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Livestock Production & Marketing

 

 

Resources and Updates

 

Please note that there is a typographical error on page 479 of the printed book. The case of Been v. OK Industries, Inc. was decided by the 10th Circuit Court of Appeals in 2007. The correct citation is 495 F.3d 1217 (10th Cir. 2007).

 

Documents & Links

Updated October 23, 2018
 

This web resource was reorganized to reflect significant developments since Food, Farming & Sustainability was published in 2016. Information is now grouped into categories that represent recent legal issues. Appreciation is extended to LL.M. Candidate and Graduate Assistant, Justin Schwegel for his assistance. 

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Overview & Trends
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Johnny Carrol Sain, This Little Piggy Went to Market, Arkansas Life (Aug. 2018) ("A view of hog farming's changing landscape—from someone who's stood on both sides of the fence").

 

Interagency Agricultural Projections Committee, USDA Agricultural Projections to 2026, Office of the Chief Economist, World Agricultural Outlook Board, USDA, Long-term Projections Rep. OCE-2017-1 (Feb. 2017).

 

James M. MacDonald, Technology, Organization, and Financial Performance in U.S. Broiler Production, USDA, Econ. Res. Serv. EIN Bull. No. 126 (June 2014).

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Organization for Competitive Markets - Policy and Research Reports 

 

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Contract Farming
 

Consolidation and Vertical Integration

 

Consolidation and vertical integration now define the poultry and pork sectors. The top five poultry companies now control more than 60% of U.S. production. The same is true for the top four pork companies. Vertical integration has largely been accomplished through production contracts, with ownership and/or extensive control maintained by the processor. Under these contracts, the majority of people who grow hogs and chickens (commonly referred to as "growers") no longer own the animals they raise. Rather, they contract with the corporations that own slaughter and processing facilities and market poultry and/or pork in wholesale and retail markets. In many regions there may be only one or two integrators, which can create market conditions that resemble a monopsony, i.e., a market condition in which there is only one purchaser for a good or service, weakening the negotiating positions for sellers.

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James M. MacDonald et. al, Three Decades of Consolidation in U.S. Agriculture, USDA, Econ. Res. Serv. EIN Bull. No. 189 (March 2018).

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Monopsony Issues in Agriculture: Buying Power of Processors in our Nations Agricultural Markets, Hearing Before the Committee on the Judiciary of the United States Senate (2003).

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Production Contracts
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Integrated poultry and hog corporations are known to closely guard access to the production contracts that they use. Growers may be precluded from sharing the contracts with others or even discussing contract terms. Contracts sometimes become available as a result of litigation or through the sharing of redacted information by advocacy groups. Three sample poultry contracts and one hog contract are provided below. 

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Examples of thought to be in current use contracts:  

Broiler Contract 1 

Broiler Contract 2

Broiler Contract 3

Hog Contract

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For additional information about production contracting see: 

Assessing the Impact of Integrator Practices on Contract Poultry Growers, Farmers Legal Action Group ("FLAG") (2001), in particular,  Neil H. Hamilton, A Current Contract Analysis Addressing Legal Issues and Grower Concerns, reprinted at 7 DRAKE J. AGRIC. L. 43 (2002).

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The book The Meat Racket by investigative journalist Christopher Leonard presents a bleak assessment of the production contracting system in the poultry industry.  

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RAFI-USA is a farm advocacy group that assists growers with respect to production contracting, particularly in the poultry industry. Their website contains a lot of relevant information.

