Strengthening the Packers and Stockyards Act

It’s time to restore one of our best protections against the meatpacking monopoly.

WHAT IS THE PACKERS AND STOCKYARDS ACT?

More than 100 years ago, the U.S. passed its first law to protect farmers and ranchers from concentrated, abusive monopoly power in the livestock industry.

Farm Action has demonstrated how the Packers and Stockyards Act (P&S Act) successfully leveled the economic playing field for decades, and how the erosion of its power by courts in the 1980s allowed corporations to gain unprecedented control over meat and poultry production. 

The result of all this? Cattle, poultry, and hog farmers are going out of business, workers are subjected to low pay and hazardous conditions, and consumers are facing skyrocketing prices at the grocery store — all while corporations like JBS, Smithfield, and Tyson Foods line their pockets with record profits.

STRENGTHENING THE P&S ACT

In June of 2021, the USDA announced it would begin work on new rules to strengthen this landmark law, and we are seizing this critical opportunity. Below is a quick rundown of the four rulemaking processes and how we are engaging. More detail is available in USDA’s Agricultural Competition report.

#1) Transparency in Poultry Grower Contracting and Tournaments

About: This proposal brings transparency to the inner workings of the poultry tournament system, a corrupt and abusive scheme in which contract poultry farmers must compete for a price they will be paid for raising poultry.

Status: This rule is final and will go into effect 75 days after appearing in the Federal Register. Farm Action’s comments argued that this rule doesn’t go far enough, and unequivocally urged the USDA to follow the Justice Department’s lead and ban the tournament system once and for all.

To learn more about this issue, check out our short video on YouTube.

#2) Inclusive Competition and Market Integrity

About: In order to facilitate enforcement of the P&S Act, USDA is proposing to clarify what conduct is considered discriminatory, prejudicial, retaliatory, or deceptive. This proposed rule will:

  1. Define who is “market vulnerable” and ban discrimination against them
  2. Designate retaliation as illegal
  3. Identify certain deceptive contracting practices as illegal

Status: The comment period for this rule ended on January 17, 2023 and we await publication of a final rule. Farm Action’s comments were supportive of the rule but also included specific recommendations to more effectively hold poultry integrators and meatpackers accountable for their widespread discriminatory and retaliatory conduct.

#3) Unfair Practices, Undue Preferences, and Harm to Competition

About: Currently, producers who have been harmed by unfair practices must prove harm to the entire industry — a prohibitively high burden of proof that protects corporate monopolies from legal action. In addition to defining unfair practices and undue preferences, we expect this regulation to clarify that farmers do not need to demonstrate sector-wide harm in order to bring legal action against corporations for market abuses.

Status: This proposed rule has not yet been issued by the USDA.

#4) Poultry Grower Payment Systems and Capital Improvement Systems

About: Beyond its rule establishing more transparency in the tournament system, USDA is also considering a rule that addresses the payment and financial structures of our poultry production system, which grossly favor corporations over chicken producers, and provide an easy and discreet avenue to exploit and punish farmers for perceived noncompliance.

Status: This proposed rule has not yet been issued by the USDA. The Department issued an advanced notice of a proposed rulemaking (ANPR) in June of 2022 to collect information from stakeholders. Farm Action’s response to the ANPR condemned the inherent unfairness of the tournament system and stated that it violates the ban on unfair practices within the P&S Act.

This isn’t the first attempt to strengthen the Packers and Stockyards Act.

Over the past century, farmers and rural communities have been caught in the middle as ever-larger and more powerful corporations lobbied against any changes to the system that benefits them — and no one else.  For a vivid illustration of this history, check out Farm Action’s blog about the Farmer Fair Practices Rules, a set of reforms proposed in 2010 that would have fortified the Packers and Stockyards Act. If these rules had been enacted rather than defeated by corporate lobbyists, they would have shifted the balance of power into the hands of livestock and poultry producers, giving them more tools to protect themselves against massive meatpackers and legal ground to stand on.

Pressure's on the USDA

We were encouraged when a momentous executive order to promote competition throughout the U.S. economy opened a critical window of opportunity to strengthen the P&S Act. 

But USDA’s pace has been slow. In our routine work with the agency, we regularly push them to move on the rules and give the P&S Act the boost it needs to prevent massive corporations from accruing and abusing power.

In 2022, we convened a coalition of food and farm groups to show public support for these reforms. With a team of attorneys carefully documenting the USDA’s legal authority to issue and implement the rules, our letter demonstrated that the USDA can and should act without delay to help farmers and ranchers struggling under the thumb of anti-competitive corporate monopolies.

We then held an event in Washington, D.C. to publicly hold the USDA’s feet to the fire, where we released our report card grading the agency’s progress on its directives from the executive order. Following this event, USDA Secretary Vilsack told the press that he’s looking for “guidance and direction” from Farm Action on competition issues.

In July 2023, we issued the second annual report card at an online event. We saw some progress towards the goals of the executive order — but we won’t let up our pressure campaign until the P&S Act has been restored to its full strength.

Speakers and panelists at our 2022 event: “Making the Grade? A Midterm Review of the Biden Administration’s Commitment to Food System Competition.” 

Taking the Fight to Congress

We’re also working with members of Congress, who have the power to step up in this fight for fairness in our livestock and poultry markets by legislating reforms to the Packers & Stockyards Act.

We helped develop the Protecting America’s Meatpacking Workers Act, which contains policies that would empower workers and farmers in the extremely consolidated meatpacking industry, where hazardous conditions and unfair pay have long been the norm. By forcing the big meatpackers to play by a different set of rules, we can stop them from squeezing their employees and contract growers — who often have no other choice of employer — in the pursuit of excessive profit. 

Another policy we developed would shift influence over the food system to the farmers and workers who power it. By cracking down on monopolistic practices and placing a moratorium on factory farms, the Farm System Reform Act helps farmers who have for too long been displaced and shut out of markets by huge corporations. Our political partner Farm Action Fund champions this bill and is calling for co-sponsors.

FURTHER READING: THE FALL OF ANTITRUST, THE RISE OF CORPORATE POWER

In April of 2022, Farm Action’s Angela Huffman spoke at the world’s largest antitrust conference, hosted by the American Bar Association, on a panel titled “Is Competition in Agriculture Suffering a Drought?” 

For this event, the Farm Action team produced a research report demonstrating the importance of the Packers and Stockyards Act (P&S Act) and antitrust law for American farmers raising livestock and poultry. 

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