Regulations Issued under the Packers and Stockyards Act: Poultry Grower Contracts, Scales, Weighing

DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

9 CFR Part 201

RIN 0580-AA51

Regulations Issued under the Packers and Stockyards Act: Poultry

Grower Contracts, Scales, Weighing

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Agency is considering the need for issuing substantive

regulations to address concerns in the poultry industry with respect to

contract payment provisions tied to the performance of other growers,

with respect to feed deliveries to contract

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growers, and with respect to practices and procedures related to

weighing of live birds delivered to processors. This notice requests

comments on the need for regulations and the content of such

regulations.

DATES: Comments are due on or before May 12, 1997.

ADDRESSES: Comments may be mailed to the Acting Deputy Administrator,

GIPSA, Packers and Stockyards Programs, Stop 3641, 1400 Independence

Avenue, SW., Washington, DC 20250-3641.

FOR FURTHER INFORMATION CONTACT: Tommy Morris, Director, Packer and

Poultry Division, (202) 720-7363.

SUPPLEMENTARY INFORMATION: Currently, the predominant method utilized

to pay growers for flocks grown under a poultry growing arrangement is

based on a system which compares a grower's results to that of other

growers during a specified time period. Many poultry growers have

repeatedly expressed concern to the Agency that comparison of their

production costs against production costs of other growers in

determining their payment is unfair. Others in the industry have

suggested that a comparison of the growout results of a group of

growers that have grown birds during the same time period and weather

conditions is the most equitable way to determine grower performance

and payment. Some growers are opposed to a system that bases their

payment on how well or how poorly their neighbor performs, asserting

that a bias is being created because the initial quality of production

inputs are exclusively under the control of the live poultry dealer.

Under this system of determining grower payment, consecutive flocks

grown by the same grower having similar production costs could receive

substantially different payment amounts because of the results of other

growers in the settlement group. Growers have expressed exasperation

over this form of settlement because they have no way of estimating in

advance how much to expect in payment.

Concern has also been expressed about the disproportionate effect a

small flock may have under a flock comparison payment system. Growers

have suggested, to ensure fairness in their flock's compensation, that

all results should be weighted. They feel that by weighting results in

any flock compensation program, smaller growers, who might have an

advantage in smaller flock numbers, would not have an undue influence

on results.

The Agency is considering the need for a regulation that would

prohibit poultry grower settlements that base payment on a comparison

of other growers' results and is seeking public comment on whether such

a regulation is needed and, if so, the content of such a regulation.

Comments are also being sought addressing the concept of weighting the

results of relatively small flock settlements. Those opposing such a

regulation are encouraged to provide information explaining their

position. In particular, the Agency is interested in comments as to why

this settlement method is, or is not, a fair, equitable way of

determining grower payment.

The weight of feed delivered to a poultry grower during the course

of a growout cycle is an integral part in determining ultimate payment

to the grower under most growing contracts. While many of the scales

used to weigh feed deliveries to contract growers are regularly tested

for accuracy and are equipped with printing devices, there are

currently no regulations under the Packers and Stockyards Act requiring

feed scale testing or the mechanical printing of feed tickets.

Likewise, there are no Packers and Stockyards regulations related to

the information required to be shown on feed scale tickets, nor are

there requirements pertaining to other feed delivery or weighing

documentation.

A number of poultry growers have expressed concern over the lack of

regulatory requirements relative to the weighing of feed delivered

during the course of a growout cycle. Growers assert that feed is at

times weighed on scales that are not certified as accurate, that

weighing is seldom performed by certified weighmasters, and that scale

tickets sometimes contain weights that are hand printed rather than

printed by a scale integrated printing device.

The Agency is considering the need for regulations requiring

periodic testing of feed scales, mechanical printing of feed tickets,

and more complete feed weighing and delivery documentation. Comments

are being sought from the public regarding the need for feed weighing

regulations and, if needed, the content of such regulations to help

assure the accuracy of feed weights. Comments suggesting that feed

weighing regulations are not needed should include information

regarding safeguards currently in place that help assure the accuracy

of feed deliveries and feed returns at the end of the growout cycle.

Essentially all poultry growing arrangements include live poultry

weight as a key element in determining grower payment. Live poultry

weight is determined by weighing the birds while loaded in coops on

flat bed trailers (gross weight) and subtracting the weight of the

trailer and empty coops (tare weight) to determine the net or grower

pay weight. In order to determine an accurate weight of poultry for

grower payment, both the gross weight and tare weight must be accurate.

The weight of the trailer, coops, and often the tractor is included in

the process of determining both the gross and tare weights that result

in the live poultry weight. It is critical in ascertaining an accurate

live weight that the weight of the vehicle remain unchanged between the

gross and tare weighings.

The weight of live poultry begins to decrease when feed is removed

from birds at the grower's farm and continues to decline during

loading, transporting, and while being held at the plant prior to

processing. Loads of poultry are held for various lengths of time prior

to processing and at times are not processed in the order in which they

arrived at the plant. Because of these variables, the Agency believes

that prompt transporting of birds after loading and immediate weighing

of the loads on arrival at the processing plant or holding area

provides the most accurate weight for grower payment.

The Agency is considering the need for promulgating regulations

relative to the weighing of live poultry for grower payment. Comments

are being sought concerning the need for such regulations and, if

needed, the content of such regulations. In particular, the Agency is

interested in knowing how such regulations could help assure the

accuracy of the live poultry weighing process.

Many poultry growers are concerned that they are in an unequal

bargaining position vis-a-vis integrated poultry companies and believe

rulemaking is necessary to provide growers with a level of assurance

that their settlements will be equitable. Regulations involving live

poultry weighing and feed weighing and delivery documentation may

provide poultry growers with increased assurance that deliveries are

weighed accurately. The Agency believes that such rules would place

little increased burden on live poultry dealers. The Agency also

believes that there would be little increased burden on live poultry

dealers resulting from new regulations prohibiting grower flock

comparison for settlement purposes. However, the Agency is seeking

comments from all segments of the industry regarding anticipated

benefits and/or burdens, and the cost, especially to smaller operations

involving less than $500,000 in poultry annually, that may

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result from the rulemaking under consideration.

Dated: February 4, 1997.

James R. Baker,

Administrator, Grain Inspection, Packers and Stockyards Administration.

[FR Doc. 97-3217 Filed 2-7-97; 8:45 am]

BILLING CODE 3410-EN-P