The Farmer Fair Practice Rule was intended to make it easier for small farmers to sue large agribusiness corporations they contract with for unfair or discriminatory practices.
Specifically, it states that a farmer need only prove that the corporation’s actions caused him or her individual harm, rather than competitive harm to the entire market, to pursue a claim under the Packers and Stockyards Act.
“USDA determined that these rules were essential for independent farmers to continue operating in a market dominated by a small number of powerful buyers,” according to a petition for review filed by the Organization for Competitive Markets, or OCM, in the Eighth Circuit on Thursday.
Reducing farmers’ burden of proof would be particularly impactful in the chicken and pork industry, where producers enter long-term contracts with processors such as Tyson Foods and Pilgrim’s Pride which fix their compensation at levels that can become unprofitable over time, forcing farmers into debt.
The rule was adopted in the waning days of former President Barack Obama’s administration but never took effect, and was immediately placed on hold by President Donald Trump’s Secretary of Agriculture Sonny Perdue.
In October, the Department of Agriculture scrapped the rule entirely.
“The concern was that this rule as proposed would lead to unnecessary and unproductive litigation,” Secretary Perdue said at the time in a conference call with reporters from Europe. He added predatory business dealings “are moral actions that I don’t believe regulations and litigation actually solve.”
The move was predictably praised by industry lobbyist groups, and condemned by groups representing farmers.
According to the petition filed by OCM, a Nebraska-based farmers’ advocacy organization, “USDA’s only stated grounds to support its decision fall well short of the reasoned consideration required by the [Administrative Procedures Act].”
While four federal appeals courts have ruled that farmers are subject to the higher burden of proof under the Packers and Stockyards Act, the petition states, “The existence of contrary circuit precedent weighs in favor of, not against, regulation because a codified agency interpretation would be afforded…deference that otherwise is unavailable if USDA remains silent. That is all the more so here where USDA’s mandate under [Grain Inspection, Packers and Stockyards Administration] is to protect independent farmers from predatory trade practices.”
Further, OCM says the Trump administration’s claim that the rule needed to be withdrawn because the public did not have sufficient opportunity to comment is completely fabricated.
“The Farmer Fair Practices Rules were published after the USDA had held three public meetings and received over 61,000 comments,” the petition states. “Moreover, the Farmer Fair Practices Rules themselves opened a comment period during which USDA received almost 2,000 additional comments.”
OCM, represented by government watchdog group Democracy Forward Foundation, asks the Eighth Circuit to reinstate the Farmer Fair Practices Rule.
“The Trump administration has eliminated rules designed to level the playing field for family farms and has instead given large multinational corporations the upper hand,” OCM Executive Director Joe Maxwell said in a statement. “In doing so, Secretary of Agriculture Perdue and the administration have thrown America’s farmers to the wolves, telling them that their family businesses don’t matter. We called on the president to reverse Secretary Perdue’s actions and he has failed to right this wrong, so we are seeking justice through the courts.”