Antitrust Law Daily USDA urged to protect small farmers against unfair and deceptive practices by meatpackers, poultry companies
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Thursday, August 8, 2019

USDA urged to protect small farmers against unfair and deceptive practices by meatpackers, poultry companies

By Jeffrey May, J.D.

Senators seek clarification that the Packers and Stockyards Act does not require a demonstration of harm across the entire industry.

Senators Chuck Grassley (R., Iowa) and Jon Tester (D., Mont.) announced today that they have sent a letter to U.S. Department of Agriculture (USDA) Undersecretary Greg Ibach, outlining key priorities to help family farmers compete with large corporations. The move comes as USDA begins to clarify rules pursuant to the Packers and Stockyards Act (PSA), according to the announcement.

The PSA makes it unlawful for any packer, swine contractor, or live poultry dealer to "use any unfair, unjustly discriminatory, or deceptive practice" or "give any undue or unreasonable preference or advantage to any particular person or locality in any respect." The 2008 Farm Bill required USDA to issue regulations clarifying aspects of the PSA, providing protections to family farms. In late December 2016, USDA published an interim final rule—known as the Farmer Fair Practices Rules—declaring that a finding of adverse effect on competition was not necessary in all PSA cases. However, in 2017, USDA announced that it would no longer be implementing the rules. Late last year, a federal appellate court denied a petition by the Organization for Competitive Markets, an advocacy group representing its members in the food and agricultural sectors, for review of 2017 USDA orders withdrawing an interim final rule and two proposed regulations promulgated under the PSA. Since then, USDA announced that it would be clarifying the rules.

In their letter, the senators asked USDA to clarify that the PSA does not require a demonstration of harm across the entire industry, to defend small producers against preferential marketing agreements for large livestock producers, and to provide security and transparency within the tournament system used to pay poultry growers.

"Family farmers and ranchers are vital to the strength of rural America. They provide the food security that America needs to thrive and create jobs in small towns across the country," the senators wrote. "...It’s critically important for USDA to limit the control and influence of meatpackers and poultry companies and provide recourse for small producers facing predatory practices."

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