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Numerous media reports and documentaries have highlighted grower concerns, some of which are linked below:

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Under Contract: Farmers and the Fine Print, (Feb. 2017)

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Cock Fight: Meet The Farmer Blowing The Whistle On Big Chicken

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PBS Original Fare, Dirty Birds: A Story of Chickens in America (2015)

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John Oliver, Chickens, Last Week Today, HBO (May 17, 2015)

 

 

  

Packers and Stockyards Act & the "GIPSA Rules"
 

Packers and Stockyards Act (Statute)

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Chronology and Update on the GIPSA Rules: 

 

The 2008 Farm Bill included amendments to the Packers & Stockyards Act that called for additional protections for growers and directed the USDA to promulgate regulations implementing these protections. Of particular concern were the judicial rulings that limited the interpretation of "unfair practice" under the Packers and Stockyards Act to situations where overall competition was harmed. See, e.g., Picket v. Tyson, 420 F.3d 1272 (11th Cir. 2005) (excerpted in the text) and Terry v. Tyson Foods, 604 F.3d 272 (6th Cir. 2011).  A note reference in the Farm Bill stated that these regulations should be promulgated "[a]s soon as practicable but not later than 2 years after the date of enactment" and listed the criteria that should be addressed. See, Food, Farming & Sustainability pp. 487-490.

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The USDA and DOJ held a series of workshops around the country to assess antitrust issues and enforcement of the Packers & Stockyards Act.  See Competition And Agriculture: Voices from the Workshops on Agriculture and Antitrust Enforcement in our 21st Century Economy and Thoughts on the Way Forward, Dept of Justice, Antitrust Division (Final report from 2010 sessions published in May 2012).​

As the USDA sought to draft new regulations, a subsequent Congress imposed restrictions.

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On November 3, 2011, the USDA submitted its final rule to OMB for review. However, on November 18, 2011, Congress passed an appropriations bill that that limited the USDA's ability to finalize the rule. The USDA was forced to promulgate a different final rule with far less in the way of grower protections. 

 

In December 2011, the USDA published it's final rule, within the confines of the strict Congressional restrictions:

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Implementation of Regulations Required Under Title XI of the Food, Conservation and Energy Act of 2008; Suspension of Delivery of Birds, Additional Capital Investment Criteria, Breach of Contract, and Arbitration, 76 Fed. Reg. 76,874 (Dec. 9, 2011) (codified at 9 C.F.R. pt. 201). The rule went into effect on February 7, 2012. 

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For the next four years, each appropriations bill would restrict further USDA action, prohibiting the USDA from implementing any additional protections. For citations and a summary of each restriction, see Joel L. Greene, USDA’s “GIPSA Rule” on Livestock and Poultry Marketing Practices, Cong. Res. Serv., CRS Report No. R41673 (Jan. 12, 2015). These Congressional restrictions were the focus of the John Oliver segment, Chickens, Last Week Today, HBO (May 17, 2015).

 

The Congressional restriction was lifted with the 2016 appropriations bill, passed in July 2015. See, Statement by Cong. Pingree on 2016 Appropriations Bill, Agriculture Bill Contains Priorities Pushed by Congresswoman Chellie Pingree Passes House Committee, (July 8, 2015).

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Thereafter, USDA renewed its efforts to provide greater protections for growers, publishing three new rules: a new interim final regulation and two proposed rules on December 20, 2016.  They were called "The Farmer Fair Practices Rules."  However, these rules were published in the last days of the Obama administration, after President Trump had been elected but before his term of office began.

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The USDA stated at the time that this “scope” rule – meant that "poultry growers will no longer have to meet an impossibly high standard to get compensated when they are treated unfairly. The interim final “scope” rule makes clear to the courts – as has long been USDA’s interpretation – that farmers don’t have to demonstrate that an unfair practice by processors harms the entire industry in order to prove a violation of the Packers and Stockyards Act. This impossibly high standard had previously put small farmers at a disadvantage for decades when pursuing their rights under the law. With this new rule in place, if a farmer is being treated unfairly, they’ll now have their day in court and be able to win."

