House Appropriations Committee Repeals Protections for Small Farmers and Ranchers
The Appropriations Committee chooses meat packing monopolies over ranchers and poultry growers.
Section 729 of The Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill for 2026 defunds Biden-era regulations at the Department of Agriculture. The new rules were put into place to protect ranchers and poultry growers from market abuses and underpayment by large meat packing monopolies.
Big Chicken
The repeal of these rules is a big win for the large poultry monopolies, who perfected the type of vertical integration colloquially known as “chickenization.” Large poultry companies like Tyson, Purdue, Pilgrim’s Pride (now owned by JBS), and Koch Foods, require farmers who raise chickens for them to sign exclusive agreements to purchase their chicks from the company, raise the chickens according to the detailed instructions given, and sign contracts prohibiting discussion of practices or pricing with any other growers.
Companies will often create competition between their growers, known as tournament systems, promising to pay the growers with the highest weight birds more per pound. These large corporations will also conduct experimentation by giving different instructions for the care of the birds to each grower. Growers must follow explicit instructions even if their experience tells them this will lead to smaller or less healthy chickens.
Not allowing growers to discuss compensation or instructions with each other keeps growers in the dark about whether or not they are being treated fairly. Failure to comply with rules can lead to a grower being expelled from the program, leaving them with operational costs and no alternative buyers for their chickens. The system pushes the risk and operating expenses onto the growers with no control over business decisions.
The infographic below, created by RAFI in 2014, shows the extent of control the top chicken companies have over the entire supply chain. If you were wondering why eggs were so expensive last year, part of the problem came from supply restrictions by egg hatcheries and large egg monopolies. Yes, that’s a thing. Cal-Maine alone sells about 20% of all eggs in the United States. As noted in the latest article by Food Processing, increased egg prices mean higher profits for Cal-Maine. Note the disclaimer at the end of the article: “We’re not implying any connection, but Cal-Maine revealed in its previous/third quarter report it’s being investigated by the Dept. of Justice in connection with antitrust or anticompetitive conduct.”
Big Pork
The chicken corporations are not the only mega companies controlling our meat industry. Smithfield’s monopoly practices slashed prices for hogs, putting over 75% of North Carolina's independent farmers out of business. In 1974, there were about 17,000 farms in North Carolina raising fewer than 50 hogs. By recent estimates, this number has dropped to fewer than 4,000. Most of the hog farmers in the state now work directly for Smithfield with exclusive contracts or have no other market to sell their pigs.
Smithfield has brought more than just low hog prices to North Carolina. The concentration of hog farms has led to severe environmental issues, including water pollution and air quality problems. The company has lost several lawsuits by members of communities surrounding their feedlots. In response, the state legislature revised laws making it harder to sue Smithfield for health and environmental issues.
In 2013, Smithfield was purchased by the Chinese-owned corporation WH Group, which also has a 20% market share in the packaged meat sector. The other top five pork corporations in the US are Tyson, JBS, Hormel, and Seaboard Foods. Together, they control over 70% of the pork market.
We can see in the table below how consolidated the meat processing industry has become. In 1980, the percentage of the marketplace controlled by only four firms was between 30-40 percent. Today, it is over 50% for poultry, over 60% for hogs, and a whopping 81% for cattle!
Big Beef
We have also seen a great deal of consolidation in meat processing for cattle, with only 4 companies, JBS, Tyson, Cargill, and National Beef, controlling the market. Consolidation has led to significant vertical integration, and ranchers and growers now sell their livestock directly to the large corporations through contracts.. Control of the market allows the big corporations to reduce the prices per cow paid to ranchers.
Overregulation Fuels Consolidation
Federal meat inspection regulations prohibit ranchers from slaughtering their own cattle for sale, or a small local operation from taking root. USDA regulations require an onsite inspector along with accommodations for the inspector, such as a private bathroom. This leaves ranchers with limited options for selling their cattle.
