Many of the concerns were related to increasing consolidation and vertical integration in the livestock and poultry marketplace, and shrinking farm numbers. For instance, there were over 666,000 hog farms in 1980, but only roughly 71,000 today. In the hog industry, producers received 50% of the retail value of a hog in 1980, but only 24.5 percent in 2009.
The proposed rule announced today would provide the following protections:
• Provide further definition to practices that are unfair, unjustly discriminatory or deceptive, including outlining actions that are retaliatory in nature, efforts that would limit a producer's legal rights, or representations that would be fraudulent or misleading. Additionally, the proposed rule reiterates USDA's position that a producer need not overcome unnecessary obstacles and have to always prove a harm to competition when they have suffered a violation under the Act ;
• Define undue or unreasonable preferences or advantages;
• Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80 percent of the cost of a required capital investment;
• Prohibit packers from purchasing, acquiring or receiving livestock from other packers, and communicate prices to competitors;
• Enable a fair and equitable process for producers that choose to use arbitration to remedy a dispute. Additionally, clear and conspicuous print in the contract will be required to ensure producers are provided the option to decline the use of arbitration to settle a dispute.
• Require that companies paying growers under a tournament system provide the same base pay to growers that raise the same type and kind of poultry, including ensuring that the growers pay cannot go below the base pay amount;
• Provide poultry growers with a written notice of a company's intent to suspend the delivery of birds under a poultry growing arrangement at least 90 days prior to the date it intends to suspend the delivery;
• Improve market transparency by making sample contracts (except for trade secrets or other confidential information) be made available on GIPSA's website for producers;
• Outline protections so that producers can remedy a breach of contract;
• Improve competition in markets by limiting exclusive arrangements between packers and dealers.
The proposed rule will be published in the June 22, 2010, Federal Register. GIPSA will consider comments received by August 23, 2010.