Trade Groups Criticize USDA’s Final P&SA Rule

Several meat industry trade groups quickly criticized USDA’s announcement on Tuesday of a final rule changing the Packers and Stockyards Act (P&SA) to give contract farmers more leverage in business with meatpackers and integrators. Trade groups argue the changes introduce unnecessary regulations and costs.

USDA claims the rule clarifies and makes more effective P&SA standards related to prohibited practices relating to discrimination, retaliation and deception in contracting. The final rule will be effective 60 days after publication in the Federal Register.

USDA is finalizing a series of rules under the Packers and Stockyards Act as part of President Biden’s historic Executive Order on Promoting Competition in America’s Economy.

“NCBA’s concern with this regulation has always been based in the rule’s unforeseen impacts to standard business practices,” NCBA Vice President of Government Affairs Ethan Lane said in a statement. “We have remained consistently opposed to any discriminatory practices in the marketplace. While we still have concerns about the unintended consequences of the rule, we are pleased that USDA has addressed most of our significant concerns between the proposed and final rules.”

Lane said NCBA urges USDA not “stray into extraneous, unrelated subject matter discussed in the proposal’s preamble.”

The North American Meat Institute claims the new P&SA rules does nothing to “encourage competition” while attempting to give USDA new power to “exert federal control over business contracts.”

“These changes are simply an attempt to assert even more federal authority to regulate the equities of industry business practices, clogging the federal courts with every contract dispute,” said Julie Anna Potts, President and CEO of the Meat Institute. “Congress never intended to give the agency such broad-ranging authority over meat industry contracts and practices, regardless of their effect on competition – and the courts have agreed.”

“While the actions described by USDA have no place in the meat industry, other federal statutes and state laws already exist to address the rare instances in which they may occur,” Potts said. “An antitrust statute is not the appropriate statute for these rules.”

National Chicken Council president Mike Brown says his group is concerned the Proposed Rule will further raise costs, expose live poultry dealers to significant legal and compliance risks and undermine the successful and mutually profitable poultry grower contracting system.

 “The last thing AMS (Agricultural Marketing System) should be doing is pushing increased regulations, red tape and costs onto businesses at a time of record inflation and input costs, threatening food security and potentially raising grocery bills even further for Americans. As such, we are urging the agency to withdraw this proposal.”