Some farm groups criticized a long-delayed competition rule the Trump administration announced Thursday as favoring big meatpacking and poultry processors and leaving small farmers and ranchers vulnerable to unfair treatment in selling livestock.
The National Farmers Union and R-CALF USA, both more closely aligned with smaller producers, said the regulations will make it harder to prevail on claims meat giants have abused their market power at a time when four large corporations control about 80% of U.S. beef processing. They called on the incoming Biden administration to reverse the regulation, which will go into effect nine days before Donald Trump leaves office.
The meat industry is facing increased scrutiny of its business practices, with the U.S. Justice Department earlier this year opening an antitrust probe of beef companies and bringing criminal charges against poultry-industry executives for price-fixing. Chick-fil-A Inc., the leading U.S. chicken restaurant chain, sued major poultry processors earlier this month, joining Target Corp., Wawa Inc., and other companies accusing them of a price-fixing scheme.
Biden in his presidential campaign criticized the impact of agribusiness consolidation on farmers’ ability to get fair prices for their products, and pledged to strengthen federal antitrust enforcement and U.S. Department of Agriculture regulations on competition.
The new rule clarifies what constitutes an “undue” preference by a meatpacker for one farmer over another in purchasing livestock under the 99-year-old Packers and Stockyards Act, passed after a federal investigation revealed market manipulation exploiting farmers. Congress in 2008 had called for a regulation on the issue but the Trump administration withdrew a proposed rule released near the end of Barack Obama’s presidency.
The new regulation defines an undue preference as one that cannot be justified through cost savings, meeting a competitor’s offer or as “a reasonable business decision.”
Rob Larew, president of the National Farmers Union, said the new regulation not only fails to protect farmers but shields corporations against legal liability for discriminatory actions.
“These corporations have immense economic resources and political clout, which means they call the shots – and when they behave unfairly, as they often do, they usually face no repercussions,” Larew said in an emailed statement. “Rather than offer farmers the very basic safeguards they’ve been asking for, USDA’s rule will inexplicably offer even more power to meatpackers, further tipping the scales in their favor.”
But Julie Anna Potts, president of the North American Meat Institute, a trade association for meatpackers, said the new regulation “recognizes the importance of marketing agreements and other, similar tools used by producers and packers and provides some guidance and clarity,” though it “introduces some uncertainty.”
R-CALF USA chief executive officer Bill Bullard said the rule “undermines the purpose” of the law.
“The producers’ burden will shift from proving a packer violated the Act to now having to prove the packer does not qualify for any of the various safe harbors the USDA has created to protect packers from effective enforcement,” Bullard said in a emailed statement.
Greg Ibach, undersecretary of agriculture for marketing and regulatory programs, said the rule will “further clarify USDA’s enforcement mechanisms” and “ultimately work to benefit everyone in the supply chain.
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