USDA Issues New Regulations
PRESS RELEASE CONTACT: Becky Ceartas, becky@rafiusa.org, (919) 621-8453
Dec. 2, 2009
USDA ISSUES NEW REGULATIONS PROTECTING CONTRACT FARMERS
The USDA Grain Inspection, Packers and Stockyards Administration released regulations today that will provide new protections for contract poultry farmers:
- Companies must provide farmers with a written copy of the contract before that farmer makes an initial investment in his or her poultry houses.
- Contracts with confidentiality clauses must allow farmers to discuss contract offers with federal or state agencies, immediate family members, business associates, farmers that contract with the same company, accounting services representative hired by the farmer, a lawyer or a financial advisor before signing.
- Contracts must state that if a farmer is put on a performance improvement plan, they must be told why, what steps will be taken to help them improve, how they can regain good standing, and the factors that will used to determine when or if the contract will be terminated.
- Farmers must be notified in writing 90 days before a contract is terminated, expired, not renewed or not replaced.
Contract poultry farmers invest their own money to build and update poultry barns to company specifications. A typical chicken house costs about $300,000 to build, and most companies encourage growers to build at least 4 houses, for an investment in excess of $1 million.
“I’m glad that USDA is taking action to protect growers,” said Kevin Hux, a farmer in El Dorado, Ark., who raised chickens for Pilgrim’s Pride until April, when the company closed its El Dorado processing plant and terminated 170 growers.
“When the company terminated my contract, the company representative left a message on my answering machine saying that the flock of chickens that we had would be our last,” Kevin said. “We had no warning. No one should be in that situation.”
Mickey Box, a farmer from Berryville, Ark., agreed. “Growers have been left in the dark,” Mickey said. “When I was put on a performance improvement plan, I knew I could lose my contract. It would have helped to know how I could get back in good standing.”
Becky Ceartas, director of the contract agriculture reform program at the Rural Advancement Foundation International – USA, said these rules increase fairness, transparency and good business practices.
“Before farmers make the financial commitment to build poultry facilities on their farms, they need to know exactly what’s expected and what the terms of that arrangement will be,” said Ceartas. “An informed farmer can make better decisions, and that benefits everyone.”
Farmers and concerned consumers can get more information about these rules by calling Ceartas at (919) 542-1396 x209 or visiting www.rafiusa.org. The Administration will release a new round of proposed regulations in early 2010.
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The Rural Advancement Foundation International – USA cultivates markets, policies and communities that support thriving, socially just and environmentally sound family farms. RAFI is a nonprofit based in Pittsboro, NC. For more information, call (919) 542-1396 or visit www.rafiusa.org.
Page Updated 12.3.09