In 2021, the Biden administration promised to improve competition in the US economy by reinforcing antitrust measures and other policies promoting fairness and transparency. The USDA recently announced progress aimed to strengthen the Packers and Stockyards Act by introducing the second in its series of new rules, titled the “Inclusive Competition and Market Integrity under the Packers and Stockyards Act”.

The new rule aims to address abusive and deceptive practices used by dominating meatpacking and poultry companies (such as Tyson and JBS) to exert control over livestock and poultry markets. In the past, these companies have used discriminatory and exclusionary practices to unfairly restrict market access to achieve financial gain. This rule will have the most impact on practices that affect contract livestock and poultry producers, but it is not limited in scope and it also protects non-contract producers.

Livestock farmers and poultry growers may choose to enter into contracts with meatpacking companies as one tool for reducing financial risks. USDA photo.

The historically underserved communities that this rule seeks to protect are in a precarious position in US agriculture; for example, only 1.4% of US farmers are Black, a drop by 90% from 1920, after generations of systemic racism and discrimination pushed them out of the industry. Livestock and poultry producers from underserved communities have reported many cases of unjust discrimination. The rule will strengthen existing measures to protect these producers, specifying what constitutes unfair treatment on the basis of protected class (including race, sex, gender identity, and more). Importantly, the rule also extends these protections to farmers in producer cooperatives.

Retaliation is a major risk for producers who stray too far from the approval of their affiliated companies. This rule clearly prohibits retaliatory actions against producers who exercise their right to communicate and advocate for themselves. Producers are protected from retaliation for serving as whistleblowers, , organizing with other growers by joining or forming a cooperative, or for deciding to sign a contract with a competing meatpacking company.

The new rules prevents meatpacking companies from discriminating against farmers from historically-underserved communities. USDA photo.

Finally, the rule cracks down on any false or misleading statements – including those by omission – that companies make to producers in any stage of their agreements. Producers should have all information made available to them in a transparent, truthful manner before they enter into a business contract. Meatpackers should also not be able to “bait and switch” producers by making empty claims in order to attract them to enter into a contract with that company under false pretenses. With better enforcement of these standards, producers will have the freedom to choose the contract that best suits their needs and provides the best terms.

This rule is open for public comment in the Federal Register and will be made effective on May 6, 2024. The USDA is expected to release one more rule to the Packers and Stockyards Act.