The final USDA Agricultural Marketing Service rule clarifying the types of conduct prohibited by the Grain Inspection, Packers and Stockyards Act is meeting with favor from some producer groups and disappointment from others.

The rule sets forth four criteria for determining whether the conduct of packers, swine contractors or live poultry dealers represents an undue or unreasonable preference or advantage.

The four criteria include whether the preference or advantage:

• Cannot be justified on the basis of a cost savings related to dealing with different producers, sellers, or growers.

• Cannot be justified on the basis of meeting a competitor’s prices.

• Cannot be justified on the basis of meeting other terms offered by a competitor.

• Cannot be justified as a reasonable business decision.

The 2008 Farm Bill required USDA to publish criteria for determining undue or unreasonable preference or advantage.

Livestock and poultry groups weighed in on the rule.

American Farm Bureau Federation Director of Congressional Relations Scott Bennett: “Farmers and ranchers work hard to grow food for America’s families, and they deserve to be compensated fairly for their efforts. The Undue and Unreasonable Preferences and Advantages (rule) under the Packers and Stockyards Act provides much needed clarity and goes a long way to ensuring all farmers and ranchers can compete in the marketplace.”

National Pork Producers Council Assistant Vice President and General Counsel Michael Formica: “We are happy that this 12-year saga has come to a conclusion and ends this cycle of regulatory uncertainty. We are supportive of any rules that recognize the right of farmers to freely enter into contracts of their choosing.”

National Chicken Council President Mike Brown: “This rule serves both farmers and chicken companies by establishing uniform standards USDA will consider when evaluating conduct under the Packers & Stockyards Act. It will help bring greater certainty for all by clearly laying out defined standards, respecting well established federal circuit court precedent, and at long last bring to completion the process initiated by the Farm Bill more than 12 years ago.”

U.S. Cattlemen’s Association Senior Policy Adviser Jess Peterson: “USCA believes there is a need to properly define anti-competitive buying practices, and this final rule falls short. However, it does leave the door open for future rulemaking in this area. Progress needs to be made in addressing anti-competitive practices both within corporate feedyards and the meatpacking sector.”

R-CALF USA CEO Bill Bullard: “The USDA’s final rule undermines the purpose of the Packers and Stockyards Act by providing packers with a list of ‘safe harbors’ to employ anytime they face a producer’s allegation that they have violated the undue and unreasonable preference section of the Act.”

R-CALF is asking the administration to rescind the rule and is asking Congress to intervene.

North American Meat Institute President and CEO Julie Anna Potts: “The rule recognizes the importance of marketing agreements and other similar tools used by producers and packers and provides some guidance and clarity. … This rule also, however, introduces some uncertainty into the use of those tools by allowing consideration of other, undefined, factors.”

The Meat Institute will continue to work to ensure livestock producers have a variety of marketing tools available and to ensure meat and poultry markets remain competitive.

National Farmers Union President Rob Larew: “Rather than offer farmers the very basic safeguards they’ve been asking for, USDA’s rule will inexplicably offer even more power to meatpackers, further tipping the scales in their favor.”

NFU is calling on the administration to reverse the rule and replace it with one that protects farmers from unfair, deceptive and discriminatory practices.

National Sustainability Coalition Policy Director Eric Deeble: “Unfortunately, the final rule issued today does not do enough to prevent integrators from circumventing the purpose of the Packers and Stockyards Act and it fails to restore competition to the market to put our farmers and ranchers on a fair footing.”

The coalition is counting on the incoming Biden administration to rescind the rule and bring back the Farmer Fair Practices rules.

The final rule is effective Jan. 11, 2021.

The rule does not address the long-settled issue of defining “competitive harm.” Eight circuit courts of appeal have ruled that demonstration of harm to competition is a necessary condition for finding a violation. USDA will continue to evaluate harm to competition on a case-by-case basis.