WASHINGTON — USDA is expanding guidance currently in place for loans to contract poultry operations meant to protect them from questionable business practices to include contract pork operations.
USDA currently provides guidance to county offices to avoid making loans that may exacerbate integrator business practices that have left some producers suddenly without contracts and unable to pay back their FSA loans.
Issues
Recent increases in energy and feed costs coupled with reductions in demand have affected profit margins and returns in the industry.
In response to these conditions, some companies who contract with producers to supply poultry and pork have closed processing plants, reduced placements and declined to renew contracts.
In some instances, it may have proven less expensive to cancel old contracts and begin new contracts with new producers, supported by FSA loans. The producers were sometimes left with debt for their contract operation facilities, but no contract to provide income and repay their USDA direct or guaranteed loan.
In addition to the contracting guidance expansion to pork production, USDA’s Farm Service Agency will solicit input and proposals from the pork and poultry community on the best way to address these contract situations in the long term.
Also
Additionally, USDA’s Grain Inspection, Packers and Stockyard Administration will investigate allegations from producers that companies are targeting producers for contract termination.
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