USDA’s Grain Inspection, Packers & Stockyards Administration’s final rule involving contracts for poultry and swine became effective this week on Tuesday, February 7. The rule, which implements parts of the 2008 Farm Bill, was proposed in June 2010 with the final rule issued in December 2011.  The new rule applies to production contracts and arrangements entered into, amended, altered, modified, renewed, or extended after February 7, 2012.

For poultry, the rule includes provisions affecting the suspension of delivery of birds, additional capital investment criteria, breach of contract between grower and dealer, and arbitration.  The rule does not address other issues the proposed rule would have covered such as tournament systems, competitive injury, or undue or unreasonable preferences or advantages.  The rule applies to all “live poultry dealers” for all types of live production and includes meat-type chickens, such as broilers, pullets, breeders, and laying hens.  The rule does not apply to egg-type breeder flocks for the table egg industry.

On Wednesday, January 25,  Alan Christian, Acting GIPSA Administrator and Deputy Administrator for Packers and Stockyards Programs, and Brett Offutt, Packers and Stockyards Programs Director of Policy and Litigation Division, conducted an industry briefing on the new rule.  The  presentation from the briefing is available here.

Although the final rule is much improved having excluded the most objectionable provisions as a result of congressional action, there remain ambiguous provisions potentially subject to misinterpretation or application.  NCC submitted a letter to GIPSA identifying and requesting clarification of these provisions.