Taking care of “cluck cluck” costs a lot of “cha-ching.”
But, new rules are in the works to improve fairness in the marketplace for America’s poultry producers.
Agriculture businesses are expensive to launch; extensive equipment, buildings, machinery, labor and animal costs add up.
Now, financial risks could be far less for one of agriculture’s most important sectors.
Most producers take out loans to build and maintain their farms, then sign contracts with poultry processors (Tyson Foods, Perdue and others) to produce specified amounts of chicken.
Poultry processors are at liberty to terminate contracts if they deem a producer is not abiding by required equipment/building upgrades.
As the cost of animal-production increases, stemming from increased energy and alleged animal-feed costs, coupled with a declining demand, poultry producers’ pocketbooks are taking the hit. The downturn has lead to reduced poultry orders, a decline in renewed poultry contracts and the termination of poultry-processing plants.
According to the USDA, Americans who participated in the Obama Administration’s Rural Tour stops throughout the country expressed concern about the financial implications of poultry farmers and the lack of oversight of the nation’s poultry processors.
Since then, the USDA's Grain Inspection, Packers and Stockyards Administration (GIPSA) released new antitrust provisions to the 2008 Farm Bill to address the feedback.
"Concerns about a lack of fairness and commonsense treatment for poultry producers have gone unaddressed far too long," Agriculture Secretary Tom Vilsack said in a written statement. "This proposed rules will help ensure a level playing field for producers by providing additional protections against unfair practices and addressing new market conditions not covered by existing rules."
Some of the proposed rules as published include:
- Establish new protections for producers required to provide expensive capital upgrades to their growing facilities, including protections to ensure producers have the opportunity to recoup 80 percent of the cost of a required capital investment.
- Provide poultry growers with a written notice of a company’s intent to suspend the delivery of birds as confirmed in a poultry-growing arrangement at least 90 days prior to the date it intends to suspend the delivery.
- Improve market transparency by making sample contracts (except for trade secrets or other confidential information) be made available at GIPSA’s website for producers.
- Improve competition in markets by limiting exclusive arrangements between packers and dealers.
However, some believe the proposals are not justified.
“The regulation was clearly drafted to satisfy a small number of activist growers and will do nothing to enhance the business of the great majority of broiler producers who are satisfied with the current system," stated The National Chicken Council in a news release.
GIPSA will consider public comments via e-mail (firstname.lastname@example.org) received by August 23, 2010.
Do you feel that this industry is deserving of the new regulations? Are there other methods that can be used to financially safeguard chicken producers?
*Photo obtained from: www.britannica.com