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The USDA stated at the time that this proposed rule "enumerates some of the specific unfair practices that violate the law. To make the rules more clear for processors and growers alike – and to help courts understand where to draw the line – the second rule being proposed today clearly outlines unfair practices for which growers can receive compensation. These practices include inaccurate or false weighing of birds, the abuse of arbitration procedures, the abrupt suspension of delivery of birds to a grower or termination of a contract without an opportunity for the farmer to get back into compliance. All of these types of activities would qualify as an unfair practice that would be compensated through a court proceeding. Processors can only treat growers differently if they have a legitimate business justification, not for arbitrary reasons. This protection is especially important to poultry growers who today often find it difficult to win in court even when they are treated unfairly."

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The USDA stated at the time that this proposed rule "reforms the poultry growing tournament system to make it more of a level playing field and avoid processors aiding and disadvantaging certain growers relative to others. Many poultry growers through the contract system are paid out based on a tournament how they perform against their peers; the bigger and better their birds turn out relative to other growers, the more money they make. However, because the processors own the birds, the feed, and other inputs, they can unfairly disadvantage or preference one grower over another as a way of forcing the growers to do things against their will or shut down dissent. The third rule, also proposed, will establish criteria to judge whether the processor is operating the ranking system in a manner that is fair to all growers. It will push back against the unequal bargaining power between poultry purchasers and poultry growers.

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​President Trump took office in January 2017. In reliance on the Whitehouse "Regulatory Freeze Pending Review" memorandum, the USDA GIPSA extended the comment period on the interim final rule (Scope of Sections 202 (a) and (b)) to March 24, 2017 and delayed the effective date to April 22, 2017.  82 Fed. Reg. 9489 (Feb. 7, 2017).

 

On April 12, 2017, the USDA further delayed the effective date of the imterim final rule to October 19, 2017. 82 Fed. Reg. 17,531 (Apr. 12, 2017). In addition, a new proposed rule was published that provided a 60-day comment period to specify whether USDA should (1) let the rule become effective, (2) suspend the rule indefinitely, (3) delay the effective date of the rule further, or (4) withdraw the rule. 82 Fed. Reg. 17,594 (Apr. 12, 2017). 

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​Related:  Maeve P. Carey, Can a New Administration Undo a Previous Administration's Regulations? Cong. Res. Serv. Insight Rep. R44093 (Nov. 21, 2016); see also, Maeve P. Carey, Midnight Rulemaking: Background and Options for Congress, Cong. Res. Serv. Rep. No. R42612 (July 18, 2012).

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In October 2017, the USDA announced that it was withdrawing the rule. 82 Fed. Reg. 48,594 (Oct. 18, 2017). In discussing the comments received, the USDA relied upon industry concerns about the costs of increased litigation. See also, USDA Withdraws GIPSA Rule, Agweb (Oct. 18, 2017). 

 

With regard to the proposed rules, the comment periods for these rules were also extended. The Poultry Grower Ranking Systems, 82 Fed. Reg. 9533 (Feb. 7, 2017); Unfair Practices, 82 Fed. Reg. 9533 (Feb. 7, 2017). In October, 2017, the USDA published a notice announcing that it intended to take no further action on the proposed rule, Unfair Practices and Undue Preferences in Violation of the Packers and Stockyards Act, 81 Fed. Reg. 92,703 (proposed Dec. 20, 2016). 82 Fed. Reg. 48,603 (Oct. 18, 2017).

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The Organization for Competitive Markets (OCM) sued the USDA for the withdrawal of the interim final rule and not complying with the statutory directive provided in the 2008 Farm Bill. The Eighth Circuit rejected the OCM appeal. OCM v. USDA, No. 17-3723  (8th Cir. Dec. 21, 2018). 

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In November 2020, President Biden was elected. Before he took office, in December 2020, the Trump administration published a single final rule, Undue and Unreasonable Preferences and Advantages Under the Packers and Stockyards Act, 85 Fed. Reg. 79,779 (Dec. 11, 2020). This rule set forth the criteria that the USDA will consider when determining whether an undue or unreasonable preference has occurred in violation of the Packers and Stockyards Act. It notes that the 2008 Farm Bill required the Secretary to establish the criteria.