Representative Thomas Massie has proposed the PRIME Act, which would allow waivers for expensive regulations for producers who will sell meat in-state. The bill would open the market for ranchers who have seen increasing costs and declining prices per head of cattle. To date, there has been little support in Congress for this bill.
Market Control Opens the Door to Large Scale Corruption.
One of the big four, JBS, which is a Brazilian company, was forced to pay corruption fines in a 2017 scandal. Executives admitted to bribing Brazilian officials to get a loan deal from the government that they used to acquire Pilgrim’s Pride in the United States. JBS receives millions of dollars in contracts from the US government for food programs for the military, Veterans Affairs hospitals and nursing homes, and school lunch programs. The large contracts awarded to JBS could be used to benefit smaller ranchers in the United States instead of imports from Mexico and South America.
Recent reporting by Insight Crime, revealed that cattle are being laundered in Mexico by the Cártel de Jalisco Nueva Generación (CJNG) which imposes a 5-peso-per-kilo tax on cattle destined for the U.S. export market. While they did not find a direct link to JBS, the corporation is involved in importing cattle from Mexico. Below is an infographic from Insight Crime explaining how cattle is laundered into the United States with fraudulent health certificates.
USDA Tries to Protect Small Producers
During the Biden Administration, the USDA passed three new rule changes to the Packers and Stockyards Act, a 1921 law meant to protect small farmers and ranchers from unfair practices by large meat packing companies and promote competition in the livestock industry. As the name implies, the act focused on fair practices for producers selling livestock in stockyards, where it could then be purchased by large meat packers. The new chickenization model subverts the law by contracting with the producers directly.
The USDA’s new rules were drafted based on complaints they received from small producers. Complaints included producers being forced to accept below-market-value prices, receiving threats of retaliation, and being forced into unfair and deceitful contracts. The USDA used its authority under the Packers and Stockyards Act to create new rules that are updated to reflect current business practices while maintaining the spirit and purpose of the law.
The three rules, listed below, only recently went into effect, with one proposal submitted in January that was never finalized. Section 729 of the Agriculture, Rural Development, Food and Drug Administration Appropriations Act repeals these rules by prohibiting funding from being used to enforce them.
Transparency in Poultry Grower Contracting and Tournaments published by the Department of Agriculture in the Federal Register on November 28, 2023
This regulation requires Live Poultry Dealers, which are typically large processing companies, to give key information about the terms of their agreements to the poultry growers with whom they contract to raise birds.
The final rule requires the companies to provide a copy of the broiler grower arrangement and a disclosure of key financial information, including a summary of any litigation or bankruptcy filings within the last five years for both the company and any of their broiler growers, the company’s policies and procedures regarding a potential sale of the grower’s farm, the company’s policies and procedures related to lay-out time, the company’s broiler grower turnover rates, and required financial disclosures.
Inclusive Competition and Market Integrity Under the Packers and Stockyards Act published by the Department of Agriculture in the Federal Register on March 6, 2024
This rule would prevent discrimination, retaliation, and deceptive practices by large corporations in the livestock and poultry industries. While the initial section of the bill regarding anti-discrimination laws may be seen to be part of the Biden administration's DEI programs, the language in the regulation merely prohibits discriminatory practices. Discrimination against producers based on personal characteristics was already prohibited by the Packers and Stockyards Act. However, most producers of livestock are no longer selling animals at stockyards, which means the Act no longer protects them.
