Chickens gather around a feeder on a farm on August 9, 2014 in Osage, Iowa. A new proposal from the U.S. Department of Agriculture would ban chicken companies from withholding farmers’ wages. (Scott Olson | Getty Images)
WASHINGTON – A proposed rule by the U.S. Department of Agriculture would eliminate payroll deductions for chicken producers, Secretary Tom Vilsack said Monday.
Under the current payment system for poultry, an incentive-based arrangement known in the industry as a tournament system, farmers who raise poultry earn a base payment from the companies that buy the product and market it to the retail market.
Companies contract with producers to supply broilers, feed and veterinary care, and then it’s up to farmers to raise healthy, substantial chickens at a mutually agreed upon price.
Farmers have options for bonuses based on the quality of their herd.
But companies can also deduct the wages from the producers’ basic wages based on that year’s market. If demand decreases or if a producer successfully raises more chickens than another producer, the chicken company can deduct wages from the smaller farmer’s contractual compensation.
The proposed rule would prohibit companies from deducting those wages.
“If you are going to set a base salary, it should not be lower,” Vilsack said at a press conference on Monday.
Industry groups say the tournament system makes economic sense and promotes competition in the chicken industry.
But critics, including farmer advocacy groups, say it often hurts smaller farmers, leading to a more consolidated industry and a tougher market for producers.
Vilsack said Monday that the USDA’s proposed rule would not jeopardize the quality of meat sold to grocers across the country, but rather balance the relationship between producers and companies.
The rule is one of several new rules under the Packers and Stockyards Act issued by President Joe Biden’s administration that aims to combat monopolization in the agricultural sector. Congress passed the Packers and Stockyards Act in 1921 to regulate competition in livestock markets.
In 2021, under Biden’s Executive Order on Promoting Competition in the American Economy, the administration aimed to ensure fair competition in the industry and equitable practices.
USDA finalized the Inclusive Competition and Market Integrity rule in March as part of this executive order. The rule addresses mistreatment and discrimination against livestock and poultry producers based on identity factors such as race, religion, national origin or gender.
The Poultry Grower Payment Systems and Capital Improvement Systems Rule now enters a public comment period during which industry members, consumers and others can provide feedback. It may then be revised and, if permitted, published as a final ruling in the Federal Register.
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The post USDA Seeks to Help Small Farmers by Banning Payroll Deductions from Poultry Farms first appeared on West Virginia Watch.