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In July 2021, President Biden signed an Executive Order directing several federal agencies including the USDA to take action on a variet of policy initiatives designed to promote fair and competitive markets. The Order directed the USDA to publish a package of three rules to update and complete the work on the Farmer Fair Practices rules under the Obama administration.

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In January 2022, the USDA released its Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain. Included in the plan was the development of three proposed rules to clarfy and to strengthen enforcement of the Packers and Stockyards Act.

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In June, 2022, the USDA issued an Advanced Notice of Proposed Rulemaking, Poultry Growing Tournament Systems: Fairness and Related Issues, 87 Fed. Reg. 34,814 (adv. notice of proposed rulemaking) (June 8, 2022) seeking comments on the tournament system in poultry contracting. 

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At that time the USDA also issued a proposed rule to revise the disclosures that poultry growers should receive. Transparency in Poultry Grower Contracting and Tournaments, 87 Fed. Reg. 34,980  (proposed rule) (June 8, 2022). This was finalized in Nov. 2023 (see below).

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In October 2022, the USDA published another proposed rule, Inclusive Competition and Market Integrity Under the Packers and Stockyards Act, 87 Fed. Reg. 60,010 (Oct. 3, 2022) to "prohibit certain prejudices against market-vulnerable individuals," to identify certain retaliatory practices as unjust discrimination, and to identify unlawfully deceptive practices in contracting.

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Related, in July 2023, the USDA issued a final rule implementing a statutory change that created a livestock dealer trust under the Packers and Stockyards Act. Preserving Trust Benefits under the Packers and Stockyards Act.

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The USDA finalized the transparency rule in November 2023, Transparency in Poultry Grower Contracting and Tournaments, 88 Fed. Reg. 83,210 (Nov. 28, 2023) (effective date Feb. 12, 2024). The rule adds disclosures and required information that must be provided to live poultry growers. In its prefatory comments, the final rule provides an explanation of the structure of the poultry industry, the risks assumed by growers and the complaints of growers. It does not prohibit the tournament system but requires certain disclosures to growers. The USDA maintais a webpage with links to supporting documents, fact sheets, and FAQs. 

 

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Pending Antitrust Litigation:  Price Fixing and Anticompetitive Practices
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Price-fixing litigation brought against major poultry corporations by purchasers: 

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Anticompetitive practices litigation brought against major poultry corporations by growers, alleging collusion in grower contracting

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Livestock Production, Marketing & Pharmaceuticals 
 

A variety of pharmaceuticals are used in livestock production to speed growth, maintain health, increase feed to weight gain ratios, and affect the quality of the meat. Antimicrobial treatments are also used to reduce pathogens in processing. The use of hormones, beta-agonists and antimicrobial treatments often present export concerns as other countries question the safety of these practices. The following resources, while incomplete, will provide a foundation for further study of this area. 

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The U.S.-EU Beef Hormone Dispute, Cong. Res. Serv. Rep. No. R40449 (Jan. 9, 2017).  

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US - EU Poultry Dispute on the Use of Pathogen Reduction Treatments (PRTs), Cong. Res. Serv. Rep. No. R40199 (Jan. 5, 2017).

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Beyond the Food We Eat: Animal Drugs in Livestock Production, 25 Duke Envtl L. Forum 227 (2015).

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Beta Agonists in Livestock Feed: Status, Health Concerns, and International Trade, 92 J. Anim. Sci. 4234 (2014).   

 

Agricultural Marketing Service’s Never Fed Beta Agonists Program   (as an example of the various voluntary certification programs). 

 

Special Note: The FSIS Export Library details the export requirements and obligatory attestations necessary to ship to foreign markets. Russia and China specifically require U.S. producers to comply with the AMS never fed beta agonist program, while exports to the European Union must meet even more stringent EU-specific export requirements. While the Russian market remains closed for political reasons, these requirements will be necessary when the market reopens. Various U.S. producers, most notably Smithfield Foods, maintain segregated supply chains to ensure they can meet the requirements of U.S. trading partners.  This shows the interplay between the AMS voluntary program and the import requirements of trading partners, an incredibly important consideration for U.S. producers/exporters. 

