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USDA updates guidance on Packers & Stockyards Act

USDA front of USDA building
UNDERSECRETARIES CONTINUE DIVERSITY: Ag Secretary Tom Vilsack continues to fill his undersecretaries with a diverse set of nominees from across the country with naming of Dr. Holmes Wilkes, a career NRCS staffer, to serve as the undersecretary of natural resources.
Industry remains concerned on interpretation of how producers must demonstrate harm to competition.

USDA issued new guidance regarding how it will enforce the Packers and Stockyards Act in light of the final rule issued on Dec. 10, 2020, in a continuing effort to modernize and enforce the 100-year old authority to the full extent of the law. The enforcement policy, in the form of “frequently asked questions,” offers insight into the direction the agency looks to change in how it holds market participants accountable in the livestock sector, but also received mixed reviews from industry participants.

USDA’s Agricultural Marketing Service notes the updated enforcement policy is one piece of USDA’s robust agenda to deliver on President Biden’s Executive Order on Promoting Competition in the American Economy. The Executive Order launched a whole-of-government approach to strengthen competition, and directed USDA to, among other things, “address the unfair treatment of farmers and improve conditions of competition in the markets for their products” under the Packers and Stockyards Act.

Related: President issues executive order promoting competition

“Since 1921, the Packers and Stockyards Act has protected fair trade practices, financial integrity and competitive markets for livestock, meat and poultry,” says Secretary of Agriculture Tom Vilsack. “Over the last 100 years, USDA has defended producers by adapting to changes in the livestock industry—from terminal stockyards, to livestock auction markets, to internet and video auctions. Our legacy for the next century must also include similar bold, decisive and adaptive actions on behalf of farmers and the American people.”

The new enforcement policy follows USDA’s July announcement that it will be issuing three proposed rules to support enforcement of the Packers and Stockyards Act. The proposed rules will strengthen USDA’s enforcement of unfair and deceptive practices and undue preferences, address the poultry grower tournament system and make it easier for USDA to bring enforcement actions under the Act. The FAQs will help strengthen Packers & Stockyards Act enforcement while USDA completes those new rulemakings. 

National Farmers Union President Rob Larew welcomed the newly released guidance. “The guidance provides helpful clarifications on the scope of the 2020 Undue Preference final rule and is essential, especially when considering the rule’s shortcomings. It is also encouraging to see USDA reiterate its intention to issue three new proposed rules that could help further strengthen the Packers and Stockyards Act,” Larew says.

Related: USDA again looks to strengthen Packers and Stockyards protections

Meanwhile, Ethan Lane, National Cattlemen’s Beef Association vice president of government affairs, appreciated the clarification of the 2020 rule, however, remains concerned about potential unforeseen consequences.

“We remain concerned by the unforeseen consequences of eliminating the requirement to demonstrate harm to competition to establish a violation of the Act,” Lane says. “We are committed to finding solutions that are agreeable to both the cattle industry and federal regulators and look forward to working with the agency to achieve that goal.”

Sarah Little, vice president of communications at the North American Meat Institute, also voiced concerns about the precedent in courts to establish injury or harm to market participants to bring PSA challenges. Little notes USDA’s FAQs are not regulations and highlight two flaws in the regulations published in December 2020. 

“First, the FAQs remain at odds with the decisions of eight different federal appellate courts. No FAQs can change the well-established precedent in those courts that a plaintiff must show injury, or the likelihood of injury, to competition to win a Packers and Stockyards lawsuit. Second, the FAQs highlight the vagueness inherent in the rule by asserting one could be found liable for violating the law based on criteria the agency cannot or will not articulate,” Little notes.

“The members of the Meat Institute – and their livestock suppliers – benefit from, and depend on, a fair, transparent and competitive market. The North American Meat Institute is prepared to work with the Administration on proposed rules,” Little says.

National Pork Producers Council assistant vice president of communications Jim Monroe says, “NPPC supports a competitive and profitable environment for American hog farmers. We are reviewing the guidance document to help producers understand its implications. NPPC awaits the upcoming rulemakings on unjust practices and the need to prove competitive injury in Packers & Stockyards Act suits. We look forward to working with USDA on a set of rules that ensures a highly competitive, innovative U.S. pork industry.”

USDA’s FAQs showcase examples designed to signal USDA’s intent to utilize the Packers and Stockyards Act across a range of different circumstances. Circumstances highlighted include:

  • When a farmer faces discrimination on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or family status;
  • When a farmer faces retaliation for participating in an association, speaking to the media, Congress, or governmental agencies;
  • When a poultry company threatens to terminate a grower’s contract unless she upgrades her broiler houses;
  • When a grower faces potential deception in the provision of inputs for poultry growing;
  • Around whether a poultry grower has sufficient information to determine accuracy of pay, highlighting that payment and settlement records must be provided to the grower upon request;
  • Around location of disputes, to protect growers from being forced to travel to distant courts.
  • Around deception and manipulation between cash negotiated markets and formula contracts in cattle;
  • Around refusal to engage in cash negotiated transactions, if the packer is treating the producer differently from others, including where producers can meet terms of delivery cooperatively;
  • Clarifying that Packers and Stockyards Act does not force all cattle to be priced the same way, using organic as an example to show differences in quality;
  • Around retaliation in the context of air and water pollution relating to hogs
  • How to report a complaint; and
  • How to offer further comments on Packers and Stockyards Act enforcement.

“The Packers and Stockyards Act has long stood as a beacon of hope for farmers and ranchers seeking relief from unfair and anti-competitive practices, and the Biden-Harris Administration is committed to strengthening its enforcement for the future,” says Vilsack. “Our upcoming rulemakings under the President’s EO, together with these FAQs, demonstrate our intent to enforce the Packers and Stockyards Act to the greatest extent possible with every tool we have. Just as the Packers and Stockyards Act met the challenges faced a century ago, more authority would help reaffirm and modernize the commitment to farmers, ranchers and consumers.”

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