US pork council comments on proposed USDA ‘Poultry Rule’

The rule heightens disclosure requirements between dealers and growers
calendar icon 1 September 2022
clock icon 2 minute read

Although it is taking no position on the new regulation, the US National Pork Producers' Council recently submitted comments on USDA’s proposed “Transparency in Poultry Grower Contracting and Tournaments” rule, which is related to enforcement and interpretation of the Packers and Stockyards Act (PSA). The PSA also deals with livestock transactions.

The so-called “poultry rule” includes heightened disclosure requirements between poultry dealers and growers, allowing growers to exchange specific contractual information with competing growers and other industry participants.

The move could lead to exchanges of “specific and competitively sensitive information between a wide range of actual and potential competitors," said NPPC in its comments. Such exchanges without adequate safeguards could result in anticompetitive effects, the organisation said.

NPPC pointed out that courts have recognised carve-outs for information exchanges that contain safeguards such as aggregated data or information exchanged anonymously. It cited the Livestock Mandatory Reporting (LMR) system, which requires meatpackers to report to USDA the prices they pay for cattle, hogs, and lambs and other information, as “the best framework … for information sharing that balances the need for information symmetry with confidentiality-driven protections from price signaling.” Pork producers rely on LMR for timely and accurate information to sell their hogs.

NPPC also warned that too much transparency — i.e., mandated information exchanges — could have a chilling effect on current livestock marketing schemes. It noted: “If dealers are required to disclose certain performance metrics, inputs, and terms across all growers and then face increased legal liability — [from, for example, offering some growers premiums] — this may lead to uniform terms.”

USDA is expected to issue two additional PSA regulations related to livestock transactions by the end of the year. One of the proposed rules was submitted on Aug. 16 to the White House Office of Management and Budget for review, but the text of it is not yet available.

NPPC supports rules that recognize the right of producers to freely enter into contracts to sell and buy livestock and poultry.

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