According to the summary of the proposed rules, the new regulations would "describe and clarify conduct that violates the P&S Act and allow for more effective and efficient enforcement by GIPSA. The proposed regulations would clarify conditions for industry compliance with the P&S Act and provide for a fairer market place."
The proposed regulations would add several definitions to section 201.2. The proposed definitions include:
- "Capital investment" is defined as "any initial capital investment of $25,000 or more paid by a grower for growing and raising facilities. Such term includes the the total cost of equipment, goods, plus any increased labor and operating costs that are directly attributable to the capital investment."
- "Additional capital investment" is defined as "a combined amount of $25,000 or more paid by a grower or swine production contract grower beyond the initial investment for growing and raising facilities by the grower to make a capital improvement to the raising or growing facility ..."
- "Likelihood of competitive injury" is defined as "a reasonable basis to believe that a competitive injury is likely to occur in the ... marketplace. It includes but is not limited to situations in which a packer swine contractor, or live poultry dealer raises rivals' costs; improperly forecloses competition in a large share of the market through exclusive dealing; restrains competition ...; or represents a misuse of market power to distort competition... It also includes situations in which a packer, swine contractor, or live poultry dealer wrongfully depresses prices paid to a producer or grower below market value, or impairs a producer's or grower's ability to compete ... or to impair a producer's or grower's ability to receive the reasonable expected full economic value from a transaction in the market channel or marketplace."
Section 201.214 requires that if a "tournament system" is used, the live poultry dealer must pay all growers raising the same type of poultry the same base pay, the pay many not be decreased below the base amount, and live poultry dealers must rank growers in groups with other growers having similar housing or facilities. Section 201.215 outlines criteria for determining "reasonable notice" for the suspension of delivery of birds.
Section 201.216 outlines "capital investment" criteria to determine whether there is a violation of the P&S Act and section 201.217 discusses requirements and prohibitions when capital investments are required. Section 201.217 states that if a contract requires a grower to make an initial or additional capital investment, it "must be accompanied by a contract duration of a sufficient period of time for the poultry grower or swine production contract grower to recoup 80 percent of the cost of the required capital investment."
Section 201.218 outlines criteria for determining whether the grower has been given a "reasonable period of time to remedy a breach of contract that could lead to contract termination." Additionally, section 201.219 outlines criteria for determining whether the arbitration process described in a contract "provides a meaningful opportunity" for the grower or producer to "participate fully in the arbitration process."
GIPSA will consider comments on the proposed rules until August 23, 2010.
For the full text of the proposed rules, click here.
For more information of the Packers and Stockyards Act, click here.
For more information on GIPSA, click here.
