NCC defends grower compensation model in comments to USDA

On September 9, 2022, in GIPSA, by David Elrod

The National Chicken Council (NCC) on Tuesday defended the use of performance-based poultry grower compensation systems in comments filed to the U.S. Department of Agriculture (USDA).

The public comment period closed on September 6. However, USDA on Friday announced it is reopening the comment period for an additional 15 days, with a new comment deadline of September 26, 2022. USDA’s formal notice of the extension can be found here.

In its notice of extension, USDA noted that “comments in response to this request would help AMS tailor further rulemaking in addition to that already planned and under way to address specific industry practices in relation to tournament systems.”

USDA’s request for comments, known as an Advanced Notice of Proposed Rulemaking (ANPR), does not propose any particular regulations or policies. Instead, it is essentially the first step in the formal rulemaking process. It contains 10 questions with multiple subparts that indicate areas of interest to USDA that could inform future rulemaking.

USDA’s Agricultural Marketing Service (AMS) states that its goal through the ANPR is to “obtain information on the industry and assess the extent to which unfairness and deception, where it may exist, can be remedied through additional regulation.”

AMS indicates that the focus of any future rulemaking would be poultry growing contract terms, “through specific prohibitions, limits, and/or conditionalities” to address “potential unfairness that may arise from the use of the tournament contracts in the poultry sector.”

The ANPR, entitled “Poultry Growing Tournament Systems: Fairness and Related Concerns,” can be found here.

“NCC strongly opposes further rulemaking by AMS regarding the current poultry grower contracting system,” NCC’s comments said. “NCC is deeply concerned that changes to, or elimination of, the tournament system would have a devastating financial impact on the U.S. chicken industry by raising costs, contributing to increasing food prices for consumers, and ultimately destabilizing a successful compensation system.”

NCC’s comments describe in detail the benefits of the current compensation model for all parties involved: growers, companies, and consumers. These benefits range from efficiently allocating risks to the parties best able to shoulder them – like companies hedging grain costs – to providing much needed, reliable cash flow to family farmers, to driving down the cost of chicken for consumers and pushing chicken to become America’s number one protein.

NCC’s full comments can be found here.