 

The extensive use of antibiotics in production is addressed as a food safety issue due to its link to the development of antibiotic resistant bacteria. It is discussed in Chapter X, Food Safety, and the following resources are also referenced here as they related to livestock production and marketing.

 

GAO, Antibiotic Resistance: More Information Needed to Oversee Use of Medically Important Drugs in Food Animals, GAO-17-192 (Published Mar. 2, 2017; Released Mar. 16, 2017).

 

Science and Technology Issues in the 115th Congress, Cong. Res. Serv. Rep. R44786 (Mar. 14, 2017).

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Beyond the Food We Eat: Animal Drugs in Livestock Production, 25 Duke Envtl L. Forum 227 (2015).


FDA, Judicious Use of Antimicrobials (portal providing direct links to all FDA directives, reports, and announcements).

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The Trouble with Antibiotics, PBS Frontline Investigative Report (Oct. 14, 2014) (video and background materials).

 

Antimicrobial Resistance: Tackling a Crisis for the Health and Wealth of Nations, Review on Antimicrobial Resistance (2014). 

 

International response to AMR at the Codex Alimentarius.  

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Livestock Production, Marketing & Animal Disease

 

​​Animal disease has the potential of threatening the health and safety of our food system as well as the economic stability of the livestock sector. The problems associated with animal disease are two-fold.

 

First, infectious diseases can spread between livestock operations as a result of wild animals (such as migrating birds) and moving domestic livestock. The cost in terms of economic damage and unnecessary animal suffering can be enormous.

 

Second, the transmission of zoonotic diseases from animals to humans can create significant public health concerns. The World Organisation for Animal Health has indicated that more than 70% of emerging human diseases are zoonotic. Zoonotic diseases can spread to humans directly through food products of animal origin, indirectly through environmental exposure to animal excreta. While many of the human health risks associated with food products of animal origin are related to microbiological risks from bacteria such as E. coli addressed in the food safety chapter, the risk also includes other foodborne animal diseases. Recognizing the complicated interplay between human health, animal health, and the environment, the United States and the international community have begun to embrace a “one health” approach to addressing emerging pathogens. However, there is some concern that the current ad hoc interagency one health coordination is insufficient to manage emergencies.

 

This issue is not addressed in the text of Food, Farming & Sustainability but the following resources may be helpful to those interested in this important topic.

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General Resources

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Center for Disease Control and Prevention, One Health Homepage

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USDA Animal and Plant Health Inspection Service: Emerging Animal Disease Preparedness and Response Plan (July 2017) 

 

GAO Report: Emerging Animal Diseases: Actions Needed to Better Position USDA to Address Future Risks, GAO-16-132 (Published: Dec 15, 2015. Publicly Released: Jan 14, 2016).   

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Emerging zoonotic viral diseases, Rev. Sci. Tech. Off. int. Epiz., 2014, 33 (2), 569-581.
 

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Avian Influenza

 

Avian Influenza impacts both humans and poultry. The most recent significant outbreak of highly pathogenic avian influenza (HPAI) had an unprecedented impact on the U.S. poultry industry with millions of birds culled to stop the spread of further infection. U.S. production faced a sharp drop and exports shrunk significantly as importers imposed trade restrictions on U.S. poultry to protect their own flocks. Proper cooking of eggs and poultry can eliminate the risk of foodborne transmission. Wild migratory birds often play an important role in spreading the disease to domestic flocks.

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Posted below are some basic resources regarding the significant outbreak in 2014-15.

 

Impacts of the 2014-2015 Highly Pathogenic Avian Influenza Outbreak on the U.S. Poultry Sector, LDPM-282-02 USDA, ERS (Dec. 2017).

