June 28, 2021

USDA to Enforce Packers and Stockyards Act

USDA to Enforce Packers and Stockyards Act

The United States Department of Agriculture (USDA) announced it will initiate the implication of 3 proposed rules to support the enforcement of the Packers and Stockyards Act (P&S). The Act is a 100-year-old law that was created to protect poultry, hog, and cattle farmers and ranchers from unfair, deceptive, and anti-competitive practices in the meat markets.

“The pandemic and other recent events have revealed how concentration can take a painful toll on independent farmers and ranchers while exposing working family consumers to higher prices and uncertain output,” said USDA Secretary of Agriculture Tom Vilsack. “The Packers and Stockyards Act is a vital tool for protecting farmers and ranchers from excessive concentration and unfair, deceptive practices in the poultry, hog, and cattle markets, but the law is 100 years old and needs to take into account modern market dynamics. It should not be used as a safe harbor for bad actors. The process we’re beginning today will seek to strengthen the fairness and resiliency of livestock markets on behalf of farmers, ranchers, and growers.”

First, USDA intends to propose a new rule that will provide greater clarity to strengthen enforcement of unfair and deceptive practices, undue preferences, and unjust prejudices. Second, USDA will propose a new poultry grower tournament system rule, with the current inactive proposal to be withdrawn. Third, USDA will re-propose a rule to clarify that parties do not need to demonstrate harm to competition to bring an action under sections 202 (a) and 202 (b) of the P&S Act.

The announcement has caused a stir among agricultural groups. The National Cattlemen’s Beef Association (NCBA) released a statement. "Today's announcement from USDA signals the start of a lengthy process, not the conclusion or result. We don't yet have language for proposed rules and we don't expect to see specifics from USDA for some time, but we are actively engaging with the agency to get more information and make sure that the needs of our members are front and center in the administration's thought process," said NCBA CEO Colin Woodall. "As we did in 2010 and again in 2020, NCBA will fight hard to ensure that any regulations created or revised under the Packers and Stockyards Act do not reduce cattle producers' ability to realize higher profits and make the decisions that are best for their business."

In 2010, the NCBA had an active role in stopping the 2010 Grain Inspection, Packers, and Stockyards Administration (GIPSA) Rule, said to have limited producer’s marketing capabilities. The Trump administration again tried to implement GIPSA in 2020 but was unsuccessful. The USDA stated that the proposed rulings are a way to help elevate the hardships farmers have had to endure within the last 5 years and that the Administration will continue to work to remove obstacles to recovery, equity, and sustainability.

The North American Meat Institute President Julie Anna Potts said these types of proposed rules “were a bad idea in 2010, they were a bad idea in 2016, and they are a bad idea in 2021.” On the other hand, Acting Assistant Attorney General Richard A. Powers of the Justice Department’s Antitrust Division stated in a news release, “The Justice Department commends the USDA for the new steps it announced today to strengthen enforcement of the Packers and Stockyards Act to improve competition in our agricultural markets.”

Read the USDA’s announcement here.