Yesterday, the U.S. Department of Agriculture Grain Inspection and Packers and Stockyards Administration (USDA GIPSA) released its final rule regarding contracts between poultry integrators and growers. OCM sees this rule as a significant and badly needed step forward in reforming an industry that has a history of subjugating and otherwise dealing unjustly with contract poultry growers.
The rule contains four important provisions:
1. The integrator must provide the grower a written contract prior to his commitment for facilities construction.
2. The former “confidentiality” restrictions can no longer be imposed on the grower; who can now consult with others prior to signing the contract.
3. Grower performance standards and remedy for substandard performance must be included in writing.
4. The integrator must give 90-days written notice prior to contract termination, with the grower also having the right to terminate a contract with similar notice.
While poultry integrators still have considerable leverage over growers, this rule mitigates the power imbalance.
Randy Stevenson, OCM President stated; “This GIPSA rule is clear evidence that USDA and the other enforcement agencies are serious about market reform. We are very encouraged by this rule on poultry contracts and eagerly await the final rule on the Packers and Stockyards Act. We are hopeful that the rule will hold that Packers owning livestock and having captive supplies is inherently discriminatory and constitutes undue and unreasonable preference.”
12/2016 update: See our updated GIPSA webpage here: https://competitivemarkets.com/gipsa/