The US Department of Agriculture is unveiling the third installment in a series of regulatory reforms under the Packers and Stockyards Act that, in combination with other updates finalized under the Biden-Harris Administration, is intended to level the playing field for farmers who raise chicken, turkeys, hogs, cattle and sheep under contract or for sale to meat and poultry processing companies.

Specifically, this rule aims to give chicken farmers better insight into companies’ payment rates for their birds, institute stability and fairness in what is commonly known as the "tournament system," provide farmers with key information on capital improvements the companies require farmers to make in order to keep or renew contracts, and give farmers stronger leverage when companies do not adhere to the rules.

This rule takes effect on July 1, 2026, following publication in the Federal Register. A preview of the final rule, and a summary and FAQ are available on the Poultry Grower Payment Systems and Capital Improvement Systems web page.

The National Chicken Council has released a statement responding to the finalization of the Poultry Grower Payment Systems and Capital Improvement Systems rule.

According to NCC President Harrison Kircher, “The Biden administration, with just six days remaining, is racing to impose the last pieces of its anti-business regulatory agenda.

“This rule – which Congress never asked for – will lead to rigid, one-size-fits-all requirements on chicken growing contracts that would stifle innovation, lead to higher costs for consumers, decrease competition, and cost jobs by driving some of the best farmers out of the chicken business.

“The vast majority of chicken farmers in rural America are happy and prosper raising chickens in partnership with companies, and they don’t want the government meddling on their farms and telling them how they should run their businesses.”

Among the issues detailed in the comments, NCC was especially concerned about the following issues with the proposed rule:

• The proposed rule exceeds Congress’s grant of authority in the PSA by prohibiting conduct without requiring a showing of injury to competition or unfair or deceptive practices;
• The proposed rule mischaracterizes dynamics and efficiencies in the current poultry growing industry, rendering it arbitrary and capricious;
• As written, the proposed rule is too vague to be considered constitutionally valid;
• The current proposed rule is so prescriptive as to unduly impinge on grower and integrator freedom to contract; and
• AMS has greatly underestimated costs associated with the rule and would require an extended implementation period of at least two years.

Over the course of the Biden-Harris Administration, the US Department of Agriculture has finalized two other rules that aim to strengthen enforcement of the Packers and Stockyards Act and seek to create a fairer dynamic between integrated processing companies and the farmers who raise animals for them. These include:

• Transparency in Poultry Grower Contracting and Tournaments, finalized in November 2023, which requires live poultry dealers —typically large processing companies -- to give critical information about terms of their agreements to the poultry growers with whom they contract to raise birds. The final rule requires a “Live Poultry Dealer Disclosure Document” that provides growers with information they need to have a better understanding of realistic outcomes they can expect before making important financial decisions, such as capital-intensive facility improvements or taking out loans. In particular, the rule requires that dealers disclose earnings for growers by quintile, establish minimum flock placements, and explain variable costs growers may incur and how companies handle certain important circumstances such as sick flocks and natural disasters. It also establishes an accountability and governance framework that must be certified by the poultry company’s CEO.
• Inclusive Competition and Market Integrity under the Packers and Stockyards Act, finalized March 2024, which prohibits discrimination on the basis of certain other basic characteristics and bans companies from retaliating against farmers over basic activities like communicating with government agencies, joining producer or grower associations and asserting legal and contractual rights; it also offers protection against deceptive contracting that are false, misleading and result in harm to producers.

In June 2024, USDA proposed Fair and Competitive Livestock and Poultry Markets, which sought to define unfair practices under the Packers and Stockyards Act. USDA received more than 13,000 public comments on the proposal. Due to the complexity and length of time needed to finalize that regulation, USDA is withdrawing the proposal to preserve its ability to reexamine these issues in the future and enable the agency to explore with stakeholders regarding how best to implement the requirements of the Packers and Stockyards Act.

Source: USDA