The remainder of the regulation focuses on unfair monopoly practices in our meat and poultry sectors. The detailed report attached to the final rule outlines the massive amount of consolidation in slaughterhouses in the country, with only four companies controlling the entire market. This type of consolidation creates the “chickenization” mentioned above. To give you an idea of just how unfair the US market is for growers and ranchers, read this excerpt :
“By the late 20th century and early 21st century, contracting practices were also changing. Bilateral and vertical contracting were becoming the increasingly dominant means to coordinate live animal supplies. Today, most poultry production and about 98 percent of hog production fall under production contracts, and roughly 70 percent of cattle procurement falls under marketing contracts. Bilateral and vertical contracting has benefits and disadvantages for both processors and producers. However, the exercise of market power through the contracting practices occurring in concentrated livestock and poultry markets has left producers susceptible to the conduct this rule aims to prohibit. “
The rule change protects ranchers, hog farmers, and poultry growers against retaliation for legal activities like exchanging information with each other, forming associations, and discussing operations with third parties. The report details how Congress was unable to get ranchers or poultry growers to testify for fear of retaliation. As mentioned above, retaliation can include being blacklisted by companies, which leaves producers with no buyer for their livestock.
The rule also prohibits deceptive practices that force producers to accept lower prices. The report details complaints “lodged with USDA, Congress, and the media over the years regarding inaccurate, incomplete, or otherwise false or misleading statements, or omission of material information that affects decision-making or access to markets by producers.”
Some examples cited include producers claiming they “are commonly given a take-it-or-leave-it offer to buy their cattle off of a pricing formula provided by the company,” or told that their livestock is of lower quality than that of others who have special contracts with the corporation to pay them less.
Poultry Grower Payment Systems and Capital Improvement Systems, published by the Department of Agriculture in the Federal Register on January 16, 2025 (90 Fed. Reg. 5146 et seq.)
The key part of this rule affects the “tournament system” used to pay growers. In the chickenization model, companies pay based on competition with other growers contracted with the corporation. The competition typically includes paying growers with larger animals more per pound for their livestock; however, the results of the competition are not transparent. In other words, one chicken grower may be told by the corporation that they will be paid less per pound of chickens delivered because other undisclosed growers produced larger chickens. The time frame for the two growers may also be different, with one grower supplying older and therefore larger chickens. There may be other dissimilarities in conditions that may make the tournament an unfair apples to oranges comparison. The new rule prohibits companies from using tournaments to pay growers less and only allows tournaments to be used to determine bonuses.
The rule will also require poultry companies to ensure fair comparisons are used in their tournament systems. The rule gives USDA a list of criteria that will be considered to determine if the comparisons are fair, including the distribution of inputs, time periods used, production practices, and any factors that may make the comparisons impractical or inappropriate.
The rule also requires corporations to provide growers with a disclosure document regarding their expected return on investment if the company requires a grower to make an additional capital investment.
The Proposal
The proposed rule entitled “Fair and Competitive Livestock and Poultry Markets” seeks to prevent monopoly practices that create “anticompetitive harm” and “market abuse.” The rule was never finalized and did not go into effect. If the appropriations bill is passed with Section 729 included, the USDA will not be permitted to continue progress on the rule or ever enforce it.
Why These Protections Matter
Over the past few decades, we have witnessed a significant consolidation in the meatpacking industry, resulting in the destruction of small farms and ranches. The Packers and Stockyards Act of 1921 was passed to prevent exactly what has occurred: independent farmers being pushed out by large corporations.
Whether you supported President Biden or not, the new rules offered by the USDA at the end of his administration were the first real protections given to small producers in decades. We need to stop reflexively lumping all policies of an administration together and determining their value based on our opinions of the party that produced them. Every administration has good policies and bad policies. Our goal should be to support the good and remove the bad. If you are still on the fence about whether these three rules from the USDA are worth fighting for, let me leave you with the following charts.
Contact Your Representative
Congress has recessed for the month of August and will not be back in session until September 4th. Now that the bill has passed out of committee, the next move will be a floor vote of the entire House. We will keep an eye on this piece of legislation. You can write to your member of Congress here. Tell them to strike Section 729 from the Agriculture, Rural Development, Food and Drug Administration Appropriations Act. The chickenization model is bankrupting our small farmers. Don’t let Congress take away what little protections they have.