The Campaign for Contract Agriculture Reform is a national alliance of organizations working to provide a voice for farmers and ranchers involved in contract agriculture, as well as the communities in which they live. The goal of the campaign is to assure that the processor-producer relationship serves as a fair partnership, rather than a dictatorship.
According to the 2012 USDA Census of Agriculture, 43% of hogs and 96% of chickens in the US were grown under production contracts where the farmer never owns the animal. The Census data also shows that over $56.7 billion of products are produced under production contracts. While contract agriculture reform has been heavily focused on the poultry industry, the model that was pioneered in poultry is being exported to many other areas of agricultural production.
Unfortunately, these agricultural production contracts are developed in an environment in which the corporate processors, handlers, packers or buyers have monopoly-like market power and farmers have almost no legal protection. According to a 2014 USDA report, the top four poultry companies control 56 percent of all chickens raised, and a producer who is located in an area where there is only one company receives 8% less income than a producer in an area where there are four companies.
The result is a growing imbalance in market power between the family farmer and agribusiness corporations, which is depressing farm income and threatening the economic viability and environmental health of our rural communities. Fairness in contracts is impossible when individual producers have no power to negotiate terms or to protect themselves against fraud, retaliation or discrimination.
2014 Farm Bill
On January 30, 2014, President Obama signed the Agricultural Act of 2014, or the Farm Bill.
What does this mean for the contract agriculture reform and fairness standards?
Despite efforts by the House to roll back important USDA protections for farmers, CCAR and our partner organizations prevailed by convincing the Farm Bill negotiators to remove the bad House language from the final version of Farm Bill.
But the battle is far from over, because lobbyists for the poultry companies and meat-packers are trying to use the annual appropriations process to block USDA’s contract farmer protection regulations. (Click here for our full analysis on the 2014 Farm Bill.)
2014 Farm Bill Analysis: GIPSA
By Steve Etka, CCAR Policy Director
Feb. 14, 2014
Recommended Policy Changes
In addition to defending contract farmer protections proposed and finalized by USDA, CCAR also believes the following amendments could help balance the contract relationship:
- Amend the Agricultural Fair Practices Act to protect the ability of farmers to negotiate fair contracts with processors.
Such an amendment enhances the power of producers and their cooperatives to stabilize farm income by providing mutual obligations for good faith bargaining. This amendment gives marketing cooperatives the leverage to compel negotiations, providing participation in contract development reflective of the farmers’ economic investments. Any such amendment must also include strengthen the enforcement ability of the Secretary of Agriculture.
- Amend to the Packers and Stockyards Act to provide enforcement authority for GIPSA over all live poultry operations.
Poultry production is almost totally contract based. Despite evidence of the contract being used as a tool to intimidate, retaliate and reduce growers profits to poverty levels, the Grain, Inspection, Packers and Stockyards Administration (GIPSA) does not have the authority to take administrative action and protect growers by halting unfair practices or penalizing poultry companies that violate the law. An amendment to provide GIPSA with the necessary enforcement authority over poultry cases would simply bring poultry in line with other livestock within the Packers and Stockyards Act.
2014 Farm Bill Analysis: GIPSA