WASHINGTON, D.C. — This week, USDA’s Agricultural Marketing Service (AMS) published in the Federal Register a proposal to delay the effective date of the Poultry Grower Payment Systems and Capital Improvement Systems Rule, which was finalized on January 16, 2025, and is currently scheduled to become effective on July 1, 2026. The rule was promulgated under the authority of the Packers and Stockyards Act. The AMS proposed rule would delay implementation of the rule for 18 months, until December 31, 2027, “to allow time for further consideration of possible actions that may be taken regarding the disposition of the rule.”
“For years, our nation’s poultry growers asked USDA to provide basic fair business guardrails around the deceptive payment system used by large poultry companies to compensate contract growers for growing chickens on their own farms for those companies,” said Steve Etka, Policy Director of the Campaign for Contract Agriculture Reform (CCAR). “The Poultry Grower Payment Systems and Capital Improvements Systems rule finally took meaningful steps to right the wrongs of the payment system. Just when it was scheduled to provide some relief and income predictability for U.S. poultry farmers, USDA has proposed to pull the rug out from under them to feather the beds of multi-billion-dollar meat conglomerates.”
The existing Poultry Grower Payment Systems and Capital Improvement Systems Rule is critical to our nation’s poultry growers, because it requires the following standards be used by poultry companies in their financial dealings with contract poultry growers:
(1) Poultry companies are prohibited from reducing a poultry grower’s compensation based on the grower’s ranking under a poultry grower ranking system, which is important because the performance measures used in the ranking system are almost entirely based on the variable quality of inputs provided by the company to growers, as well as company decisions, not grower decisions.
(2) Allows poultry companies to provide bonuses to growers but places a limit on how big those bonuses can be relative to total annual grower compensation. This is important because it underscores the importance of having the base compensation to growers be meaningful and predictable, without huge and unpredictable swings in the compensation based on factors outside of the growers’ control.
(3) Requires poultry companies to establish their own system to document that the variability of inputs provided by the company, and the differential treatment of growers by the company, are not resulting in differential payments to growers based on factors outside the growers’ control and within the poultry company’s control (called the “duty of fair comparison.”)
(4) Requires poultry to provide certain disclosures when requesting or requiring that broiler growers make additional capital investments, which is important because often poultry companies will pressure poultry growers to make very expensive upgrades to their poultry houses at the growers’ own expense, without any clear financial benefit to the grower.
USDA’s proposal states that the agency needs to better understand the costs and benefits of requiring companies to comply with the fair payment standards of the existing rule. However, the agency should note the success of Wayne-Sanderson, the nation’s third largest poultry company, which agreed to most of these same grower payment system standards as part of a larger merger consent decree with the U.S. Department of Justice in 2022. Not only has the company marketed itself as a grower-friendly poultry company because of their adoption of these basic fairness standards, but they have racked up billions in profits since adoption of the new grower payment standards.
“If USDA is concerned about the costs of providing fair payment protections to U.S. farmers in their dealings with multi-national poultry companies,” said Etka, “they should look closely at the real-world data from a company that already adheres to those standards, with great success. These standards are about good business.”
CCAR will submit more detailed comments on the proposed rule and will be urging USDA to stay the course and allow the Poultry Growers Payment Systems and Capital Improvement Systems Rule to become effective on July 1, 2026, as U.S. poultry farmers have long anticipated.
