OMAHA, Neb. -- The Biden administration plans to issue a new rule to protect the rights of farmers who raise cows, chickens and hogs against the country's largest meat processors as part of a plan to encourage more competition in the agriculture sector.
The new rule that will make it easier for farmers to sue companies they contract with over unfair, discriminatory or deceptive practices is one of several steps that the White House plans to announce in the next few days. The U.S. Department of Agriculture is also expected to tighten the definition of what it means for meat to be labeled a “Product of USA” to exclude when animals are raised in other countries and simply processed in the United States.
Farmer advocacy groups have pressed for change for years but Congress and the meat processing industry have resisted. A USDA official familiar with the White House’s plan said an executive order is expected to be announced this week that will clear the way for the new rules.
White House press secretary Jen Psaki said Tuesday that the rules are designed to “increase competition in agricultural industries to boost farmers’ and ranchers’ earnings, fight back against abuses of power by giant agribusiness corporations, and give farmers the right to repair their own equipment how they like.”
The regulation will make it easier for farmers to bring complaints under the Packers and Stockyards Act and is similar to one the Trump administration killed four years ago. That rule was first proposed in 2010.
Several court rulings have interpreted federal law as saying a farmer must prove a company’s actions harm competition in the entire industry before a lawsuit can move forward. The new rule would ease that high burden of proof.
Chicken and pork producers, for example, often must enter long-term contracts with companies such as Tyson Foods and Pilgrim’s Pride that farmers say lock them into deals that fix their compensation at unprofitably low levels and force them deep into debt.
Previously, major meat companies have defended the system as fair; it calls for farmers to provide barns and labor to raise chickens while the companies provide chicks, feed and expertise. The North American Meat Institute, which represents meat processors, said the proposed rule would likely encourage “costly, specious lawsuits.”
Supporters of the new rule said not to expect a flood of lawsuits from small farmers who are “working very hard for not a lot of pay.”.
“The idea that they’re going to become ultimately extremely litigious and go out and hiring every lawyer they can to sue the industry is, I think, a big exaggeration on the part of some of the associations that are against this,” said Jonathan Hladik, with the nonprofit Center for Rural Affairs in Nebraska, which lobbies on behalf of family farmers.
Bill Bullard, who leads a trade group representing farmers and ranchers, said the change should better protect individuals in their dealings with the four major meat companies, which together control roughly 70% of U.S. beef production.
“It will help to reform the marketplace and balance the tremendous disparity in power between multinational meatpackers and independent family-owned cattle farms and ranches,” said Bullard, who is CEO of the R-CALF USA trade group.
Missouri farmer Darvin Bentlage, who raises crops and cattle about 40 miles (64.37 kilometers) north of Joplin in the southwest corner of the state, said these new rules will help if they can boost competition.
“We need more competition," Bentlage said. "Capitalism works well with competition. But when you start consolidating everything and taking away the competition then the capitalism doesn’t work good for the smaller guys.”
The USDA also plans to review the definition of what it means for meat to be labeled a “Product of USA.” Currently, companies can use that label whenever meat is processed in the United States, even if the animals were born and raised elsewhere. USDA officials say that most grass-fed beef labeled as made in the U.S. actually comes from imported cattle. Agriculture Secretary Tom Vilsack has said he wants that label to accurately reflect what consumers expect when they read it.
Bullard said changing the label rules will help, but that even if meat producers can't use the “Product of USA” label, they won't be required to label the beef as foreign. Consumers may think the meat they buy is produced domestically, even if it has been imported, because it carries a USDA inspection stamp when it has been processed in the United States, he said.
The Agriculture Department also plans to invest in new local and regional markets, so farmers will have more options for selling the animals and crops they raise. Critics have said the major meat processing companies dominate the market for cattle, hogs and chickens, which makes it harder for small farmers to get a fair price.
This week's expected executive order follows an announcement this spring that the USDA was planning to strengthen protections for farmers under the law and encourage more competition in livestock markets.
A source familiar with the executive order said it will also encourage the Federal Trade Commission to limit the ability of agricultural equipment manufacturers to force farmers to have their equipment repaired at dealers instead of using independent repair shops or doing repairs themselves. Currently, some tractor makers use proprietary tools and software to force farmers to go to dealers for repairs.
Associated Press writer Nancy Benac in Washington D.C. contributed to this report.