[Federal Register Volume 62, Number 27 (Monday, February 10, 1997)]
[Proposed Rules]
[Pages 5935-5937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3217]


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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

[[Page 5936]]

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