With some notable exceptions, the agriculture industry is asking the USDA to withdraw a rule allowing beef, pork and poultry producers to sue meat packers over individual contract disputes.

The USDA closed public comment Sept. 11 on a rule the agency says will clarify the Packers and Stockyards Act prohibits “unfair practices” against individual producers.

Courts have interpreted the 1921 law more narrowly, requiring farmers and ranchers to show their grievances with meat packers affected market competition generally.

Meat packers oppose the rule, warning it will open up their industry to costly lawsuits that will eventually affect consumers and stifle innovative agreements that reward producers for supplying high-quality meat.

The American Farm Bureau, National Chicken Council and National Cattlemen’s Beef Association support that position.

The rule would “inflict staggering costs on the meat and poultry industries, ultimately to the detriment of American consumers,” National Chicken Council Interim President Gary Kushner said in a statement.

Some farm groups, such as R-CALF and the Minnesota Farmers Union, support the rule, arguing the act has been interpreted too narrowly by courts as purely an antitrust law meant to prohibit price fixing.

The Packers and Stockyards Act was intended to protect individual producers from abusive practices to ensure competitive markets, said Bill Bullard, CEO of R-CALF, which represents cow-calf producers.

R-CALF’s support for the rule stems from its membership, he said. Many who identified themselves as ranchers wrote to USDA to back the rule.

“The fundamental economic interests of producers is not the same as the fundamental interests of packers,” Bullard said. “The rule is definitely a huge step in the right direction.”

The act prohibits meat packers from discriminating, deceiving or being unfair to producers. Congress didn’t define “unfair,” leaving up to generations of judges and bureaucrats to provide a definition.

The USDA has long urged a more liberal definition, but courts have consistently defined “unfair practices” as something that hinders market-wide competition, not the fortunes of one producer.

The USDA, supported by the Federal Trade Commission, now proposes to define unfair practices “as conduct that harms market participants.”

The Meat Institute, which represents packers, said the rule will expose companies to lawsuits unrelated to maintaining competitive markets.

Rule opponents cited remarks by U.S. Assistant Attorney General Jonathan Kanter last spring when the rule was proposed hoping the Justice Department will bring more lawsuits under the Packers and Stockyards Act.

Opponents also argue USDA is defying courts that ruled against farmers who claimed they were being harmed, but could not show harm to competitive markets. Unless Congress changes the law, the court’s interpretation should stand, the opponents say.

In one often-cited case, three Texas chicken farmers sued Pilgrim’s Pride, claiming their contracts were less profitable than another Texas chicken farmer, namely Pilgrim’s founder and chairman, Lonnie “Bo” Pilgrim.

The 5th U.S. Circuit Court of Appeals in 2009 ruled the dispute did not violate the Packers and Stockyards Act and dismissed the lawsuit.

The 6th Circuit Court in 2010 dismissed a lawsuit by a Tennessee chicken farmer who claimed Tyson Farms canceled his contract because he complained about being barred from a processing plant to see his chickens weighed.