Tester: New USDA rule beefs up fairness for family agriculture

(BIG SANDY, Mont.) – Senator Jon Tester today released the following statement in response to a new rule proposed by the U.S. Department of Agriculture.  The new rule will improve the livelihoods of Montana producers by increasing protections against unfair practices due to increased consolidation the meatpacking industry:

“A lot of family ranchers in Montana have been waiting for fairness and common sense as they try to compete in an industry dominated by a handful of giant corporations.  This new rule is a smart and important step to stop the stranglehold that a few big companies have on family agriculture, so we can finally see some true competition back in the marketplace.  And I’ll fight for rural America’s families every step of the way.”

The USDA was required to write the new rule as part of the 2008 Farm Bill.  The U.S. Grain Inspection, Packers and Stockyards Administration (GIPSA) will now accept public comment on the proposed rule through August 23.

According to the USDA, the new rule will:

  • Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights, or representations that would be fraudulent or misleading.
  • Define undue or unreasonable preferences or advantages;
  • Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80 percent of the cost of a required capital investment;
  • Prohibit packers from purchasing, acquiring or receiving livestock from other packers, and communicate prices to competitors;
  • Enable a fair and equitable process for producers that choose to use arbitration to remedy a dispute. Additionally, clear and conspicuous print in the contract will be required to ensure producers are provided the option to decline the use of arbitration to settle a dispute.
  • Require that companies paying growers under a tournament system provide the same base pay to growers that raise the same type and kind of poultry, including ensuring that the growers pay cannot go below the base pay amount;
  • Improve market transparency by making sample contracts (except for trade secrets or other confidential information) be made available on GIPSA's website for producers;
  • Outline protections so that producers can remedy a breach of contract;
  • Improve competition in markets by limiting exclusive arrangements between packers and dealers.

A summary of the new USDA rule proposal is online HERE.  The entire 61-page proposal is online HERE.