Ag Policy Blog

WASHINGTON (DTN) -- USDA's Agricultural Marketing Service on Tuesday delayed implementation of the Poultry Grower Payment Systems and Capital Improvement Systems rule, pushing the effective date from July 1, 2026, to Dec. 31, 2027.

In a Federal Register notice, AMS said it is proposing to delay the effective date of the final rule "to allow time for further consideration of possible actions that may be taken regarding the disposition of the rule."

The National Chicken Council said it was pleased with the decision, but farm organizations such as the National Farmers Union, the American Farm Bureau Federation, R-CALF and the Campaign for Contract Agriculture Reform each expressed disappointment and frustration over the decision.

"We applaud Secretary Rollins and the Trump administration for their thoughtful review of this Biden-era regulation and for listening to chicken farmers across the country who oppose it," said National Chicken Council (NCC) President Harrison Kircher. "NCC strongly supports the administration's commitment to cutting regulatory red tape and returning decision-making to farmers and the businesses that sustain rural America."

NCC said, "The Biden administration finalized a regulation six days before President Trump took office that threatened to dismantle an efficient and successful industry model that has worked well for decades and helps keep chicken affordable.

"The Poultry Grower Payment Systems and Capital Improvement Systems rule would effectively ban bonuses for the best chicken farmers. Eliminating this performance-based compensation system would pay all farmers the same, regardless of hard work, investments, housing conditions, or bird welfare practices. It would drive experienced farmers out of the industry and reduce efficiency and competition in rural markets.

"Simply put, the rule is un-American."

National Farmers Union President Rob Larew said, "NFU is disappointed that USDA is delaying the implementation of its rule to increase fairness in poultry contracting and payment systems. Growers have long raised concerns about the unfairness of tournament pricing and the amount and quality of information provided to them by poultry companies. The rule establishes guardrails on the tournament system, giving producers more certainty and transparency so they can operate their farm businesses successfully.

"NFU is eager to see implementation of this long-overdue rule. Delaying it is a disservice to family farmers who deserve a fairer system."

Zippy Duvall, president of the American Farm Bureau Federation, said the final rule would address some longstanding issues that growers have seen with tournament pay and requirements to make major capital investments to their operations without any guarantees they can recoup that investment.

"The decision by the administration to tell contract poultry growers to take a back seat by delaying the effective date by a year and a half is disappointing," Duvall said. "Growers have spoken on the need to level the playing field with more transparency surrounding how they are compensated and they believed progress was being made. AFBF looks forward to reminding the administration during the public comment period that farmers come first and poultry companies should not be prioritized over the men and women who work to put food on the table for all of America's families."

Steve Etka, policy director for the Campaign for Contract Agriculture Reform, said poultry growers have spent years asking USDA "to provide basic guardrails around the deceptive payment system" used by poultry companies.

"The Poultry Grower Payment Systems and Capital Improvements Systems rule finally took meaningful steps to right the wrongs of the payment system. Just when it was scheduled to provide some relief and income predictability for U.S. poultry farmers, USDA has proposed to pull the rug out from under them to feather the beds of multi-billion-dollar meat conglomerates," Etka said.

AMS published the proposed rule in June 2024 and received 755 comments on it. USDA's summary of the comments noted a clear split on the rule: "Farmers' coalitions, advocacy associations, government entities, and unaffiliated individual commenters broadly supported the proposed rule, while the regulated trade organizations and LPDs (live poultry dealers) opposed the proposed rule. Live poultry growers both supported and opposed the proposed rule."

AMS added, "Many growers who support the rule raised concerns of unfairness within the tournament system, including that pay rates are influenced by factors outside growers' control, that growers are forced to make new capital investments that have poor to nonexistent return while putting growers in more debt, and that growers must compete against fellow growers in an unfair manner. Those growers who opposed the proposed rule felt that the tournament system does a good job of rewarding effort, and that the rule would upset this system by shifting money away from high-performing growers and by reducing overall bird quality."

Still, even some growers that opposed the rule expressed concern that LPDs force growers to make additional capital investments that do not produce an economic return for the grower, AMS noted.

The Biden administration finalized the Poultry Grower Payment Systems and Capital Improvement Systems on Jan. 14, 2025, just before the administration left office. Under the rule, poultry companies would no longer be able to dock a grower's base pay under a tournament system, but companies could provide bonuses. Poultry companies also would be limited so that the "variability" of performance payments under a tournament system would be capped at 25% of a contract's gross pay annually.

Etka noted Wayne-Sanderson is now marketing itself as a "grower-friendly poultry company" because of the changes made in the consent decree and is profitable despite new grower payment standards.

"If USDA is concerned about the costs of providing fair payment protections to U.S. farmers in their dealings with multi-national poultry companies," Etka said. "They should look closely at the real-world data from a company that already adheres to those standards, with great success. These standards are about good business."

The rule had been proposed and debated following a 2022 consent decree between the Justice Department and Cargill as well as Wayne-Sanderson over wage-fixing and Packers and Stockyards violations. Under that decree, Wayne-Sanderson, the third-largest poultry integrator in the country, was barred from deducting producers' base pay based on performance and also were capped at 25% performance incentives compared to a producer's total pay.

The rule also requires companies to provide more information about the level of inputs provided in connection to a tournament system. More information also was needed about the extent of capital improvements required for a poultry company to renew a contract.

DTN Ag Policy Editor Chris Clayton contributed to this report.

Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com

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Chris Clayton can be reached at Chris.Clayton@dtn.com

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