Politico | USDA Announces New Competition Rule, Initiatives to Tackle Consolidation in Agriculture

Reposted from: https://subscriber.politicopro.com/article/2022/09/usda-announces-new-competition-rule-initiatives-to-tackle-consolidation-in-agriculture-00058926

The Biden Administration is taking aim at companies that it says are abusing, deceiving and discriminating against farmers and ranchers in a new proposed rule from the Agriculture Department, a draft of which was released Monday at a meeting of the White House Competition Council.

The proposed rule is intended to strengthen provisions of the Packers and Stockyards Act, a 1921 anti-monopoly law that gives USDA broad authority to protect farmers and ranchers against anti-competitive conduct. The rule aims to protect “market vulnerable individuals” such as those who might experience “exclusionary treatment” based on “race, gender, sexual orientation, and religious affiliation.”

The rule also would prohibit retaliation that deters lawful speech or even an individual’s participation in an association.

It will also identify “deceptive practices” that violate the Packers and Stockyards Act, with a focus on contracts. For many farmers in animal agriculture for example, the livestock are raised on contract, such as poultry and hogs where companies own the animals, not farmers. Farmer advocates have said these contracts create a relationship rife for abuse and deception, though companies argue that the contracts ensure fair, performance-based payment.

Finally, the rule would also require new and increased record keeping in order to ensure USDA’s own compliance and enforcement of the rule.

A USDA spokesperson confirmed that the proposed rule will be published in the Federal Register “in the coming week.” That will start the clock for the 60-day public comment period.

The announcement comes as the administration is preparing for the White House conference on hunger, nutrition and health, where the President is likely to address high food prices, something the White House has repeatedly attributed in part to corporate price gouging. The White House deferred comment to USDA.

“In the last five years, stresses and disruptions caused by concentration in livestock markets have impacted not only producers, but consumers as well,” the USDA spokesperson said. “Additionally, the rise of vertical integration along with highly concentrated local markets in livestock and poultry over the last four decades has increasingly left producers and growers vulnerable to a range of practices that unjustly exclude them from economic opportunities and fair and equal access to the marketplace.”

Context: Since the President’s July 2021 executive order to tackle corporate power, the White House has coordinated what it calls an “all-of-government” approach to addressing concentration across the economy. For example, the Justice Department has attempted to stop mergersthat they say would decrease competition in agriculture. Also, the DOJ has joined forces with USDA to welcome complaints via a portal where farmers and ranchers can record allegations of anti-competitive or unfair actions.

This is the second of three rules USDA has said it will use to confront consolidation and abuse of market power in agricultural industries. The first rule will attempt to increase transparency and fairness in the poultry tournament system chicken processing companies use to pay poultry farmers contracted to grow chickens. The public comment period for the rule has closed and the agency is reviewing the comments as required by law. USDA may finalize the rule or issue a modified proposal addressing the comments.

These rules “are intended to be complementary and propose modernized regulations” under the Packers and Stockyards Act, a USDA spokesperson explained.

A renewed alliance with state attorneys general: USDA also announced $15 million in funds to enlist state attorneys general in partnership to shore up enforcement of the Packers and Stockyards Act. The applications and roll out of the money are still being finalized and the details will be shared with states attorneys general offices, according to a USDA spokesperson. The partnerships will take the shape of “renewable cooperative agreements” and “memorandums of understanding.”

“USDA will continue using its existing resources and partnership with law enforcement agencies at the federal, state and local levels to enforce the Packers and Stockyards Act,” the spokesperson said. “The USDA’s AG Competition Initiative is an additional tool that will create state-level partnerships and provide resources to state Attorneys General to help combat these problems.”

It’s unclear if USDA intends to hire additional staff for competition work, but the department spokesperson said that staffing needs are “being assessed.”

Anti-monopoly advocates praised the move. “There are brilliant state attorneys general out there who are hungry to rebalance the ship on behalf of consumers farmers and ranchers as well as small businesses,” said Joe Maxwell, president of Farm Action. “But they don’t always have the resources or the backing to move forward. $15 million doesn’t get you many cases but it will get you cases among some of the hungriest young brilliant attorneys out there.”