Trump officials quash litigation rule for farms

Trump officials quash litigation rule for farms
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The Trump administration is rescinding an Obama-era rule that would have made it easier for independent farmers to bring lawsuits against big food companies they raise chicken and other livestock for.

The United States Department of Agriculture’s (USDA) Grain Inspection Packers and Stockyard Administration last week withdrew an interim final rule a day before it was set to take effect. The rule aimed to make it easier for farmers to bring companies like Tyson Foods, Pilgrim Pride and Perdue to court over what they say are unfair, deceptive and retaliatory practices. 

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The interim final rule prevented farmers from having to prove in court the company’s actions not only harmed them individually, but also harmed competition throughout the entire industry.

Mark Dopp, senior vice president for regulatory and scientific affairs and general counsel for the North American Meat Institute, said the rule would have been “extremely detrimental” for the meat industry.

Dopp noted the rule contradicted the rulings of eight federal appellate courts, which all said an injury to competition was necessary to bring a claim under the Packers and Stockyards Act. Fear of litigation from lowering the burden of proof, he said, would have kept companies from entering into individualized contracts with farmers.

But advocates say the interim final rule marked the first step in creating a culture of accountability, particularly in the poultry industry, where they say farmers are forced to compete against each other in what’s often a rigged system.

Sally Lee, a director of the contract agriculture reform program at the farm advocacy group RAFI-USA, said big companies provide farmers with the chicks, feed and veterinary services to raise birds to slaughter weight — about six pounds for broiler chickens.

Under the tournament system currently in place, farmers are then pooled together and ranked by who raised the biggest birds for the least amount of cost to the company.

Lee said those who cost the company the least make more than the average base pay promised in their contract, while those who cost the company more make less. She said the weight of the birds largely depends on how much feed the farmer is given and if the chicks were healthy to begin with.

Rudy Howell, who raises chickens for Perdue on a farm named after his “daddy-in-law,” in Rockingham, N.C., said his pay can fluctuate by about $10,000 per flock, which he says is equivalent to about 110,000 chicks. RAFI-USA put Howell and another farmer, Reid Phifer, in contact with The Hill.

Howell believes he’s been getting less feed than the company is ticketing him for.

But Perdue countered Howell’s accusation, telling The Hill that farmers can put scales on their feed bins and that pay is determined using a standard chick, feed and fuel cost.

The Grain Inspection Packers and Stockyard Administration said it has decided not to take any action “at this time” on another rule proposed in December, which mapped out what criteria the Agriculture secretary can consider when determining whether the tournament system for poultry growers is fair.

“We continue to review the comments received and analyze current business practices to determine whether specific regulation is necessary to ensure that these systems are not unfair, unjustly discriminatory, or deceptive,” a USDA spokesperson said in an statement to The Hill.

Perdue says its poultry contracts are designed to insulate farmers from most of the financial risks associated with raising chickens, such as volatile grain and poultry markets, while providing a stable income and rewarding top performers.

“Under the contract growing relationship, Perdue delivers day-old chicks to the farms and provides feed, veterinary care and advice,” Andrea Staub, a company spokeswoman, said in a statement.

“Farmers in turn, are responsible for providing housing that meets Perdue’s standards and for caring for the birds on a daily basis,” she continued.

But Lee, of RAFI-USA, said chicken houses cost about $250,000 each and are often debt-financed. The loans payments, she said, are usually based on the base pay promised in the farmer’s contract.

Farmers argue they are then forced to make expensive upgrades to their facilities on a company’s whim, driving them further into debt, or risk losing their contracts.

Perdue said its contract poultry operation is like any other business, in that farmers need to reinvest in their operations to remain competitive.

“In addition, standards related to food safety, bird health and welfare and environmental stewardship change over time as a result of, among other things, advances in animal husbandry, changing consumer and customer expectations and new laws and regulations,” Staub said.

“However, Perdue often provides no-interest financing and other incentives to assist our farmers with necessary upgrades,” she said.

The National Chicken Council, a trade group for the industry, defended the tournament system.

“It’s a performance-based system,” the group’s spokesman, Tom Super, said via email.

“It makes no sense for a company to do anything that would jeopardize the success of the farmer. The company’s ultimate success is directly tied to the success of the farmer in raising healthy chickens.”

Super claims most farmers are happy and prosper raising chickens in partnership with companies.

“Business under the current contract structure has given thousands and thousands of farm families the opportunity to live in rural America and operate profitable businesses that allowed them to build nice homes, expand other aspects of their farm enterprises and put their children through college,” he said.

“We have thousands of people on waiting lists to be contract broiler farmers,” he added.

But Phifer, a poultry farmer who raises chickens in North Carolina for Pilgrim’s Pride, said most farmers don’t know what they are getting themselves into.

“Folks are so uneducated in growing poultry for large integrators. Everyone wants to be their own boss, but they don’t realize they are going to be told every move to make and when to make it,” he said.

Now, thanks to the Trump administration, he said farmers have no recourse.

“Do you think I could sleep at night if I sat behind a judge’s bench and told a farmer he has no right to equal protection under the law because he couldn’t prove [the company’s action] harmed competition between Pilgrim’s Pride and Tyson?” he asked.

“Do you see how totally ludicrous this is?” he added.

Both Howell and Phifer voted for Trump. Phifer said he now wishes he hadn’t.

“Mad is not even the word for it,” he said. “Remember his campaign on taking care of the little man? The farmer is the little man. Is he taking care of the farmer by rescinding these rules?  He’s going to say, ‘I didn’t rescind them.’ Well, you put Sonny PerdueGeorge (Sonny) Ervin PerdueAdministration announces plan to streamline oil and gas extraction in national forests The Hill's Morning Report — Sponsored by Better Medicare Alliance — How will Obama impact the midterms? Here are the administration officials who have denied they wrote the anonymous NYT op-ed MORE in the position of secretary of Agriculture, so I’m going to have to put the blame on you.”

Howell, however, said he doesn’t think Trump knows what’s been done.

“I don’t know Trump has heard about it,” he said. “This is Sonny Perdue’s doing with the USDA.”