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Update on the Highly-Pathogenic Avian Influenza Outbreak of 2014-2015, Cong. Res. Serv. Rep. No. R44114 (July 20, 2015).

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Bird Flu Outbreak Raises Biosecurity Questions, USA Today (May 30, 2015). 

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Questions and Answers: Highly Pathogenic Avian Influenza, USDA APHIS (May 2015).

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Transmissible Spongiform Encephalopathies (BSE)

 

Transmissible spongiform encephalopathies (TSEs) (Bovine Spongiform Encephalopathy also known as BSE or Mad Cow, Scrapie, Chronic Wasting Disease) have received great attention because of the unique health risk they pose. They are also unique in that they are not spread by a virus or a bacterium, but by a misshapen protein called a “prion.”

 

The disease spread widely throughout the United Kingdom and was attributed to the widespread practice of feeding cows meat byproducts from sheep infected with scrapie. While there is still scientific uncertainty regarding the exact relationship between different spongiform encephalopathies, there is a scientific consensus that consuming bovine meat contaminated with brain and spinal tissue from cows infected with BSE causes variant Creutzfeldt-Jakob disease in humans. There are also indications that scrapie can be transmitted to humans causing sporadic Creutzfeldt-Jakob disease.

 

Proper cooking and irradiation are NOT effective at killing prions or rendering them inactive. Prions have also been shown to be environmentally persistent. Due to the seriousness of the threat posed by BSE, USDA and FDA adopted regulations designed to minimize the risk of human transmission of BSE, including the prohibition of ruminant tissues in ruminant feed, the prohibition of non ambulatory (“downer”) cattle from production lines, and the removal of specified risk material (including brain and spinal tissue and tonsils) from slaughtered animals. A proposed small ruminants rule was first published in 2015, but a final rule has not been adopted.

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Some good background resources are posted below:

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An Economic Chronology of Bovine Spongiform Encephalopathy in North America  USDA, ERS (2006).


CDC Homepage on prion diseases.

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FSIS Homepage on BSE and Specified Risk.

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FDA Regulation on ruminant feed, 21 C.F.R. § 589.2000

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APHIS, Proposed Rule on Scrapie in Sheep and Goats, 80 Fed. Reg. 54,660 (Sept. 10, 2015). 

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Food Safety News, ‘Surprising’ Discovery Made About Chronic Wasting Disease (June 1, 2015).

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Livestock and Environmentally Spread Pathogens

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While foodborne illness caused by pathogens directly on meat and poultry products is an issue addressed specifically in Food Safety, it is appropriate to note here that livestock production can sometimes contaminate other foods through the environmental transmission of harmful pathogens. Here are just a few intriguing references to this issue.

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Environmental Scientists Find Antibiotics, Bacteria, Resistance Genes in Feedlot Dust, Texas Tech Today(Jan. 22, 2015).

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High-density Livestock Operations, Crop Field Application of Manure, and Risk of Community-associated Methicillin-resistant Staphylococcus Aureus Infection, Penn., JAMA Intern Med. 173(21): 1980–1990 (Nov 25, 2013).


NPR, What Sparked An E. Coli Outbreak In Lettuce? Scientists Trace A Surprising Source, (Aug. 29, 2018). 

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Websites​
 
General Legal Resources
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Agricultural Law Resources

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Overview & Trends
Contract Farming
Packers & Stockyards Act
Animal Disease
Pharmaceuticals
Pending Antitrust Litigation

USDA Reorganization

 

On September 7, 2017, USDA Secretary Sonny Perdue announced the realignment of a number of offices within USDA. 

The Grain Inspection, Packers, and Stockyards Administration (GIPSA) and several program areas from the Farm Service Agency (FSA) were merged into the Agricultural Marketing Service (AMS), losing status as a separate agency with the department.  See USDA AMS Reform.

2010 - present

2010 - present

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