USDA plans new regulations on poultry industry

The U.S. Department of Agriculture on Friday announced plans for new regulations it said are designed to help protect poultry farmers from unfair and anti-competitive practices by big food companies.

The rules could have a significant impact on farmers in Georgia -- the nation's biggest poultry producer -- and potentially affect how much consumers pay for chicken in the future.

The proposal would change the pricing system used by many farmers and big chicken companies such as Tyson Foods, Pilgrim's Pride and Perdue and require other changes to contracts between farmers and the big companies.

They come amid an unprecedented joint examination of competitiveness in the agriculture industry by the USDA and the U.S. Department of Justice.

"Concerns about a lack of fairness and common-sense treatment for livestock and poultry producers have gone unaddressed far too long," USDA Secretary Tom Vilsack said in announcing the proposed changes. The agency cited prices paid to farmers as an indication of the need for the new rules.

According to the USDA, a farmer on average gets about 34 cents per chicken, while a processing company gets about $3.23 per bird -- although big poultry companies dispute the estimates.

The trade group for big chicken companies slammed the proposal, which is still subject to public comment and congressional review. In a statement, the National Chicken Council, which represents the big chicken companies, called the USDA's proposed rules "one-sided and unrealistic."

The proposed rule changes also raised a red flag at the Senate Agriculture Committee, where Republican Sen. Saxby Chambliss of Georgia is the ranking member.

Erin Hamm, spokeswoman for Chambliss, said the rules proposal "appears to go well beyond congressional intent under the 2008 Farm Bill ... and contradicts established legal precedent." She said committee staff was reviewing the USDA proposal.

Specifically, the rules would change the "tournament" pricing system used by farmers and chicken companies; give farmers new protections from expensive capital upgrade requirements that chicken companies can force them to make; and require chicken companies to give more notice to farmers before suspending delivery of birds.