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USDA Commits to maximum enforcement of the Packers and Stockyards Act

The U.S. Department of Agriculture (USDA) today issued new guidance regarding how it will enforce the Packers and Stockyards Act in light of the final rule issued on December 10, 2020, in a continuing effort to modernize and enforce the 100-year old authority to the full extent of the law. 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.

The enforcement policy, in the form of “frequently asked questions (FAQs),” is a significant pivot from the previous administration and commits USDA to defending farmers to the maximum extent possible. In particular, the policy highlights how problematic provisions of the 2020 Undue Preferences rule will not apply to cases that seek to protect producers from a range of circumstances such as retaliation and racial discrimination by giant agribusinesses. They also highlight USDA’s long-standing position that a violation of the Packers and Stockyards Act does not require a show of harm to competition. USDA is signaling its intent to use every weapon in its arsenal to ensure that growers and producers are protected from harm, even while the agency engages in the rulemaking process to update its rules.

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. USDA also announced in July that it would be investing directly in enhancing competition in livestock and poultry markets with $500 million of support for new entrants into meat processing.



This month, USDA also commemorates the centennial of the Packers and Stockyards Act which was signed into law in 1921 after a Congressional investigation found that the incumbent meat packers had “attained such a dominant position that they control at will the market in which they buy their supplies, the market in which they sell their products, and hold the fortunes of their competitors in their hands.” A century later, USDA recognizes the continued critical importance of the Packers and Stockyards Act for our nation’s farmers, ranchers, and consumers.

“Since 1921, the Packers and Stockyards Act has protected fair trade practices, financial integrity, and competitive markets for livestock, meat, and poultry. 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. As President Biden’s Executive Order on Promoting Competition in the American Economy made clear, USDA is committed to taking bold action to defend producers and growers and ensure the competitiveness of our agricultural markets over the century to come,” said Agriculture Secretary Tom Vilsack.



The December 2020 Final Rule to Define Undue or Unreasonable Preferences or Advantages under the Packers and Stockyards Act provides four criteria that will be considered when determining if an undue or unreasonable preference or advantage has occurred in violation of the Packers and Stockyards Act. These criteria are not exhaustive, nor do they limit the scope of additional criteria. The FAQs released today shed more light on additional criteria that may be utilized in undue preferences cases brought by the Packers and Stockyards Division against packers, swine contractors, or live poultry dealers, and also distinguish circumstances that will be handled outside of the four criteria.

The FAQs also 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,” Secretary Vilsack said. “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.”

–USDA


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