On February 12, 2024, the Transparency in Poultry Grower Contracting and Tournaments Final Rule, which amends the regulations under the Packers and Stockyard Act, went into effect. This new rule is consistent with recent moves by the Biden Administration for more transparency and competitiveness in livestock, meat, and poultry markets. The rule aims to thwart deception and aid growers in competing more effectively. The rule finalizes a number of new and revised requirements for a number of stakeholders in the poultry supply chain. As a result, the House and Senate Chicken Caucuses unsuccessfully requested an extension on the implementation of the rule to give these stakeholders a chance to better understand and comply with the rule’s requirements.  Those letters were signed by 45 House members and 12 Senators. The U.S. Department of Agriculture’s Agricultural Marketing Service has a number of resources on the Rule, which can be found here.

Generally, the Final Rule revises the list of disclosures and information to broiler growers from Live Poultry Dealers (LPDs), establishes additional disclosure requirements regarding ranking (tournament) systems, and requires targeting transparent market information to assist broiler growers in contracting decisions. This rule applies to anyone that contracts with growers for broiler grow out, though an exemption applies to LPDs whose volume is fewer than 104 million pounds annually and do not require original investment or additional capital investment at the time of contracting. All broiler growing arrangements must include the minimum number of guaranteed flocks placed annually and the minimum guaranteed density range of those placements, which minimums must be consistent with any representations to growers in the original solicitation. There are no exemptions to these requirements. Additionally, there are two other primary components to the Rule: (1) the LPD Disclosure Document (Section 102 disclosures); and (2) the tournament disclosures (Section 104 disclosures).

The LPD Disclosure Document

The Disclosure Document provides relevant information to growers at the time of contracting or modification of existing contracts. In most situations, the documentation must be provided at least 14 days prior to executing the broiler growing arrangement by the LPD, but the grower may waive up to 7 days of the 14-day waiting period. The components of the disclosure document include prominent disclosures; risk factors, such as litigation and bankruptcy history and LPD policies; financial disclosures; governance certification; and grower receipt. The USDA PSD 6100 Guidance Document provides step-by-step instructions regarding the disclosures and associated calculations.

The Tournament Disclosures

The tournament disclosures apply to anyone contracting for broiler production and using a poultry grower ranking system tournament to allocate grower payments. The two requirements under the Rule are: (1) placement disclosures provided to individuals growers at the placement of flocks; and (2) settlement disclosures on the ranking sheets provided to all growers within a settlement group. If flocks were placed prior to the effective date, but settled after, the settlement disclosures would not be required.

Conclusion

The breadth of the final rule will certainly generate questions from stakeholders in poultry markets in the coming months as these stakeholders look to comply with the rule’s new requirements. Ice Miller’s Food and Agribusiness Law and Government Affairs and Regulatory Law teams are tracking the rule and can assist you as you are working toward compliance.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.