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Is the third time the charm for farmer fair practice rules?

By Ellen Essman, Ohio Law Blog, Agricultural & Resource Law Program at The Ohio State University

A new rule proposed by the USDA Agricultural Marketing Service (AMS) covers a topic that has been up in the air for more than a decade. The 2008 Farm Bill called on the Secretary of Agriculture to create regulations meant to guide the USDA in determining whether or not a packer, swine contractor, or live poultry dealer gave a person or locality “any undue or unreasonable preference or advantage” when purchasing livestock and meat products. The Secretary of Agriculture entrusted the rulemaking to USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA). GIPSA did propose versions of the rule in 2010 and 2016, but neither ever went into effect due to congressional prohibitions on such rulemaking and a presidential transition, respectively. (The anticipated regulations have long been referred to as the “Farmer Fair Practice Rules.”) Once Trump came into office, his administration did away with GIPSA and gave its responsibilities to AMS, further delaying the rulemaking.

After all this time, what does AMS propose for the Farmer Fair Practice Rules? On Jan. 13, AMS published its proposed rule in the Federal Register. AMS would add a section to the Packers & Stockyards regulations, which would allow the Secretary of Agriculture to “consider one or more criteria” when deciding whether a packer, swine contractor, or live poultry dealer unfairly favored any person or locality over another in their dealings. AMS developed four criteria to be considered when determining whether a packer, contractor, or dealer’s actions were unfair. Actions would be deemed unfair when they:

  • Cannot be justified on the basis of 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; and
  • Cannot be justified as a reasonable business decision that would be customary in the industry.

In the rulemaking, AMS provides several examples of fair and unfair practices. AMS also emphasizes several times that the Secretary of Agricultural would not be limited to considering just those four criteria when making a decision, as each situation is unique. In essence, the proposed language is meant to guide the Secretary’s thinking when making a determination about whether or not an action is unfair.

If you would like to read more about this proposed rule it is available in its entirety here. Information about submitting comments on the rule is available at the same link. Comments on the rule may be submitted up until March, 13, 2020. Will this version of the elusive Farmer Fair Practice Rules finally stick? We will have to wait and see.

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