Contract Poultry: Comments Still Open on Proposed Integrator Disclosure Rules
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There is still time to comment on the regulations proposed by the USDA Agricultural Marketing Service (AMS) concerning the level of disclosure required between poultry integrators and their contract growers. The comment period closes on August 8, 2022. The proposed rule – promulgated under authority of the Packers and Stockyards Act of 1921 – expands existing disclosure concepts under the Packers and Stockyards Act in 7 U.S.C 197(a) through (c) and 9 CFR 201.100. The comment period on the proposed rule closes August 8.
The proposed regulation targets what AMS describes as a need for greater transparency regarding factors that may impact grower compensation under the so-called “tournament system.” (The tournament system is a term used to describe an incentive mechanism that ranks of growers in a cohort, whereby additional compensation is tied to performance [in matters of weight, mortality, etc] relative to the average performance of that cohort, rewarding growers demonstrating superior flock management skills.) AMS contends that grower rankings in the system fluctuate due to uneven input distribution by the integrator, and that inadequate disclosure of such negatively impacts growers. (Input factors include feed disruptions, variations in stocking density and gender/age/breed of supplied poults, as well as health of breeder flocks and medical interventions to certain flocks.
The proposed rule requires greater disclosure from the integrator regarding input distribution – a matter outside of the growers’ control – to help growers “avoid, mitigate, or manage the risks arising from the integrator’s decisions.” (87 FR 34990). AMS likewise contends that greater transparency will allow growers to “individually assess the relationships between input variability, grower management and skills, and tournament payments.” (87 FR 34991).
The proposed rule thus amends § 201.100 (Records to be furnished poultry growers and sellers) to require a “Live Poultry Dealer Disclosure” statement to current and prospective growers that includes information on bird placements, stocking density, prior litigation with poultry growers, and prior bankruptcy filings. Also, information on payments to poultry growers in prior years (in five ranges) to demonstrate potential outcomes for growers.
The proposed rule also requires enhanced disclosure on flock settlement statements to show input distribution among growers, their housing specifications, and any feed disruptions.
Poultry integrators harvesting less than 2 million pounds weekly are exempt from the proposed rule disclosure requirements.