The National Chicken Council (NCC) has expressed significant reservations about the US Department of Agriculture’s (USDA) recent update to regulations that aim to enhance transparency in contracts between poultry producers and processors.
The rules, announced on November 8, have been met with a mix of support and criticism from various industry associations.
The NCC has warned that the final rule, which falls under the Packers and Stockyards Act, could have a detrimental financial impact on the US chicken industry.
The council argues that the new regulations will increase costs and administrative burdens, potentially leading to a surge in unwarranted litigation and destabilising the current compensation system that benefits farmers and chicken companies alike.
Mike Brown, president of the NCC, has stated that the rule is less about transparency and more about facilitating legal action. He contends that the administration’s regulatory approach, which he refers to as “Bidenomics,” is imposing excessive regulations and costs on businesses, contributing to record inflation and input costs, and could further increase grocery bills for American consumers.
The NCC also highlighted the logistical challenge of amending approximately 25,000 contracts within two months, a period that includes three major federal holidays.
Furthermore, the council criticised the rule for mandating contract terms such as minimum annual placements and stocking densities, arguing that it oversteps by dictating terms of private contracts and hinders the industry’s ability to respond to market fluctuations and events such as pandemics or natural disasters.
Conversely, the Campaign for Contract Agriculture Reform (CCAR) has welcomed the USDA’s move. Steve Etka, the policy director of CCAR, praised the rule for demanding greater honesty from poultry companies and providing farmers with crucial information to make informed investment decisions.
He acknowledged the need for broader reform but recognised the rule as a significant step towards that objective.
Farm Action also supported the USDA’s initiative but called for further measures. Angela Huffman, the president of Farm Action, noted the benefits of providing contract growers with more details on flock sizes and potential earnings, while also advocating for changes to the “tournament system” that determines payment structures for poultry farmers and growers.
Both CCAR and Farm Action are advocating for a revision of the payment system used by large poultry companies, which they believe is central to the economic challenges faced by poultry farmers across the United States.
