By Leah Douglas
(Reuters) – U.S. poultry companies could be required to adjust the way they pay their contract chicken farmers, under a rule proposed by the U.S. Department of Agriculture on Monday.
The rule is the third proposed by President Joe Biden’s administration to increase competition in the meatpacking sector, where four companies control between 55% and 85% of the cattle, pork and chicken markets.
Under this rule, chicken farmers would no longer be able to have their base compensation tied to how their flocks compare to their peers, and they would receive more information to assess the risks associated with capital improvements requested by poultry companies.
Poultry farmers often contract for companies, such as Tyson Food (NYSE:) and Pilgrim’s Pride (NASDAQ:) are paid in a “tournament system” that ties their pay to performance – such as how much their chickens weigh or the mortality rate – relative to other farmers. The farmers are also usually responsible for paying for updates to their chicken houses.
“Producers came to me and indicated that they were deeply concerned about the way they were being treated in this tournament system,” Agriculture Secretary Tom Vilsack said on a call with reporters.
The agency previously finalized a rule to increase transparency between chicken farmers and processors, and another to ban retaliation against chicken farmers for whistleblowing or association participation.
The USDA expects to release more regulations on competition in the livestock industry in the coming months, Vilsack said.
The proposed rule announced Monday will be open for public comment for 60 days.
