On June 3, 2024, the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS) announced a pre-published version of the proposed rule, “Poultry Grower Payment System and Capital Improvement Systems.” The Proposed Rule is part of the agency’s broader effort to increase transparency and address potential deception and unfairness in contracting arrangements.
The Proposed Rule only focuses on broiler chicken growing arrangements and would impose no additional requirements for other types of poultry, such as turkeys or ducks.
The Proposed Rule addresses three aspects of broiler growing arrangements where AMS believes contract broiler growers are vulnerable to unfair and deceptive practices:
- Lack of payment transparency in broiler growing arrangements: The Proposed Rule would prohibit any grouping or ranking system (commonly known as “tournaments”) that would reduce or discount any rate of compensation for broiler growers. In other words, the integrator would be required to provide a “floor” price.
- Unfairness in tournament operations: The Proposed Rule would require integrators to adopt policies and procedures for operating a fair ranking system for broiler growers.
- Inadequate disclosure from integrators regarding Additional Capital Investments: The Proposed Rule would require integrators to provide certain information to broiler growers when the integrator requests or requires the grower to make additional capital investments.
The Proposed Rule, if finalized, would revise the Packers and Stockyards Act, 1921 (P&S Act or the Act) by amending 9 CFR part 201, subpart N, to include:
- Proposed §201.106: Design of broiler grower compensation arrangements
- Proposed §201.110: Fair operation of broiler grower ranking systems
- Proposed §201.112: Disclosure requirements for additional capital investments (ACIs)
- Proposed §201.290: Severability
Comments on the Proposed Rule will be due 60 days after its publication in the Federal Register. If you need assistance in preparing your comments, please contact Kyla Kaplan (kkaplan@ofwlaw.com) or John Dillard (jdillard@ofwlaw.com)
