GIPSA finalizes rule designed to protect pork and poultry producers

WASHINGTON — Pork and poultry producers who rely on contracts may get more protection from the finalization of a GIPSA rule proposed in June 2010.

U.S. Agriculture Secretary Tom Vilsack announced Dec. 8 that the USDA has published the final rule implementing the 2008 farm bill provisions to better protect livestock producers and poultry growers under the Grain Inspection, Packers and Stockyards Administration.

Revisions

The provisions have been modified from the June 22, 2010 proposed rule.

These sections include criteria the secretary may consider when determining whether a live poultry dealer has provided reasonable notice to poultry growers of any suspension of the delivery of birds, when determining whether a requirement of additional capital investments over the life of a poultry growing arrangement or swine production contract constitutes a violation of the Packers and Stockyards Act. And when determining if a packer, swine contractor, or live poultry dealer has provided a reasonable period of time for a grower to remedy a breach of contract that could lead to termination of a production contract.

Arbitration

The rule also includes a section requiring contracts that require the use of arbitration to include language on the signature page that allows the producer or grower to decline arbitration.

It also provides criteria the secretary may consider when determining if the arbitration process provided in a contract provides a meaningful opportunity for growers and producers to participate fully in the arbitration process.

The department also planned to seek additional public comment on several other revised provisions from the June 22, 2010, proposed rule including changes to the tournament system of payment for poultry growers, requirements to collect and post sample contracts and to address the issue of need for producers to show harm to competition prior to asserting a violation of the Packer and Stockyards Act.

However, the fiscal year 2012 agriculture appropriations bill passed by Congress included language prohibiting the department from moving forward on these provisions.

NASC

The National Sustainable Agriculture Coalition feels there are good parts and bad parts included in the rule.

In a release, the NSAC said for its members, the arbitration provision of the final rule is an improvement over the proposed rule. Farmers who do not choose whether or not to be bound by an arbitration clause in a production contract are deemed by the rule to have declined to be bound by arbitration.

But the final rule also weakens important provisions of the proposed rule, the coalition said. The proposed rule provided that a processor that requires a farmer to make initial and additional capital investments must also provide a reasonable opportunity for the farmer to recoup the investment over the life of the production contract.

Final rule

The final rule limits the recoupment requirement to additional capital investments required after a production contract is entered into and omits the recoupment requirement for the initial capital investment.

According to the coalition, the final rule also weakens a requirement that packer and processors provide poultry and livestock contract farmers with notice and a reasonable opportunity to remedy an alleged breach of a production contract.

The final rule includes a new broad exemption from the requirements if the packer or processor contends that food safety or animal welfare was concerned in the breach. There are no safeguards or procedures in the final rule to ensure that packers and processors document these contentions, the coalition stated.

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