USDA Tackles Lack of Transparency in Poultry Industry with New Rule

NFFCNFFC Weighs In

In the poultry sector, only a few major firms rule the roost. Poultry is hugely consolidated – the top four firms, Pilgrim’s Pride, Tyson, Perdue, and Sanderson Farms, control approximately 60% of the market.

Raising and processing poultry is based on a complex contract grower system, where the balance of power is markedly tipped in favor of poultry corporations over the growers who actually raise the birds. Contract growers do not own the birds, feed, or medicine used in production, and pay is determined through a complicated “tournament system” pitting growers against others in their region. Poultry companies have long been criticized for using deceptive practices that undermine fair competition and transfer business risks onto the grower. These practices have been used by companies to further oppress farmers of color, with numerous lawsuits filed against the largest poultry processors demonstrating years of discrimination.  

Pie chart displaying market share of top poultry companies.

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 addressing this tangled web of corporate control of the US poultry industry. The first in a series of new rules under the Packers and Stockyards Act (PSA) has been introduced, titled “Transparency in Poultry Grower Contracting and Tournaments”. Specifically, the rule will:

  • Require poultry dealers (primarily large processors like Tyson, Pilgrim’s Pride, Perdue, etc.) to provide clear, transparent information about the terms of their contracts with poultry growers. This includes the full range of possible earnings growers can expect to make, potential variable costs that could be incurred, and how situations like sick flocks and natural disasters will be handled. The rule ensures that growers have the key information they need to make important financial decisions, such as taking out a loan.
  • Require poultry companies to disclose the quality of the inputs (such as feed) they provide both upon delivery and upon payment. Since contract growers do not own the poultry they raise, or the feed and medicine used, this information provides crucial transparency for calculating payments.
  • Require poultry companies to disclose the quality of inputs provided to other growers in their tournament group, and how their tournament formulas account for quality variability.
  • Require poultry company CEOs to sign agreements requiring company compliance with disclosures. 

In our fight for the economic empowerment of independent producers, NFFC and our members have long advocated for fairer contract growing practices, primarily through our membership in the Campaign for Contract Agriculture Reform (CCAR). NFFC previously commented on this new transparency rule in 2022, when the first draft was released for public comment. 

NFFC has also worked closely with member organizations and farmers to gain a clearer understanding of practices in the field. NFFC member group RAFI-USA has demonstrated leadership in reforming contract agriculture practices through their Challenging Corporate Power program – with their partnership, we continue to push for federal policies that strengthen the Packers and Stockyards Act and fairly support contract growers. 

Most recently, NFFC joined more than 60 organizations in a letter to President Biden urging the quick implementation of all upcoming Packers and Stockyards Act rulemakings. Without swift finalization, the improvements made in PSA rulemaking could be in jeopardy from repeated attempts from corporate-backed opponents to undermine progress in antitrust enforcement. Industry lobbyists have already argued for a 6-month extension to the implementation date for this first ruling, despite the proposed rule being public for more than 500 days and the USDA announcing the new rule nearly 100 days before implementation.

The rule can be found in the Federal Register and will be made effective on February 12, 2024. The USDA is expected to release two additional rules in the Packers and Stockyards Act. The next two rules will address deceptive and discriminatory practices, and market competition and fairness.

Learn more about contract poultry growing with these resources: