83210 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

1One measures of industry concentration is the 

four-firm concentration ratio, which is the 

combined market share of the four largest firms in 

the industry. A higher four-firm concentration ratio 

means a higher level of industry concentration. 

Rapid increases in broiler productivity, an 

important factor driving consolidation, did not 

begin until after World War II. Charles R. Knoeber. 

‘‘A Real Game of Chicken: Contracts, Tournaments, 

and the Production of Broilers.’’ Journal of Law, 

Economics, & Organization, Vol. 5, No. 2. (Autumn, 

1989). 

2Michael Ollinger, James MacDonald, and Milton 

Madison. Structural Change in U.S. Chicken and 

Turkey Slaughter. U.S. Department of Agriculture, 

Economic Research Service. Agricultural Economic 

Report No. 787, September 2000, p. 7. 

3 John M. Crespi, Tina L. Saitone, and Richard J. 

Sexton Competition in U.S. Farm Product Markets: 

Do Long-Run Incentives Trump Short-Run Market 

Power?, Applied Economic Perspectives and Policy 

(2012) volume 34, number 4. 

4WATT Poultry USA, March 2023. Companies 

ranked by weekly ready to cook pounds. 

5 James M. MacDonald, Technology, 

Organization, and Financial Performance in U.S. 

Broiler Production, EIB–126, U.S. Department of 

Agriculture, Economic Research Service, June 2014: 

30, https://www.ers.usda.gov/webdocs/ 

publications/43869/48159_eib126.pdf?v=0. 

6USDA, NASS. 2017 Census of Agriculture: 

United States Summary and State Data. Volume1, 

Part 51. Issued April 2019. 

7AMS has no exact data on grower revenues but 

assumes most broiler growers are small businesses 

as defined by the Small Business Administration 

(SBA), with annual sales of less than $3.5 million. 

8All live poultry dealers are required to annually 

file PSD form 3002 ‘‘Annual Report of Live Poultry 

Dealers,’’ OMB control number 0581–0308. The 

annual report form is available to public on the 

internet at https://www.ams.usda.gov/sites/default/ 

files/media/PSP3002.pdf. 

9Live poultry dealers annual report submissions 

PSD form 3002 ‘‘Annual Report of Live Poultry 

Dealers,’’ to AMS. OMB control number 0581–0308. 

10 Ibid. 

11 Ibid. 

12Citing data from the 2011 ARMS survey, 

MacDonald states ‘‘97 percent of broilers were 

grown under contract, 94 percent of contracts 

included payment incentives tied to grower 

performance, and 93 percent of those contracts tied 

the incentives to relative performance—that is, 

performance compared to other growers.’’ See 

MacDonald, James M. Technology, Organization, 

and Financial Performance in U.S. Broiler 

Production, EIB–126, U.S. Department of 

Agriculture, Economic Research Service, June 2014: 

27. 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

9 CFR Part 201 

[Doc. No. AMS–FTPP–21–0044] 

RIN 0581–AE03 

Transparency in Poultry Grower 

Contracting and Tournaments 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: This final rule amends the 

regulations under the Packers and 

Stockyards Act, 1921 (Act), to add 

disclosures and information that live 

poultry dealers engaged in the 

production of broilers must furnish to 

poultry growers with whom dealers 

make poultry growing arrangements. 

The rule also establishes additional 

disclosure requirements for live poultry 

dealers engaged in the production of 

broilers who use poultry grower ranking 

systems to determine settlement 

payments for broiler growers. These 

requirements add targeted transparency 

to the market for grower services that 

will inhibit deceptive practices related 

to broiler contracting and performance. 

The Act protects fair trade, financial 

integrity, and competitive markets for 

livestock, meat, and poultry. 

DATES: This final rule is effective 

February 12, 2024. 

FOR FURTHER INFORMATION CONTACT: S. 

Brett Offutt, Chief Legal Officer/Policy 

Advisor, Packers and Stockyards 

Division, USDA AMS Fair Trade 

Practices Program, 1400 Independence 

Ave. SW, Washington, DC 20250; 

Phone: (202) 690–4355; or email: 

s.brett.offutt@usda.gov. 

SUPPLEMENTARY INFORMATION: At the 

beginning of the 20th century, a small 

number of meat packing companies 

dominated the industry and engaged in 

practices that were deemed 

anticompetitive and harmful to 

livestock producers. In response, 

Congress enacted the Packers and 

Stockyards Act, 1921 (Act), 7 U.S.C. 181 

et seq., which seeks to promote fairness, 

reasonableness, and transparency in the 

livestock marketplace by prohibiting 

practices that are contrary to these goals. 

In the 100 years since the Act went into 

effect, livestock business practices have 

changed significantly, particularly in 

the poultry industry, for which 

provisions were added to the law in 

1935 (Act of August 14, 1935, 49 Stat. 

648). 

Within the last 40 years, the poultry 

industry has become highly integrated, 

with most live poultry dealers operating 

as ‘‘integrators’’ who frequently own or 

control all segments of the production 

process except growout, where poultry 

growers raise young poultry to harvest 

size under poultry growing 

arrangements (contracts). Most 

integrators employ a relative 

performance or grower ranking system 

to determine grower payment, as 

explained later in this section. Thus, 

AMS’s references to ‘‘integrator’’ in the 

discussion of this final rule refer 

specifically to those live poultry dealers 

who are vertically integrated and 

generally use a relative performance or 

grower ranking system to determine 

grower payment. 

Over the same 40-year time span, the 

industry has also become more 

concentrated.1 One measure of industry 

concentration is the four-firm 

concentration ratio, which is the 

combined market share of the four 

largest firms in the industry. A higher 

four-firm concentration ratio means a 

higher level of industry concentration. 

In 1963, the four firm concentration 

ratio for chickens was 14 percent.2 By 

1980, the four-firm concentration ratio 

for integrators processing broilers was 

32 percent.3 By 2022, the four-firm 

concentration ratio increased to 57 

percent.4 Concentration is even higher 

at the local level in which growers 

operate. In the last available survey of 

local markets, MacDonald and Key 

(2011) found that about one quarter of 

contract growers reported that there was 

just one live poultry dealer close enough 

to grow for; another quarter reported 

two; another quarter reported three; and 

the rest reported four or more.5

There are approximately 16,500 

broiler (chicken grown for meat) 

growers—those who actually raise the 

chickens from chicks, often under 

contract with live poultry dealers—in 

the U.S.6 Based on comments from the 

industry, broiler growers typically have 

no employees, but some may employ a 

handful of workers outside themselves 

and their families.7 According to annual 

reports filed with the Department of 

Agriculture (USDA), there were 42 live 

poultry dealers engaged in broiler 

production in the U.S. in their fiscal 

year 2021.8 Of those, 20 have fewer than 

1,250 employees each, and have average 

annual sales of $77 million.9 Fewer than 

5 percent of approximately 20,000 U.S. 

broiler grower contracts are with these 

20 dealers.10 More than 95 percent of 

broiler grower contracts are with the 22 

larger live poultry dealer companies that 

employ more than 1,250 employees 

each and have average annual sales of 

$3.6 billion.11 Total U.S. chicken sales 

for these dealers was $58.6 billion in 

2019. 

Most broiler growers raise poultry 

under a contractual growing 

arrangement commonly known as a 

tournament system.12 Under this 

system, integrators use a relative 

performance or grower ranking system 

for settlement purposes, i.e., to 

determine grower payment among a 

group of competing growers. Poultry 

growers in tournament systems find 

themselves competing for payment 

without access to information in the 

possession of the integrators that would 

allow growers to manage, as best they 

can, poultry production under the 


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13RIN: 0581–AE18, available at https://

www.reginfo.gov/public/do/eAgendaViewRule?

pubId=202304&RIN=0581-AE18. 

14The concept of asymmetric information and 

associated market failures is discussed in a seminal 

article: Akerlof, G.A. ‘‘The Market for ‘Lemons’: 

Quality Uncertainty and the Market Mechanism.’’ 

The Quarterly Journal of Economics Vol. 84, No. 3 

(August 1970). 

payment systems established by the 

integrators. 

Live poultry dealers generally do not 

provide, and poultry growers and 

prospective poultry growers find 

themselves unable to negotiate access 

to, (1) critical information needed to 

properly assess farm revenue streams 

and the operation of poultry growing 

contracts, and (2) information related to 

the distribution of inputs delivered to 

growers affecting performance among 

tournament participants. Whether from 

a representation, omission or practice, 

the inability to secure this information 

exposes growers to deception and risks 

of deception that could be reduced or 

eliminated with the provision of the 

information. Additionally, live poultry 

dealers possess or are reasonably 

expected to possess this information 

and are able to provide it to growers 

with minimal costs. For more than two 

decades, USDA, through the 

Agricultural Marketing Service (AMS) 

and its Packers and Stockyards Division 

(PSD) which now administers the Act, 

and formerly through Grain Inspection 

Packers and Stockyard Administration 

(GIPSA), has received numerous 

complaints from poultry growers about 

poultry growing contracting in general 

and tournament systems particularly. 

While the complaints cover a range of 

concerns, a central concern is the gap 

between expected earnings and the 

ability to achieve those outcomes 

through reasonable efforts by the 

grower. This central concern is 

manifested specifically where live 

poultry dealers fail to make transparent 

the range of financial outcomes possible 

in these arrangements, where they exert 

high degrees of discretion that can and 

do adversely affect growers, and where 

they fail to provide information 

necessary for growers to understand and 

respond to changing factors (i.e., input 

differences) in the operation of their 

contracts. 

Among other things, the Act protects 

growers from deceptive practices 

wherein they can be misled through 

lack of information from live poultry 

dealers regarding both potential 

revenues and the risks growers assume 

in the course of making and operating 

their contracts. Accordingly, AMS is 

establishing rules that will increase 

transparency in broiler growing 

contracting, including tournament 

systems, targeted at key decision points 

for growers—at the time of contracting 

and housing upgrades, and at the 

provision of inputs during tournaments. 

These are points where live poultry 

dealers repeatedly and consistently 

either omit vital information or make 

misleading statements, which prevents 

growers from understanding the risks 

they are taking on. Such 

misrepresentations may inhibit growers’ 

ability to choose amongst competing 

live poultry dealers on a level playing 

field. 

This rulemaking sets forth enforceable 

transparency requirements under 

section 202(a) of the Packers and 

Stockyards Act that will secure a more 

level playing field for growers and foster 

a marketplace with fairer contracts and 

the fairer operation of those contracts 

under the contract production model. 

Deception undermines the integrity of 

the market and deprives producers of 

the true value of their livestock. 

In addition to the prohibitions on 

deceptive practices set forth this final 

rule, AMS is also evaluating additional 

specific prohibitions and regulatory 

limitations. To facilitate additional 

input, data, and ideas that may inform 

further efforts to regulate the poultry 

tournament system, USDA put forward 

an Advance Notice of Proposed 

Rulemaking seeking stakeholder input. 

Based on that input, AMS has included 

in the Office of Management and 

Budget’s Spring 2023 Regulatory 

Agenda an upcoming proposed rule 

entitled ‘‘Poultry Grower Payment 

Systems and Capital Improvement 

Systems.’’ 13 AMS welcomes 

engagement with interested 

stakeholders around ideas to be 

developed in that further rulemaking on 

poultry tournaments. 

I. Overview 

On June 8, 2022, AMS published in 

the Federal Register (87 FR 34980; 

Docket No. AMS–FTPP–21–0044) a 

proposal to amend the regulations 

implementing the Packers and 

Stockyards Act. AMS solicited 

comments on the proposed rule for an 

initial period of 60 days and extended 

the comment period 15 days on August 

8, 2022 (87 FR 48091) through August 

23, 2022. AMS received 504 comments, 

some with multiple signatories, from 

individual poultry growers, trade 

organizations representing producers, 

poultry companies, the meat industry, 

State- and national-level agriculture 

groups, other associations, and nonprofit organizations. After consideration 

of all comments, AMS adopts the 

proposed rule, with modification. 

Section V details the regulatory changes 

made by this final rule. Modifications to 

the proposed rulemaking are discussed 

in Section VI. Public comments are 

discussed by topic in Section VII. 

This rulemaking adds two new 

sections to PSD regulations under the 

Act, introducing new disclosure 

requirements that live poultry dealers 

engaged in the production of broilers 

must furnish to broiler growers with 

whom they establish broiler growing 

arrangements. In doing so, the final rule 

builds on existing disclosure concepts 

under the Act in 7 U.S.C. 197(a) through 

(c) and in the regulations that effectuate 

the Act at 9 CFR 201.55; 9 CFR 

201.56(d); 9 CFR 201.99; and 

particularly 9 CFR 201.100, with respect 

to the poultry industry, which provide 

for a range of disclosures such as 

settlement sheets and establish other 

regulatory requirements. The current 

disclosure framework has improved 

transparency in poultry contracting and 

has helped close the asymmetric 

information gap between the parties, 

thus reducing the market failure caused 

by asymmetric information.14 However, 

the modern poultry industry, in 

particular the broiler chicken segment, 

now requires increasingly large capital 

investments; and under the tournament 

system, growers are subject to intense 

pressures to perform, as well as 

financial and operational risks that may 

exacerbate the dangers of deception. 

Section 202(a) (7 U.S.C. 192(a)) of the 

Act prohibits live poultry dealers from 

engaging in deceptive practices. This 

rulemaking establishes prohibitions 

against specific deceptive practices, 

such as withholding important 

information on the economic, financial, 

and operational risks growers take when 

entering into and operating their 

growing agreements. Growers can make 

more informed business decisions when 

they know the economic, financial, and 

operational risks associated with 

poultry growing. A lack of transparency 

for growers in poultry growing 

arrangements also creates an 

environment where growers are more 

vulnerable to other marketplace abuses. 

Live poultry dealers have possession 

of key information that is materially 

useful for growers as they make 

decisions. This information asymmetry 

can be exploited by dealers to impede 

growers’ ability to understand, evaluate, 

and compare contracts offered by 

dealers, bargain efficiently with 

competing dealers where and to the 

extent possible given the highly 

concentrated nature of the poultry 

industry, and manage their farm 

effectively for the risks they confront. 


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83212 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

15See, generally, Leonard, Christopher, The Meat 

Racket (2014). 

16Transcript, United States Department of Justice, 

United States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshop May 21, 2010, Normal, Alabama 

(https://youtu.be/j11GXzvA7u0?t=1822). 

17See Domina, David A. and Robert Taylor. ‘‘The 

Debilitating Effects of Concentration Markets 

Affecting Agriculture,’’ Drake Journal of 

Agricultural Law 15 (May 2010): 61–108. See also 

Leonard, Christopher, The Meat Racket (2014). 

This type of deceptive conduct denies 

growers the benefits of market and the 

full value of their services, and results 

in misallocation of grower resources, 

heightened live poultry dealer 

bargaining power, and significant 

financial risk to growers. 

This rule adds a new § 201.102 to the 

regulations, adding to the list of 

required disclosures a live poultry 

dealer must make to broiler growers and 

prospective broiler growers in 

connection with poultry growing 

arrangements. By obtaining these 

disclosures prior to making the 

underlying capital investment, growers 

are better positioned to understand and 

evaluate growing arrangements. The 

rule further requires live poultry dealers 

to specify additional terms in broiler 

growing contracts about variables that 

are highly correlated with grower 

annual revenue. This information is not 

routinely shared with growers. AMS 

intends for these new requirements to 

improve transparency and inhibit 

deceptive practices in poultry growing 

arrangements. 

Additionally, this rule adds a new 

§ 201.104 to the regulations to require 

live poultry dealers to provide 

information related to the integratorcontrolled input distribution to poultry 

growers paid under grower ranking 

systems (tournaments), where growers 

are paid based on their performance 

relative to a grouping of other growers. 

These disclosures allow growers to 

evaluate the distribution of inputs 

affecting performance such as poultry 

breed, gender ratio, and flock health— 

of their own flock and as compared to 

flocks of all tournament participants. 

These new data points will help growers 

better understand, evaluate, and 

compare the relationships between 

inputs, flock performance, and payment 

under their poultry growing 

arrangement. The requirements in this 

rule are intended to provide greater 

transparency and inhibit deceptive 

practices in the operation of poultry 

grower ranking systems. 

Finally, this rule makes conforming 

changes to the regulations by adding to 

the list of definitions in § 201.2 to define 

terms used in new § 201.102 and new 

§ 201.104. 

Specifically, this final rule requires 

the following of live poultry dealers 

engaged in the production of broilers: 

1. A Live Poultry Dealer Disclosure 

Document (Disclosure Document), to be 

provided to prospective or current 

broiler growers that contains critical 

information about the broiler growing 

arrangement when seeking to establish, 

renew, revise, or replace a broiler 

growing arrangement with the grower, 

including when a broiler growing 

arrangement would or might reasonably 

require a broiler grower to make an 

original or additional capital investment 

to comply with the live poultry dealer’s 

housing specifications. A governance 

framework and CEO-certification 

enhances the accuracy and 

enforceability of the disclosures. 

a. The Disclosure Document includes 

summaries of the dealer’s litigation 

history with broiler growers and its 

bankruptcy filings over the past 5 years, 

the dealer’s policies and procedures 

regarding sale of the grower’s farm or 

assignment of the growing arrangement 

to another party, and the dealer’s 

average annual turnover rate for broiler 

growers over the past five years. 

b. The Disclosure Document describes 

the live poultry dealer’s policies and 

procedures regarding certain instances 

of heightened discretion or unusual 

circumstances which would otherwise 

be opaque—specifically, increased 

layout times; sick or diseased flocks; 

natural disasters, weather-related 

events, or other events adversely 

affecting the physical infrastructure of 

the local complex or the grower facility; 

other events potentially resulting in 

massive depopulation of flocks affecting 

grower payments; feed outages 

including outage times; grower 

complaints relating to feed quality, 

formulation, or suitability; as well as 

any appeal rights growers may have 

relating to any of those items. 

c. The Disclosure Document provides 

a more fulsome set of financial 

disclosures, including average annual 

gross payments to growers over the past 

5 years broken out by quintiles to reflect 

the full range of outcomes, and a 

summary of information pertaining to 

grower variable costs inherent to broiler 

production. 

2. Mandated disclosures in the 

contract that also set out the minimum 

number of placements to be delivered to 

the broiler grower’s farm for each year 

of the broiler growing arrangement 

contract, as well as the minimum 

stocking density of each placement. 

3. When a poultry grower ranking 

system is used, disclosures of critical 

information about the flock (e.g., 

stocking density, breed names and 

ratios, breeder facility identifiers, and 

breeder flock age) placed with the 

grower must be disclosed within 24 

hours of delivery. 

4. When a poultry grower ranking 

system is used, dealers must provide 

settlement disclosures regarding critical 

information about each grower’s ranking 

within the system, in particular the 

nature of the inputs received (e.g., 

stocking density, breed names and 

ratios, breeder facility identifiers, and 

breeder flock age) and housing 

specifications for each growout period, 

without the identities of the growers to 

each other. 

II. Background 

A. Demand for This Rulemaking 

For more than two decades, poultry 

growers have complained to USDA of 

abuses that arise in the contracting 

process and the operation of those 

contracts under poultry grower ranking 

systems, also known as the tournament 

system, a payment method which 

dominates the broiler chicken industry. 

To address these longstanding concerns 

regarding the fairness and competitive 

functioning of the market, Executive 

Order 14036 ‘‘Promoting Competition in 

the American Economy’’ (86 FR 36987; 

July 9, 2021), directs the Secretary of 

Agriculture (Secretary) to consider 

rulemaking to address, among other 

things, unfair treatment of farmers 

arising from certain practices related to 

poultry grower ranking systems. AMS 

has considered that direction in 

undertaking this rulemaking, as well as 

in undertaking an Advance Notice of 

Proposed Rulemaking around ideas to 

be developed in further rulemaking on 

poultry tournaments. 

USDA’s efforts to address grower 

complaints of malfeasance and abuses 

in the broiler industry now span more 

than a decade.15 In 2010, USDA held a 

series of workshops in conjunction with 

the Department of Justice (DOJ) to hear 

from producers about concentration and 

trade practice issues in agriculture. At 

the workshop in Normal, Alabama, 

poultry growers complained that their 

success or failure is dependent on 

factors controlled by their integrators.16

Further, growers were troubled by the 

lack of alternative integrators in many 

regional relevant markets, which further 

heightens the bargaining position of 

integrators.17 Grower public comments 

at the workshop were consistent with 

numerous comments submitted to 

USDA in connection with previous 

rulemaking efforts, as well as on the 

June 8, 2022, proposed rulemaking. 

Growers expressed concerns about 

contract dependency, uncertainty of 


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18United States Department of Justice, United 

States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshop May 21, 2010; Normal, Alabama 

(https://youtu.be/8CvEGyMQ9v8?t=2156). 

19United States Department of Justice, United 

States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshops May 21, 2010; Normal, Alabama 

(https://youtu.be/j11GXzvA7u0?t=2422) (https://

youtu.be/j11GXzvA7u0?t=3032). 

20United States Department of Justice, United 

States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshops May 21, 2010; Normal, Alabama 

(https://youtu.be/j11GXzvA7u0?t=2453). 

21United States Department of Justice, United 

States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshops May 21, 2010; Normal, Alabama 

(https://youtu.be/8CvEGyMQ9v8?t=4226; https://

youtu.be/j11GXzvA7u0?t=3084; https://youtu.be/

j11GXzvA7u0?t=3091). 

22United States Department of Justice, United 

States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshops May 2010; Normal, Alabama 

(https://youtu.be/8QJ_K06lp5M?t=1051). 

23MacDonald, James M. Technology, 

Organization, and Financial Performance in U.S. 

Broiler Production, EIB–126, U.S. Department of 

Agriculture, Economic Research Service, June 2014. 

24Charles R. Knoeber. ‘‘A Real Game of Chicken: 

Contracts, Tournaments, and the Production of 

Broilers.’’ Journal of Law, Economics, & 

Organization, Vol. 5, No. 2. (Autumn, 1989). 

pay, and informational asymmetries 

related to farm revenues and debt. 

Poultry growers have indicated they 

lack information about certain crucial 

production factors controlled by live 

poultry dealers, such as the anticipated 

frequency and density of flock 

placements and bird target weight under 

poultry growing arrangements, which 

heavily influence grower payments on 

an individual flock basis and over the 

long term.18

Growers cited the level of control and 

discretion reserved to integrators under 

their contracts, remarking how 

discretionary decisions controlled by 

integrators related to inputs quality, 

flock placements, housing 

specifications, tournament grouping, 

and other production factors can 

significantly affect grower revenue and 

profitability. Many growers were 

worried that contract terms did not 

cover the time required to repay the 

debt on their farms, noting that— 

sometimes unforeseen—additional 

capital investments, such as those 

necessitated by integrators’ housing 

specifications, can plunge growers into 

further debt without assurances of 

adequate or stable returns.19 Growers 

indicated they do not have adequate 

information with which to assess 

original and additional capital 

investments because pay rates alone are 

insufficient for long-term revenue 

estimates without assumptions related 

to integrator discretionary production 

decisions.20 Growers have also raised 

concerns regarding the use of overly 

rosy ‘‘pro forma’’ financial estimates, 

including income projections, during 

the contracting process, which in the 

growers’ experience are not realized.21

Finally, poultry growers complained 

to USDA about being prohibited by 

dealers from asserting their rights under 

the current regulations to discuss 

poultry growing contracts with USDA 

government representatives (including 

PSD), family members, lenders, and 

other business associates. Some growers 

allege they have been threatened or 

retaliated against by integrators for 

asserting those rights, including for 

responding to Federal Government 

requests for information—specifically, 

the 2010 DOJ Workshop.22 USDA also 

received comments to the proposed rule 

that alleged some growers were 

harassed, intimidated, and retaliated 

against for refusing to make expensive 

upgrades to their growing operations. 

Similar to the comments received 

during the 2010 workshop, comments 

received in response to this proposed 

rule specifically reaffirmed that one 

prevalent deceptive practice involves 

live poultry dealers’ omission of key 

information in the contracts with 

growers. This omission of information 

caused growers to believe that they were 

signing up for a contract that in practice 

they did not end up receiving or provide 

providing services under. Numerous 

comments to the proposed rule 

described how dealers provide growers 

with inadequate information on 

settlement sheets, particularly related to 

payment, and how, without this 

information, growers could not make 

sound business decisions. 

Commenters have noted live poultry 

dealers do not provide critical 

information about— 

• typical upfront associated costs; 

• revenues and the full range of 

possible outcomes thereto; 

• sale-of-farm policies; 

• dealer bankruptcy and litigation 

history with poultry growers; 

• grower turnover rate; 

• how dealers handle—and growers 

are affected by—depopulation, sick 

chicks, natural disaster, weather-related 

events, and impairments to the physical 

infrastructure of the local complex or 

the grower’s facility; feed outages; feed 

quality, formulation, and suitability; 

and appeals processes related thereto; 

• minimum flock numbers and 

stocking densities; 

• information about inputs and any 

differences between them, such as about 

the breeds, chick weights, breeder 

facilities, breeder flock age, and bird 

sexing—both at delivery and at 

settlement; and 

• at settlement, information about 

housing type. Growers expressed a 

strong need for such information, as 

they could use it when deciding how to 

manage their farms, grow chicks, and 

take on—or not take on—additional 

risks in growing broiler chicken. 

B. Market Structure and Production 

Contracts 

Integrated live poultry dealer firms 

typically own and manage local 

‘‘complexes’’ of integrated operations 

that include hatcheries, feed mills, 

transportation systems, and processing 

facilities, and they contract with 

individual growers within a local region 

to raise birds for meat and hatchery 

eggs.23 As explained earlier, these live 

poultry dealers that own and manage 

vertically integrated operations are 

referred to in the industry as 

‘‘integrators.’’ 

Through vertical integration, 

integrators control the complete supply 

chain from the genetics of breeder stock 

to slaughter. While integrators own most 

of the inputs and manage the operation 

of the supply chain, they outsource the 

function and major costs of raising 

poultry to broiler growers—and control 

much of that process through 

production contracts. Contracting with 

individual growers to grow out broilers, 

rather than procuring broilers from 

company-owned farms, is advantageous 

to integrators for two reasons: (1) the 

rapid pace of technological change in 

broiler production since the 1950s 

requires ongoing significant capital 

investments, and (2) the use of 

tournaments to compensate growers 

insulates growers from common 

production risks (such as disease and 

extreme weather) and lowers transaction 

costs.24

Through the poultry growing 

arrangement, broiler growers provide 

the growout facilities and the 

equipment, labor, and management 

associated with those facilities. Broiler 

growers are typically responsible for 

utilities, fuel, maintenance, and repairs. 

Growers are responsible for ensuring the 

equipment functions properly and the 

environment inside the poultry house is 

satisfactory at all times throughout 

placement, including waste removal and 

disposal of deceased birds. These 

activities are subject to significant 

discretion and control by the integrator 

through contract terms and integratorsupplied supervisors or service 

technicians who oversee growers. 

Integrators exert significant power over 

contract poultry grower operations 


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25Often expressed as a ratio of birds per square 

foot, or pounds (target weight of poultry at harvest) 

per square foot, stocking density reflects the 

number of birds placed on a farm or in a poultry 

house. 

26Muir, W.M. and SE Aggrey. Poultry Genetics, 

Breeding, and BioTechnology (2003). 

27See Burke, William, and Peter J. Sharp. ‘‘Sex 

Differences in Body Weight of Chicken Embryos.’’ 

Poultry Science 68.6 (1989): 805–810; and Beg, 

Mah, et al. Effects of Separate Sex Growing on 

Performance and Metabolic Disorders of Broilers. 

Diss. Faculty of Animal Science and Veterinary 

Medicine, Sher-e-Bangla Agricultural University, 

Dhaka, Bangladesh, 2016. 

28See Washburn, K.W., and R.A. Guill. 

‘‘Relationship of Embryo Weight as a Percent of Egg 

Weight to Efficiency of Feed Utilization in the 

Hatched Chick.’’ Poultry Science 53.2 (1974): 766– 

769; Weatherup, S.T.C., and W.H. Foster. ‘‘A 

Description of the Curve Relating Egg Weight and 

Age of Hen.’’ British Poultry Science 21.6 (1980): 

511–519; Wilson, H.R. ‘‘Interrelationships of Egg 

Size, Chick Size, Posthatching Growth and 

Hatchability.’’ World’s Poultry Science Journal 47.1 

(1991): 5–20; Goodwin, K. ‘‘Effect of Hatching Egg 

Size and Chick Size Upon Subsequent Growth Rate 

in Chickens.’’ Poultry Science 40 (1961): 1408– 

1409; Morris, R.H., D.F. Hessels, and R.J. Bishop. 

‘‘The Relationship Between Hatching Egg Weight 

and Subsequent Performance of Broiler Chickens.’’ 

British Poultry Science 9.4 (1968): 305–315; 

Peebles, E. David, et al. ‘‘Effects of Breeder Age and 

Dietary Fat on Subsequent Broiler Performance. 1. 

Growth, Mortality, and Feed Conversion.’’ Poultry 

Science 78.4 (1999): 505–511. AMS notes 

additionally that research in this and related areas 

has limitations. It is older and results are mixed. 

AMS is concerned that publically available research 

has stagnated, despite the introduction of new 

breed strains in the intervening years. Because 

integrators now own the genetics companies, AMS 

has additional concerns that research has, in effect, 

been privatized, creating informational 

asymmeteries. Based on regulatory experience and 

on public comments, growers believe these factors 

affect performance, highlight its value to growers 

from disclosure. 

29 Dozier III, W.A., et al. ‘‘Stocking Density Effects 

on Growth Performance and Processing Yields of 

Heavy Broilers,’’ Poultry Science 84 (2005): 1332– 

1338; Puron, Diego et al. ‘‘Broiler performance at 

different stocking densities.’’ Journal of Applied 

Poultry Research 4.1:55–60 (1995). 

30 Dozier III, W.A., et al. ‘‘Effects of Early SkipA-Day Feed Removal on Broiler Live Performance 

and Carcass Yield.’’ Journal of Applied Poultry 

Research 11.3 (2002): 297–303. 

31Treatments may be necessary to mitigate 

disease within a single poultry house or an entire 

flock, or to boost the performance of suboptimal 

progeny from impaired breeder flocks, as described 

above. These treatments may affect the flock’s 

growth rate or mortality. See Wells, R.G., and C.G. 

Belyawin. ‘‘Egg quality-current problems and recent 

advances.’’ Poultry science symposium series. No. 

636.513 W4. 1987. (citing Spackman, D. ‘‘The 

Effects of Disease on Egg Quality.’’) 

32Merriam-Webster online dictionary: A 

monopsonist is one who is a single buyer for a 

product or service of many sellers. https://

www.merriam-webster.com/dictionary/ 

monopsonist; accessed 3/8/2022. 

33Merriam-Webster online dictionary: 

Oligopsony is a market situation in which each of 

a few buyers exerts a disproportionate influence on 

the market. An oligopsonist is a member of an 

oligopsonistic industry or market. https://

www.merriam-webster.com/dictionary/oligopsonist; 

accessed 3/8/2022. 

34MacDonald, James M., and Nigel Key. ‘‘Market 

Power in Poultry Production Contracting? Evidence 

from a Farm Survey’’. Journal of Agricultural and 

Applied Economics 44 (November 2012): 477–490. 

See also, MacDonald, James M. Technology, 

Organization, and Financial Performance in U.S. 

Broiler Production, EIB–126, U.S. Department of 

Agriculture, Economic Research Service, (June 

2014): 29–30. 

through individual production contracts 

and payment systems. 

Grower revenue is a function of 

payment per flock multiplied by the 

number of flocks over a time period. 

While the specific formula for flock 

payment varies among integrators, it 

typically involves the evaluation of 

three variables: payrate, farm weight, 

and feed consumed. Where used to 

allocate payment, the tournament 

system is supposed to essentially rank 

growers on their efficiency in 

production, with payrates adjusted up 

or down based upon the growers’ 

deviation from average performance of 

all growers over the growout period. 

Growers’ annual revenues are heavily 

dependent upon the annual number of 

flock placements and stocking density 25

of each placement, which are typically 

discretionary functions controlled by 

the integrator. Empty poultry houses do 

not produce revenue. Additionally, 

under tournament contract payments, 

flock performance—and therefore per 

flock payments—can be influenced by 

integrator discretionary decisions 

related to variation in input 

distributions like poultry breeds,26 bird 

sex,27 breeder stock age,28 stocking 

density,29 consistency of feed 

availability,30 and the type and 

administration of veterinary 

medicines.31

Moreover, when integrators encounter 

problems in performing their contract 

obligation to provide inputs, they often 

seek to resolve them via discretionary 

functions reserved to the integrator 

under the contract. From growers’ 

points of view, these are operational 

risks that can result in actual or 

perceived disparate treatment among 

growers. When natural disasters or 

weather events affect the integrators’ 

ability to provide chicks and feed or 

other key physical infrastructure of the 

local complex or grower facility, 

growers are unlikely to be aware of the 

integrators’ policies and procedures that 

dictate allocation of inputs or determine 

availability or supplemental pay. 

Similarly, if a disease outbreak or 

massive depopulation event affects 

growers, growers have a right to be 

informed of the policies and procedures 

that will be implemented to control the 

outbreak, assign payment, and reallocate 

inputs. As feed is a primary input for 

growout, growers must be made aware 

of policies and procedures to report 

issues of feed suitability and quality to 

company personnel. Integrators do not 

necessarily share these policies and 

procedures with growers and often use 

informal rules with respect to the abovementioned issues. Without this critical 

information, growers’ ability to 

understand and evaluate, as well as 

compare contracts among integrators, is 

impeded, and the potential for 

deception in contracting and deceptive 

practices in the operation of those 

contracts increases. 

Due to market consolidation 

combined with certain natural factors 

(such as the fragility of birds, limiting 

their transport), many integrators 

operate as monopsonists 32 or 

oligopsonists 33 in their relevant 

regional market. Some research 34 shows 

a correlation in local markets between 

the number of available integrators and 

grower payments, with payments 

shrinking as the number of integrators 

decreases. In local markets, the lack of 

alternative integrators, coupled with 

integrator control and discretion over 

production contracts, leaves growers 

with little bargaining power to obtain 

reasonable contract assurances and 

transparency. 

Under the existing poultry industry 

market structure, growers are dependent 

on a live poultry dealer and receive only 

nominal assurances related to 

production levels and the variables 

composing farm revenue, while 

integrators set those production levels 

and have significantly more data related 

to grower payment variables, which 

generate costs integrators seek to 

minimize. The failure to provide critical 

information is deceptive given the 

conditions of asymmetrical information 

that compound as growers accumulate 

debt and operate in a tournament they 

do not control, both of which are 

discussed in greater detail below. 

C. Grower Debt and Hold-Up Risk 

Poultry growout operations require 

significant financial investments on the 

part of poultry growers, who typically 

provide the facilities (poultry housing 

and necessary equipment), utilities 

(electricity, gas, and water), manure 

management, compliance with 

environmental regulations, labor, and 

day-to-day management of growing 

poultry. One of the costliest investments 

is in poultry housing and equipment, 

the requirements of which are dictated 

to the poultry grower by the live poultry 

dealer through the contract. Throughout 

the term of the contract, live poultry 

dealers may encourage, incentivize, or 

even require a poultry grower, at the 

grower’s expense, to upgrade existing 


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35MacDonald (June 2014) Op. Cit., pp. 38–40. 

Data from the Agricultural Resource Management 

Survey—Version 4, Financial and Crop Production 

Practices, 2011, and U.S. Census Bureau, 2011 

Quarterly. 

36Cunningham, Dan L., and Brian D. Fairchild. 

‘‘Broiler Production Systems in Georgia Costs and 

Returns Analysis 2011–2012.’’ UGA Cooperative 

Extension Bulletin 1240 (November 2011), 

University of Georgia Cooperative Extension. 

37See, for example, Cunningham and Fairchild 

(November 2011) Op. Cit.; Simpson, Eugene, Joseph 

Hess and Paul Brown, Economic Impact of a New 

Broiler House in Alabama, Alabama A&M & Auburn 

Universities Extension, March 1, 2019 (estimating a 

$479,160 construction cost for a 39,600 square foot 

broiler house). 

38MacDonald (June 2014) Op. Cit. 

39Poultry growing facilities are often 

characterized by certain expensive attributes, such 

as temperature and other habitat control systems. A 

fully equipped poultry growing facility repurposed, 

for example, as a hay barn or other storage is 

unlikely to generate the revenue necessary to meet 

a grower’s $400,000 mortgage obligation. Nor is 

repurposing it for an alternative livestock usage, 

such as hogs or dairy cows, possible, at least 

without retrofitting that would essentially demolish 

the growout facility. The grower’s return on 

investment is tied to using the facility as intended. 

40 Vukina, Tom, and Porametr Leegomonchai. 

‘‘Oligopsony Power, Asset Specificity, and HoldUp: Evidence from the Broiler Industry.’’ American 

Journal of Agricultural Economics 88 (2006). 

41 Grower churn refers to changes in grower make 

up at a given complex. This metric reflects growers 

who have been terminated or left on their own 

accord. 42MacDonald (June 2014) Op. Cit. 43 Knoeber, Charles R. and Walter N. Thurman. 

‘‘Testing the Theory of Tournaments: An Empirical 

Analysis of Broiler Production.’’ Journal of Labor 

Economics 12 (April 1994). Levy, Armando and 

Tomislav Vukina. ‘‘The League Composition Effect 

in Tournaments with Heterogeneous Players: An 

Empirical Analysis of Broiler Contracts.’’ Journal of 

Labor Economics 22 (2004). 44MacDonald (June 2014) Op. Cit., pp. 38–40. 

Data from the Agricultural Resource Management 

Continued 

housing or equipment in order to renew 

or revise an existing contract. Revenue 

instability and continuing debt 

accumulation may explain the low 

returns to equity 35 in this space. 

1. Construction Costs 

A 2011 study estimated a cost of 

$924,000 for site preparation, 

construction, and necessary equipment 

for four 25,000-square-foot poultry 

houses (or $231,000 per house) in rural 

Georgia at that time, independent of the 

cost for the land.36 Costs for establishing 

poultry houses have increased 

substantially since 2011, due to the 

advancement of new technologies in 

poultry housing and the increased cost 

of materials. AMS estimates current 

construction costs at nearly $500,000 

per poultry house.37

Poultry growers can incur 

considerable debt to make the 

investments necessary for poultry 

production. Most new broiler housing is 

debt-financed. According to MacDonald, 

U.S. contract poultry growers’ total debt 

amounted to $5.2 billion, or 22 percent 

of the total value of their assets, in 

2011.38 The research cited here found 

that debt loads—and exposure to 

liquidity risks, should flock placements 

and revenues fall—are closely related to 

the age of the operation, with newer 

farmers carrying greater debt relative to 

the value of farm assets. Farmers with 

fewer than six years of experience in 

broiler production carried debt equal to 

51 percent of assets, on average, and one 

quarter of those farmers carried debt 

equal to at least 77 percent of assets. 

The weight of poultry grower debt 

load can be exacerbated by three 

additional factors: (1) the length, in 

terms of time, of a poultry growing 

arrangement is rarely long enough to 

cover the grower’s debt repayment 

period, and can be as short as one flock; 

(2) growers may be encouraged or 

required by live poultry dealers to 

invest in facility upgrades, which may 

lead to additional debt; and (3) poultry 

housing is a specific-use asset with little 

salvage or repurpose value.39 In other 

words, the grower is unlikely to be able 

to use or sell the facilities for a different 

purpose should the poultry growing 

contract be terminated. These ‘‘term,’’ 

‘‘upgrade,’’ and ‘‘specific use’’ problems 

are rooted in asymmetrical information 

problems at the contracting stage, where 

live poultry dealers have knowledge and 

control of production and technical/ 

equipment needs over the useful life of 

the poultry farm and growers do not. 

Combined, these factors create classic 

hold-up risk, where live poultry dealers 

make contract renewal dependent on 

further grower investments not 

disclosed at the time of the original 

agreements.40

Grower debt problems are exacerbated 

by the limited number of live poultry 

dealers in most localities and by 

complex dealer-specific requirements 

that inhibit grower movement between 

dealers, particularly for growers with 

older poultry houses. For example, a 

grower who currently produces smaller 

birds for one live poultry dealer may 

desire to move to a different dealer that 

wants larger birds. The grower could be 

required to upgrade their poultry 

growing facility to include more cooling 

capacity in order to accommodate larger 

birds. However, such upgrades may not 

be economically feasible for the grower, 

so the grower stays with their current 

live poultry dealer. Growers also may 

encounter problems trying to sell their 

farm to exit the industry. Banks 

commonly require that a prospective 

buyer secures a contract with a live 

poultry dealer to be approved for 

financing the farm, making the 

availability of the poultry growing 

contract a critical element to the farm’s 

sale. Growers have often expressed 

frustration with live poultry dealer 

refusals to offer contracts to interested 

buyers, thwarting farm sales. Growers 

need to understand how live poultry 

dealer policies and procedures affect 

their ability to sell their poultry 

operation. 

Grower debt and dependance on live 

poultry dealers contribute to additional 

risks that are enhanced by other 

informational disparities. For example, 

dealers are not required to provide 

growers information related to the 

financial condition of the dealer or 

complex. Complexes that are 

underperforming financially may be 

subject to closure or reduced production 

levels, resulting in negative effects on 

grower revenue and potential contract 

termination. Growers also lack insight 

into other growers’ satisfaction with a 

dealer and how often growers and 

dealers are involved in disputes, legal or 

otherwise. Dissension between a grower 

and their dealer can often result in 

contract termination and/or litigation 

between the parties. Dealers have 

readily available access to information 

concerning their financial health, 

grower churn,41 and frequency of 

litigation with growers. Disclosure of 

these items is critically useful 

information for growers to understand 

and evaluate risk and compare contracts 

among competing live poultry dealers. 

A live poultry dealer’s failure to 

disclose this information to growers is 

deceptive. 

2. Returns to Equity 

The substantial debt accumulation, 

hold-up risk, and lack of competition for 

grower services, in an environment of 

opacity and asymmetrical information, 

is reflected in low grower returns to 

equity. In 2011, data drawn from a 

nationally representative sample of 

growers showed that the median 

payment received by contract growers 

was 5.55 cents per pound of farm 

weight. However, 10 percent of growers 

earned at least 7.02 cents per pound, 

while 10 percent earned less than 4.32 

cents per pound.42 The sample data 

ranged across all growers and all 

contract types, but research has also 

shown that payments can range widely 

within specific contract types and 

within individual grower pools, creating 

revenue uncertainty for growers.43

Perhaps even more concerning than 

the range of grower contract payments 

are the low returns on equity for poultry 

operations. According to USDA’s 

Economic Research Service (ERS),44 a 


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Survey—Version 4, Financial and Crop Production 

Practices, 2011, and U.S. Census Bureau, 2011 

Quarterly Financial Report (QFR): Manufacturing, 

Mining, Trade, and Selected Service Industries. 

https://www2.census.gov/econ/qfr/pubs/ 

qfr11q4.pdf; accessed 1/19/2022. 

45MacDonald (June 2014) Op. Cit. p. 40. 

46MacDonald (June 2014) Op. Cit. See footnote 20 

on page 27 citing ARMS data from 2011 that 

reported 97% of broilers are grown under contract, 

with 93% of contracts tied to relative performance. 

47Metrics are typically associated with ‘‘costs’’. 

Formulas to calculate the metric vary among 

integrators. A high ‘‘cost’’ grower would be a poor 

performance, as a low ‘‘cost’’ grower would have 

performed well. 

special survey conducted in 2011 

showed mean returns on equity were 

negative for operations with one to two 

poultry houses, and increased with the 

size of the operation to positive 2.7 

percent among operations with six or 

more houses. These figures were below 

mean rates of return on equity for large 

and midsize U.S. farms.45 In AMS’s 

experience, growers are experiencing 

the ongoing harm of contracting 

practices that omit critical information, 

such as certain dealer policies and 

procedures, input differences, 

information needed to evaluate returns 

across quintiles, and more. 

D. Tournaments 

The majority of growers producing 

poultry under production contracts are 

paid under a poultry grower ranking or 

‘‘tournament’’ pay system.46 Under 

poultry grower ranking systems, the 

contract between the live poultry dealer 

and the poultry grower provides for 

payment to the grower based on a 

grouping, ranking, or comparison of 

poultry growers delivering poultry to 

the dealer during a specified period 

based on metrics 47 created by the 

integrator. Per flock performance 

payments under tournament contracts 

generally depend on three variables: pay 

rate, farm weight, and feed consumed. 

In a simplified example, the live poultry 

dealer places flocks with ten growers 

under contract to deliver the same size 

of finished poultry to the dealer’s 

processing plant at the end of a 

specified growout period. Upon harvest, 

each grower’s performance (e.g., farm 

weight and feed conversion) is 

determined by an integrator-determined 

formula. The integrator then compares 

individual grower results against 

average results for all growers in the 

group, and ranks individual growers 

according to their relative performance 

within the group of ten growers. Grower 

contract payrate is adjusted up or down 

in relation to the grower’s deviation 

from the average within the tournament 

grouping for that specific growout 

period. 

Grower experience and skill, the 

technical specifications and relative 

sophistication of the housing, and other 

factors, such as the makeup of 

tournament groupings or inconsistent 

grower effort, may all affect 

performance. However, integrator 

decisions about inputs provided to 

tournament growers can also impact 

growers’ relative performance. 

Under the tournament system, 

integrators control the source of inputs 

and the distribution of those inputs to 

growers. Key inputs provided by the 

integrator are not always uniform with 

respect to quality characteristics across 

complexes or across time, and variation 

in these quality characteristics may 

impact grower performance. Based on 

AMS’s experience, live poultry dealers 

will select strategies around broad types 

of inputs to grow at certain complexes, 

in general, to target customer 

preferences or to meet product 

requirements relating to growout or 

slaughter efficiency. For example, 

certain genetically tailored birds will be 

used to grow out more meat in certain 

areas or with uniformity in larger or 

smaller sizes to help live poultry dealers 

tailor their production. Similarly, feed 

inputs may be tailored based on the 

availability of grains or to achieve other 

animal health goals. However, within 

these broader strategies, there are a wide 

range of differences to the inputs that 

growers state are material to the growout 

process—such as the sex and age of the 

chicks, age and health of breeder flocks, 

the feed mix overall based on different 

grain availability, and more. Timely 

performance by live poultry dealers and 

dispute resolution are also relevant to 

the growout process. For example, 

improper delivery of feed mix designed 

for different stages of growout or 

delayed delivery or pickup of inputs are 

all potentially relevant. 

In comments, dealers have denied or 

downplayed the significance of input 

variability and its effect on bird 

performance. Grower commenters are 

concerned about input differences and 

prefer some level of parity in input 

allocations, or at least mitigation of any 

disparities. Growers, however, unlike 

integrators, do not have direct access to 

the specific input differences, which 

makes it difficult if not impossible for 

them to evaluate whether their 

compensation is related to management 

and skill or correlated with ‘‘favorable’’ 

inputs. The lack of information further 

enables an opaque market environment 

where integrators may provide different 

inputs with little check on those 

actions. 

The omission of this known 

information by integrators—impedes 

growers’ ability to understand, evaluate, 

and adjust their performance, 

management, and skill as growers. In 

the absence of this information, growers 

are deprived of known information 

necessary to understand their 

performance and payment in operation 

under contract. 

E. Addressing the Omission of 

Information 

As described above, live poultry 

dealers have engaged in a series of 

omissions in the contracting process 

and operation of those contracts that 

deprives growers of the ability to make 

contracting and investment decisions 

and manage the operation and risks of 

their farms. This rule addresses that 

deceptive practice with regulatory 

transparency mandates enforceable 

under the Act. Eliminating deception 

will increase the intensity of 

competition amongst live poultry 

dealers to the benefit of growers. 

Growers need this information to 

understand the market for grower 

services, to understand and evaluate 

their performance under the terms of the 

contract, and to make decisions about 

their investments and operations of 

their farms that may improve 

performance or mitigate risks under 

those contracts. The additional 

information will intensify competition 

in the market for grower services. As a 

result of more complete and transparent 

information for all market participants, 

live poultry dealers will have to 

compete more vigorously for grower 

services, allowing growers to benefit 

from the competition in the market. 

The lack of this information further 

contributes to an opaque market 

environment that exposes growers to 

greater risks from actions by live poultry 

dealers. The deprivation of this 

information is a deceptive practice 

under the Act. The final rule addresses 

that ongoing deception with specific 

transparency requirements in the 

contracting process and during the 

ongoing operation of those contracts, 

consistent with the FTC’s approach to 

similar problems in franchising. These 

transparency requirements, together 

with a governance framework designed 

to enhance the reliability of the 

disclosures, are enforceable under the 

Act by AMS and by growers under 

section 202(a)’s prohibition on live 

poultry dealers engaging in deceptive 

practices. 

III. Authority 

Congress enacted the Act to promote 

fairness, reasonableness, and 

transparency in the marketplace by 

prohibiting practices that are contrary to 


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48An Act to Amend the Packers and Stockyards 

Act, S. 12, 74th Cong. (1935). 

49See, e.g. . . . Philson v. Cold Creek Farms, 

Inc., 947 F. Supp. 197, 201 (E.D.N.C. 1996) (‘‘[T]he 

violation of a regulation such as 9 CFR 201.82 is 

indisputably prohibited by the PSA . . . .’’); see 

also Stafford v. Wallace, 258 U.S. 495, 515, 42 S. 

Ct. 397, 401, 66 L. Ed. 735 (1922) (finding the Act 

Constitutional); O V Handy Bros Co v. Wallace, 16 

F. Supp. 662, 666 (E.D. Pa. 1936) (finding the 

regulation of live poultry dealers Constitutional). 

50 9 CFR 201.55 and 9 CFR 201.99. 

51 9 CFR 201.56(d) 

52 9 CFR 201.100(a). 

53For a discussion of the Act in relation to the 

FTC Act, see, e.g., Kades, Michael. ‘‘Protecting 

Livestock Producers and Chicken Growers,’’ 

Washington Center for Equitable Growth, May 2022, 

https://equitablegrowth.org/research-paper/ 

protecting-livestock-producers-and-chickengrowers/. 

54Federal Trade Commission, Policy Statement 

on Deception, 1983, available at https://

www.ftc.gov/system/files/documents/public_

statements/410531/831014deceptionstmt.pdf. 

55 16 CFR part 436; 84 FR 9051 (May 2019). 

56 D.W. Carlton and J.M. Perloff, Modern 

Industrial Organization (1994): 624. 

57Paula J. Dalley, ‘‘The Use and Misuse of 

Disclosure as a Regulatory System,’’ 34 Fla. St. U. 

L. Rev. 1089 (2007). https://ir.law.fsu.edu/lr/vol34/ 

iss4/2. 

these goals. In 1921, the Act’s stated 

purpose was to ‘‘regulate interstate and 

foreign commerce in livestock, livestock products, dairy products, poultry, 

poultry products, and eggs.’’ At that 

time, poultry was included in the 

definition of a ‘‘packer.’’ Amendments 

to the law in 1935 added a new type of 

entity under its jurisdiction, the ‘‘live 

poultry dealer.’’ The poultry industry of 

that time involved marketing of live 

animals in large population centers, 

accompanied by various unfair, 

deceptive, and fraudulent practices. The 

1935 amendments required that live 

poultry handlers be licensed, and 

subjected them to criminal penalties for 

violations. Congress also made sec. 202 

(7 U.S.C. 192) applicable to live poultry 

dealers.48 The Poultry Producers 

Financial Protection Act of 1987 (Pub. 

L. 100–173), modified and replaced 

parts of the 1935 amendments. The new 

provisions further protected growers of 

live poultry by adding payment 

provisions (sec. 410), trust provisions 

(sec. 207), and adding and modifying 

the liability provisions (secs. 411, 412, 

and 308), including creating a private 

cause of action for violations of sec. 202 

of the Act. 

AMS authority to regulate deception 

and deceptive practices is wellestablished.49 Sec. 202(a) of the Act (7 

U.S.C. 192(a)) prohibits live poultry 

dealers, with respect to live poultry, 

from engaging in or using deceptive 

practices or devices. Further, sec. 410(a) 

of the Act (7 U.S.C. 228b-1(a)) requires 

live poultry dealers obtaining live 

poultry under a poultry growing 

arrangement to make full payment for 

such poultry to the poultry grower from 

whom the dealer obtains the poultry on 

a timely basis. Sec. 407(a) of the Act (7 

U.S.C. 228(a)) authorizes the Secretary 

to make rules and regulations as 

necessary to carry out the provisions of 

the Act. Such regulations are found, in 

part, at 9 CFR part 201. 

Disclosure is a key component of the 

current regulations in place pursuant to 

the Act. The current regulations require 

disclosure of weights in the settlement 

of sales of livestock and live poultry,50

disclosure of certain potential conflicts 

of interest in the consignment of 

livestock at auction,51 and disclosures 

for poultry growers at contracting and 

on settlement, including the payment 

formula, performance plans, grading 

certificates, and more.52

Like sec. 202(a) of the Act, sec. 5 of 

the Federal Trade Commission (FTC) 

Act also prohibits deceptive practices.53

The FTC has long implemented 

disclosure requirements under sec. 5 of 

the FTC Act for the purpose of 

providing adequate information 

necessary for parties in imbalanced 

business relationships to inhibit 

deceptive practices. In 1981, the FTC 

adopted a policy statement summarizing 

its longstanding approach to deception 

cases, which AMS takes notice of.54 For 

example, FTC’s Franchise Rule requires 

the franchising industry to provide 

prospective purchasers of franchises 

information necessary to weigh the risks 

and benefits of an investment by 

providing required disclosures in a 

uniform format.55 This rule is designed 

to similarly provide current and 

prospective poultry growers with 

sufficient information prior to entering 

into an agreement. 

Additionally, disclosure requirements 

are commonly utilized in the regulation 

of financial markets, housing consumer 

protection, and other complex markets 

with significant information imbalances, 

to prevent deception and other abuses.56

In those markets, disclosure commonly 

yields multiple benefits, starting with 

correcting the specific information 

asymmetries that give rise to 

deception.57 For example, disclosure 

can also function to create reputational 

disincentives to counter potentially 

problematic behavior. This rule is 

designed in part with that in mind. 

Given the longstanding set of grower 

complaints about input differences, 

costly capital investments, and other 

problematic practices arising from live 

poultry dealers’ high degree of control 

over growers under a poultry growing 

arrangement, transparency can 

reasonably be expected to contribute, at 

least in part, to improvements in fair 

dealing by market participants. Overall, 

disclosure is recognized as a costeffective tool to prevent deception and 

improve market integrity. 

IV. Summary of the Proposed Rule 

In the June 2022 proposal, AMS 

proposed to revise current regulations in 

9 CFR 201.100 regarding the timing and 

contents of poultry growing contracts. 

Currently, that section sets forth the 

disclosures a live poultry dealer must 

make to poultry growers and 

prospective poultry growers in 

connection with poultry growing 

arrangements. The proposal would have 

revised § 201.100 by requiring dealers to 

disclose additional information to 

poultry growers and prospective poultry 

growers in connection with poultry 

growing arrangements. In the proposal, 

the regulations also would have 

required live poultry dealers to specify 

additional terms in poultry growing 

contracts to improve transparency and 

forestall deception in the use of poultry 

growing arrangements. 

AMS also proposed to add a new 

§ 201.214 to the regulations to require 

live poultry dealers to provide certain 

information to poultry growers in 

tournament pay systems about 

integrator-controlled inputs related to 

the poultry flocks growers receive for 

growout. Proposed new § 201.214 also 

would have added a new level of 

transparency to grower ranking sheets. 

The proposal was intended to enable 

poultry growers to evaluate the 

distribution of inputs among all 

tournament participants in order for 

poultry growers to assess the effect on 

grower payment. 

Finally, AMS proposed to add to the 

list of definitions in § 201.2 to define 

terms used in the proposed revisions to 

§ 201.100 and proposed new § 201.214. 

Upon consideration of public 

comments on the proposed rule, AMS 

modified some of its proposed 

provisions in this final rule. An 

overview of the new or revised rule 

provisions follows in Section V, a 

discussion of changes from the 

proposed rulemaking is in Section VI, 

and a discussion of the public 

comments on the proposed rulemaking 

is in Section VII. 

V. New or Revised Provisions 

AMS addresses concerns related to 

market power imbalance and 

asymmetric information in poultry 

grower contracting by adding two new 

sections to 9 CFR part 201 that 

implements the Act. The first section 

addresses the lack of transparency and 


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associated deceptive practices in broiler 

grower contracting. The second section 

addresses the lack of transparency and 

associated deceptive practices in the use 

of poultry grower ranking systems to 

determine tournament grower payment 

settlements for broiler growers. In both 

cases, live poultry dealers are required 

to make disclosures that provide broiler 

growers more information with which to 

evaluate poultry growing arrangements. 

This rule will better balance the 

quantity, quality, and type of critical 

information broiler growers, prospective 

broiler growers, and live poultry dealers 

engaged in the production of broilers 

have as they enter and operate under 

broiler growing arrangements. Through 

this rulemaking, the agency requires 

dealers to provide growers with critical 

information during the contracting 

process. This rule gives growers the 

ability to understand and evaluate 

contracts from dealers. The rule 

enhances the integrity of the 

marketplace overall, helps reduce the 

risk of other forms of problematical 

market practices, such as the 

inappropriate provision of different 

inputs to different growers, and 

prevents certain deceptive practices by 

dealers. 

AMS also made conforming changes 

and changes for clarity in § 201.2, 

§ 201.100(a), and § 201.100(b). This 

section provides an overview of the new 

and revised provisions. 

A. Definitions 

This rule amends § 201.2 by removing 

the paragraph designations within the 

section, reorganizing the definitions 

alphabetically, and adding definitions 

for new terms. The new terms are: 

breeder facility identifier, breeder flock 

age, broiler, broiler grower, broiler 

growing arrangement, complex, gross 

payments, grower variable costs, 

housing specifications, inputs, letter of 

intent, Live Poultry Dealer Disclosure 

Document, minimum number of 

placements, minimum stocking density, 

number of placements, original capital 

investment, placement, poultry grower 

ranking system, poultry growout, 

poultry growout period, prospective 

broiler grower, prospective poultry 

grower, and stocking density. 

Additionally, this rule incorporates into 

§ 201.2 the statutory definitions of: 

commerce, live poultry dealer, poultry 

grower, and poultry growing 

arrangement. 

B. Disclosure 

To address concerns related to 

deception and deceptive practices by 

dealers in contracting for broiler 

growing arrangements and in the 

operation of such contracts, this final 

rule adds new, enforceable transparency 

requirements on live poultry dealers for 

the benefit of growers. Specifically, it 

adds a new section at § 201.102,— 

disclosures for broiler production, and 

makes conforming changes to 

§ 201.100(a) and (b). Currently, 9 CFR 

201.100 describes the documents that 

live poultry dealers must provide to 

poultry growers within certain 

timeframes. Paragraph (a) of § 201.100 

requires a dealer to provide the grower 

with a true written copy of the offered 

poultry growing arrangement on the 

date the dealer provides poultry housing 

specifications to the grower. The final 

rule retains the requirement for all live 

poultry dealers but revises the language 

in paragraph (a) for clarity by replacing 

‘‘house specifications’’ with ‘‘housing 

specifications,’’ replacing the personal 

pronoun ‘‘you’’ with ‘‘the dealer,’’ and 

by removing the word ‘‘as’’ from the 

beginning of the paragraph. Paragraph 

(b) of § 201.100 requires live poultry 

dealers to allow growers to discuss the 

terms of poultry growing arrangement 

offers with a Federal or State agency, the 

growers’ legal and financial advisors 

and lenders, other growers for the same 

dealer, and family members or other 

business associates with whom growers 

have valid business reasons for 

consulting about the offered poultry 

growing arrangements. This final rule 

retains the requirement but revises the 

language to clarify that the right to 

discuss the terms of the poultry growing 

arrangement offer also applies to 

prospective poultry growers and, if 

applicable, to the accompanying 

Disclosure Document described in 

§ 201.102. This rule also revises the 

language to remove the personal 

pronoun ‘‘you’’ and replace ‘‘must allow 

poultry growers to discuss the terms of 

a poultry growing arrangement offer’’ 

with ‘‘may not prohibit a poultry grower 

or prospective poultry grower from 

discussing the terms of a poultry 

growing arrangement offer’’ for clarity. 

The rest of § 201.100 remains 

unchanged. 

This final rule adds new § 201.102— 

Disclosures for broiler production— 

establishing new disclosure 

requirements in addition to those 

required by § 201.100 for live poultry 

dealers engaged in the production of 

broilers. This rule adds new definitions 

to § 201.2 for: broiler, meaning any 

chicken raised for meat production; 

broiler grower, meaning a poultry 

grower engaged in the production of 

broilers; broiler growing arrangement, 

meaning a poultry growing arrangement 

pertaining to the production of broilers; 

and prospective broiler grower, meaning 

a person or entity with whom the live 

poultry dealer is considering entering 

into a broiler growing arrangement. 

New paragraph 201.102(a)— 

Obligation to furnish information and 

documents—requires the live poultry 

dealer engaged in the production of 

broilers (‘‘dealer’’) to provide the 

prospective or current broiler grower 

with the Disclosure Document, as 

described in paragraph (b) of the 

section, in addition to the true written 

copy of the broiler growing 

arrangement, under three different 

scenarios. 

First, under § 201.102(a)(1), a live 

poultry dealer engaged in the 

production of broilers seeking to renew, 

revise, or replace an existing broiler 

growing arrangement or to establish a 

new broiler growing arrangement that 

does not contemplate modifications to 

existing housing specifications will be 

required to provide both the broiler 

growing arrangement and the Disclosure 

Document to the grower at least 14 

calendar days before the dealer executes 

the broiler growing arrangement, 

provided that the grower may waive up 

to 7 calendar days of that time period. 

Housing specifications is defined as a 

description of—or a document relating 

to—a list of equipment, products, 

systems, and other technical poultry 

housing components required by a live 

poultry dealer for the production of live 

poultry. A live poultry dealer will likely 

have multiple housing specifications 

that operate in concert to create housing 

tiers at a given complex. The housing 

specifications document or list should 

accurately reflect the minimum 

requirements for qualification under a 

specific housing tier. Growers agree to 

provide housing that meets the 

minimum requirements of a live poultry 

dealer. 

Second, under § 201.102(a)(2), a live 

poultry dealer that requires the grower 

to make an original capital investment 

to comply with the dealer’s housing 

specifications will be required to 

provide the grower simultaneously with 

four relevant documents. These 

documents are a true written copy of the 

broiler growing arrangement, the 

housing specifications, the Disclosure 

Document, and a letter of intent that can 

be relied upon to obtain financing for 

the original capital investment. 

Finally, under § 201.102(a)(3), a live 

poultry dealer engaged in the 

production of broilers seeking to offer or 

impose modifications to existing 

housing specifications that could 

reasonably require the grower to make 

an additional capital investment will be 

required to provide the grower 


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simultaneously with four relevant 

documents. These documents are a true 

written copy of the broiler growing 

arrangement, modified housing 

specifications, the Disclosure 

Document, and a letter of intent that can 

be relied upon to obtain financing for 

the additional capital investment. AMS 

expects most growers will seek 

financing for additional capital 

investments. The simultaneous 

production of the three other documents 

will: (1) provide growers with improved 

information with which to assess the 

new capital investment and (2) allow 

growers to establish appropriate 

timelines for contemplating the 

investment. 

The required contents and format of 

the Disclosure Document cover pages 

are provided in § 201.102(b)— 

Prominent disclosures. Paragraph 

201.102(b) specifies the required 

elements for the cover pages of the 

Disclosure Document, including basic 

information about the live poultry 

dealer, key points in the broiler growing 

arrangement, and precise language for 

certain notices the dealer must make to 

the grower. AMS has developed 

downloadable instructions that contain 

the language required by § 201.102(b) 

for live poultry dealers. The instructions 

(Form PSD 6100 (Live Poultry Dealer 

Disclosure Document Form Instructions, 

OMB Control No. 0581–0308)) are 

intended to simplify compliance with 

these notification requirements and 

provide guidance for complying with 

§ 201.102(c) and (d). Under 

§ 201.102(b)(1), the required Disclosure 

Document cover page must include the 

title ‘‘LIVE POULTRY DEALER 

DISCLOSURE DOCUMENT’’ in capital 

letters and bold type. Section 

201.102(b)(2) requires live poultry 

dealers engaged in the production of 

broilers to list their name, type of 

business organization, principal 

business address, telephone number, 

email address, and if applicable, 

primary internet website address. 

Paragraph 201.102(b)(3) requires the 

dealer to specify the length of the term 

of the broiler growing arrangement. 

Including this information at the front of 

the Disclosure Document clearly 

identifies for growers the live poultry 

dealer and the associated broiler 

growing arrangement under 

consideration. 

Under § 201.102(b)(4), the live poultry 

dealer engaged in the production of 

broilers must include a notice to the 

grower that highlights that grower 

income may be significantly affected by 

decisions made by live poultry dealers, 

and encourages growers to carefully 

review the information in the Disclosure 

Document. Then, under § 201.102(b)(5), 

the dealer must state the minimum 

number of poultry placements on the 

broiler grower’s farm annually and the 

minimum stocking density for each 

flock to be placed under the broiler 

growing arrangement. The minimum 

stocking density is the ratio that reflects 

the minimum weight of poultry per 

facility square foot the live poultry 

dealer intends to harvest from the 

grower following each growout. 

New broiler growers may not 

understand how the discretionary 

actions of live poultry dealers affect 

grower payments. Many broiler growers 

are paid based on farm weight 

multiplied by a feed conversion 

variable. A live poultry dealer 

exercising discretion in placements, 

stocking density, and target weight is 

directly affecting that farm weight basis. 

Cautioning growers about the potential 

impact of dealer-controlled inputs and 

providing growers with the minimum 

number of flocks and minimum stocking 

density of flocks to be placed with the 

grower annually under the broiler 

growing arrangement will help growers 

assess the projected baseline value of 

their broiler growing arrangement. 

Under § 201.102(b)(6), the live poultry 

dealer engaged in the production of 

broilers must include one of two 

alternative statements depending on 

whether the offered broiler growing 

arrangement includes housing 

specifications that require or could 

reasonably require an original or 

additional capital investment. If the 

new, renewed, revised, or replacement 

broiler growing arrangement does not 

contemplate modifications to existing 

housing specifications, the dealer must 

include the statement in 

§ 201.102(b)(6)(i) in the Disclosure 

Document cover pages. The dealer’s 

statement explains the grower’s right to 

read the Disclosure Document and all 

accompanying documents carefully, and 

notes that the live poultry dealer is 

required to provide the current or 

prospective broiler grower with the 

Disclosure Document and a copy of the 

broiler growing arrangement at least 14 

calendar days before the dealer executes 

the broiler growing arrangement, 

provided that the grower may waive up 

to 7 calendar days of that time period. 

This timing has been amended to match 

the revised timing in the final rule, as 

explained above. Alternatively, if the 

dealer offers a new broiler growing 

arrangement that requires the current or 

prospective broiler grower to make an 

original capital investment, as in 

§ 201.102(a)(2), or offers or imposes 

modifications to existing housing 

specifications that could reasonably 

require the current broiler grower to 

make an additional capital investment, 

as in § 201.102(a)(3), the dealer must 

include the statement in 

§ 201.102(b)(6)(ii). 

The statement in § 201.102(b)(6)(ii) 

explains the grower’s right to read the 

Disclosure Document and all 

accompanying documents carefully, and 

notes that the live poultry dealer 

engaged in the production of broilers is 

required to simultaneously provide the 

broiler grower with the Disclosure 

Document, a copy of the broiler growing 

arrangement, the new or modified 

housing specifications, and the letter of 

intent. These required statements in the 

Disclosure Document cover pages will 

notify broiler growers of their rights 

under the regulations and indicate what 

documents they must receive from the 

live poultry dealer within the described 

timeframes. 

Under § 201.102(b)(7), the live poultry 

dealer engaged in the production of 

broilers must include a statement 

notifying the broiler grower that the 

terms of the broiler growing 

arrangement will govern the grower’s 

relationship with the live poultry 

dealer’s company. The statement further 

notifies broiler growers of their right, 

notwithstanding any confidentiality 

provision in the broiler growing 

arrangement, to discuss the terms of the 

broiler growing arrangement and the 

Disclosure Document with a Federal or 

State agency; the grower’s financial 

advisor, lender, legal advisor, or 

accounting services representative; 

other growers for the same live poultry 

dealer; and a member of the grower’s 

immediate family or a business 

associate. The statement explains that a 

business associate is a person not 

employed by the broiler grower, but 

with whom the current or prospective 

grower has a valid business reason for 

consulting when entering into or 

operating under a broiler growing 

arrangement. 

Finally, § 201.102(b)(8) requires the 

live poultry dealer engaged in the 

production of broilers to include the 

following statement in bold type in the 

Disclosure Document cover pages: 

‘‘Note that USDA has not verified the 

information contained in this document. 

If this disclosure by the live poultry 

dealer contains any false or misleading 

statement or a material omission, a 

violation of Federal and/or State law 

may have occurred.’’ With this 

language, this rule clarifies that the 

Disclosure Document is not subject to 

agency review prior to submission to 

broiler growers, and that legal recourse 

may be available for some present and 

future controversies related to the 


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58The word ‘‘local’’ in this discussion is used to 

differentiate between the complex with which the 

grower may be considering a contract and all the 

other complexes a dealer may own. 

59Most dealers do not own or operate growout 

and breeder facilities, but they do own everything 

else around which the growout facilities are 

organized—i.e., the complex. The complex 

commonly includes the processing plant and feed 

mill and may include other production facilities. 

Growers produce for a particular local complex, 

even though the dealer may own more than one 

local complex and other complexes around the 

country. Depending on the technical needs for 

optimizing poultry growth for each product type, 

the dealer may have multiple different housing 

specifications for growers who produce different 

products for the complex. Therefore, the required 

table will show average payments to growers in 

each of the different housing specifications at the 

complex. 

Disclosure Document and the broiler 

growing arrangement. 

Paragraph 201.102(c)—Required 

disclosures following the cover page— 

specifies the information the live 

poultry dealer engaged in the 

production of broilers must provide in 

the Disclosure Document following the 

cover pages. Under § 201.102(c)(1), the 

dealer must provide a summary of 

litigation over the previous 5 years 

between the live poultry dealer and any 

broiler grower, including the nature of 

the litigation, its location, the initiating 

party, a brief description of the 

controversy, and any resolution. 

Information about a live poultry dealer’s 

litigation with poultry growers within 

the relevant period, particularly the 

basis of the litigation and the volume of 

litigation relative to the number of 

growers with whom the dealer 

contracts, will help growers identify 

conflict origins and better assess 

potential risk of conflict. 

Paragraph 201.102(c)(2) requires the 

live poultry dealer engaged in the 

production of broilers to provide a 

summary of all bankruptcy filings in the 

previous 5 years by the dealer and any 

parent, subsidiary, or related entity of 

the live poultry dealer. Bankruptcy of 

the live poultry dealer poses a very real 

financial risk to grower financial 

returns. Recent or current bankruptcy 

filing is an indicator of the financial 

health of the live poultry dealer, which 

a broiler grower may need to consider 

when deciding whether to enter or 

continue a contractual relationship with 

the dealer. 

Paragraph 201.102(c)(3) requires the 

live poultry dealer engaged in the 

production of broilers to provide a 

statement that describes the dealer’s 

policies and procedures regarding the 

potential sale of the broiler grower’s 

farm or assignment of the broiler 

growing arrangement to another party. 

This information is important for broiler 

growers to have when considering a 

broiler growing arrangement because 

growers may choose or be forced to exit 

poultry farming for various reasons, 

such as the death or disability of the 

grower or the prospect of other 

occupational opportunities. However, in 

some situations, farm sales and 

assignments might be contingent on 

approval from the live poultry dealer. 

Growers informed of these policies and 

procedures can develop a coherent 

strategy, should they desire to exit 

poultry farming. 

Paragraph 201.102(c)(4) contains new 

requirements for the live poultry dealer 

engaged in the production of broilers to 

disclose their policies and procedures, 

as well as any appeal rights, arising 

from increased lay-out time; sick, 

diseased, and high early mortality 

flocks; natural disasters, weather events, 

or other events adversely affecting the 

physical infrastructure of the local 

complex or the grower facility; other 

events potentially resulting in massive 

depopulation of flocks affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability. 

If no policy or procedure exists, the live 

poultry dealer must acknowledge ‘‘no 

policy exists’’ for each item listed in 

§ 201.102(c)(4)(i)–(vi). The rule is not 

intended to require live poultry dealers 

to have polices for every listed 

occurrence, nor is the rule intended to 

have a legal consequence for simply not 

having a policy. Disclosing, however, 

that no policy exists is important to the 

poultry grower for risk assessment 

during the contracting process, and for 

protection against arbitrary undisclosed 

policies or procedures when the listed 

situations arise during the operation of 

the contract. The live poultry dealer will 

also be required to describe any policies 

on grower appeal rights associated with 

these events should a grower disagree 

with the live poultry dealer’s actions or 

determinations. 

Paragraph 201.102(c)(5) adds a new 

requirement for live poultry dealers 

engaged in the production of broilers to 

disclose broiler grower turnover data. 

Specifically, the live poultry dealer will 

be required to provide a table showing 

the average annual broiler grower 

turnover rates for the previous calendar 

year and the average broiler grower 

turnover rates of the 5 previous calendar 

years at both a company level and a 

local complex level. The broiler grower 

turnover rate is the number of grower 

separations during the time period 

divided by the average number of 

growers during the same period. The 

broiler grower turnover rate relates to 

the general risk of contracting with a 

live poultry dealer. Growers may 

compare the turnover rates of multiple 

live poultry dealers as a consideration 

in assessing relative risk when making 

contracting decisions. Instructions for 

calculating and normalizing table values 

are provided on Form PSD 6100 (OMB 

Control No. 0581–0308). 

Under § 201.102(d)—Financial 

disclosures—live poultry dealers 

engaged in the production of broilers 

must provide certain additional 

information in the Disclosure 

Document. Under § 201.102(d)(1), live 

poultry dealers will be required to 

provide in the Disclosure Document 

tables showing quintiles of average 

annual gross payments to broiler 

growers at the local complex for each of 

the previous 5 years.58 If there are nine 

or fewer growers at a local complex, live 

poultry dealers will not be required to 

report quintiles of average annual gross 

payments as this would result in the 

disclosure of the unique payment 

information of one or more growers. 

Unique payment information is 

considered confidential business 

information. For local complexes with 

nine or fewer growers, live poultry 

dealers will be required to report only 

the mean and one standard deviation 

from the mean of the average annual 

gross payment to growers at the local 

complex. Average payments must be 

shown in U.S. dollars per farm facility 

square foot. Further, the required tables 

must be organized by year, housing 

specification tier, and quintile or mean 

and standard deviation.59 Instructions 

for calculating and normalizing table 

values are provided in Form PSD 6100. 

This rule adds to § 201.2 a definition for 

complex, meaning a group of local 

facilities under the common 

management of a live poultry dealer. 

The definition states that a complex 

may include, but not be limited to, one 

or more hatcheries, feed mills, 

slaughtering facilities, or poultry 

processing facilities. 

The required disclosure of historical 

revenue information relating to growers 

in the same local complex will give the 

current or prospective broiler grower 

considering entering into a broiler 

growing arrangement a clear and 

accurate picture of potential earnings 

under the arrangement and help the 

grower evaluate whether those earnings 

are sufficient. Providing insights into 

the variability of cash flow within any 

given year will enable growers to make 

informed business decisions, manage 

risk, and improve farm management. 

Paragraph 201.102(d)(2) provides that, 

if the housing specifications for poultry 

growers under contract with the live 

poultry dealer in the local complex are 

modified so that an additional capital 


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60Certification of regulatory compliance 

requirements is found in several regulatory regimes 

involving important market compliance protocols. 

These include section 302 of the Sarbanes-Oxley 

Act (Pub. L. 107–204; 116 Stat. 745) and Title XIII 

of the Bank Holding Company Act (12 U.S.C. 1851 

et seq.) and regulations thereunder, commonly 

known as the Volcker Rule, including revisions 

designed to simplify the rule. See ‘‘Subpart D— 

Compliance Program Requirements’’ (12 CFR 

248.20 and discussion in 79 FR 5535); ‘‘Revisions 

to Prohibitions and Restrictions on Proprietary 

Trading and Certain Interests in, and Relationships 

With, Hedge Funds and Private Equity Funds’’ (84 

FR 61974). 

investment may be required, or if for 

some other reason annual gross payment 

averages for the previous 5 years do not 

accurately represent expected future 

grower payment averages, the 

Disclosure Document must provide 

additional information. The additional 

information includes annual payment 

projections by quintile or mean and 

standard deviation (depending on the 

number of growers at the local 

complex). The projections must reflect 

anticipated payments to growers under 

contract with the complex with the 

same housing specifications for the term 

of the applicable broiler growing 

arrangement. The dealer also must 

explain why the historical data does not 

provide an accurate representation of 

future earnings. Live poultry dealers 

engaged in the production of broilers 

considering or undertaking actions 

related to discretionary functions, such 

as changes in pay rates, pay systems, 

housing specifications, growout models, 

stocking densities, or number of annual 

placements, must provide grower 

payment projections to allow growers to 

determine the financial feasibility of the 

upgrades and make better-informed 

business decisions. Standardized grower 

payment projections will include 

realistic expectations about future 

earnings. 

Paragraph 201.102(d)(3) requires the 

live poultry dealer engaged in the 

production of broilers to provide a 

summary of any information the dealer 

collects or maintains pertaining to 

grower variable costs inherent to broiler 

production. A conforming change, for 

clarity and emphasis purposes, to 

§ 201.2 adds a definition for grower 

variable costs to mean those costs 

related to poultry production that may 

be borne by the poultry grower, which 

may include, but are not limited to, 

utilities, fuel, water, labor, repairs and 

maintenance, and liability insurance. 

The modified language is intended to 

help improve readability; the listed 

costs are not required to be treated as 

grower variable costs under a poultry 

growing arrangement if the parties 

choose to contract for them in some 

other manner. Receiving information on 

grower variable costs will allow broiler 

growers to make informed decisions 

about their participation in the broiler 

production business. 

Finally, under § 201.102(d)(4), the live 

poultry dealer engaged in the 

production of broilers must supply the 

contact information for the State 

university extension service office or the 

county farm advisor’s office that can 

provide relevant information to the 

current or prospective broiler grower 

about grower costs and broiler farm 

financial management in the grower’s 

geographic area. 

Paragraph 201.102(e)—Small live 

poultry dealer financial disclosures— 

exempts from the requirement to 

provide the Disclosure Document 

required under § 201.102(a)(1) live 

poultry dealers engaged in the 

production of broilers that, together 

with all companies controlled by or 

under common control with the dealer, 

slaughter fewer than 2 million live 

pounds of broilers weekly (104 million 

pounds annually). The exemption 

applies to these small operators as long 

as their housing specifications are static. 

If their housing specifications are 

modified, requiring an additional 

capital investment from growers, these 

smaller operators will be required to 

provide the complete Disclosure 

Documents, as specified in 

§ 201.102(a)(2) or (a)(3), to balance any 

financial risk of the new investment. 

AMS proposed—and retains this 

exemption in the final rule—because, in 

general, smaller operators are in discrete 

market segments and not engaged in the 

same market practices that are as likely 

to deceive as larger live poultry dealers’ 

practices, which reduces the risks to 

growers and the need for the disclosures 

mandated in this rule. Examples of such 

market practices include allowing 

growers to be responsible for providing 

some inputs (e.g., feed), allowing 

growers to use older growout facilities, 

or granting growers more discretion in 

production decisions. Additionally, 

AMS will continue to monitor the 

impact of this rule on small businesses 

to ensure that its analysis is correct and 

to determine whether enforcement 

discretion may be appropriate. 

This final rule adds new 

§ 201.102(f)—Governance and 

certification, which requires the live 

poultry dealer engaged in the 

production of broilers to establish, 

maintain, and enforce a governance 

framework designed to review and 

ensure the accuracy and completeness 

of the Disclosure Document, and ensure 

the live poultry dealer’s compliance 

with all its obligations under the Act 

and its regulations. The governance 

framework and anti-fraud protections 

require oversight by corporate officers 

and ensure legal accountability. Under 

§ 201.102(f), the framework must be 

reasonably designed to audit the 

accuracy and completeness of 

disclosures under the Disclosure 

Document and ensure compliance with 

the Act and associated regulations. The 

principal executive officer of the live 

poultry dealer’s company, or a person 

performing similar functions, must 

certify that the company complies with 

the governance framework requirement 

and that the Disclosure Document is 

accurate and complete. The certification 

requirement is tailored to ensure the 

soundness and accuracy of the 

procedures used to produce the 

Disclosure Document and the 

information contained therein.60

The framework requirement helps 

ensure that the company has in place 

specific steps that it will take to comply 

with this rule. It seeks to balance 

effectiveness at providing the internal 

controls necessary for reliable 

disclosure with some degree of 

flexibility to enable dealers to design a 

framework appropriate to manage the 

risks relating to the preparation of 

complete and accurate disclosures given 

their own particular operations. 

As explained earlier, to simplify 

compliance with this requirement, AMS 

has developed instructions for 

compiling the Disclosure Document, 

Form PSD 6100, with standardized 

language that live poultry dealers can 

use. The language includes a 

certification statement the principal 

executive officer of the live poultry 

dealer’s company, or a person 

performing similar functions, must sign. 

Section 201.102(g)—Receipt by 

growers—requires a live poultry dealer 

engaged in the production of broilers to 

include in the Disclosure Document a 

signature page. The signature page 

includes a statement highlighting the 

requirements for timely delivery of the 

disclosure document, potential liability 

for a false or misleading statement or a 

material omission, and how to contact 

USDA to file a complaint at its website 

or by telephone. 

The live poultry dealer must also 

obtain the current or prospective 

grower’s dated signature on the 

signature page, or obtain alternative 

documentation to evidence delivery and 

that the dealer used best efforts to obtain 

grower receipt according to the 

specified timeframes. The dealer must 

provide a copy of the dated signature 

page or alternative documentation to the 

grower and retain a copy of the dated 

signature page or alternative 

documentation in the dealer’s records 


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for 3 years following expiration, 

termination, or non-renewal of the 

broiler growing arrangement. Including 

the required statement informs growers 

that false or misleading statements or 

material omissions contained in the 

Disclosure Document may form a basis 

for legal action. Requiring live poultry 

dealers to collect and retain proof of 

compliance will ensure compliance 

with the regulation. 

Paragraph 201.102(g) also contains 

new clear language and translation 

requirements for the document. Under 

§ 201.102(g)(3), the Disclosure 

Document must be presented in a clear, 

concise, and understandable manner for 

growers, and it references Form PSD 

6100 for guidance on the presentation of 

the information and required 

calculations. Under § 201.102(g)(4), the 

live poultry dealer must make 

reasonable efforts to ensure that growers 

are aware of their right to request 

translation assistance, and to assist the 

grower in translating the Disclosure 

Document at least 14 calendar days 

before the live poultry dealer executes 

the broiler growing arrangement that 

does not contemplate modifications to 

the existing housing specifications 

(provided that the grower may waive up 

to 7 calendar days of that time period). 

For a broiler growing arrangement that 

does contemplate modifications to the 

existing housing specifications, the 

translation assistance must be provided 

when the live poultry dealer provides 

the Disclosure Document to the grower. 

Reasonable efforts include but are not 

limited to providing current contact 

information for professional translation 

service providers, trade associations 

with translator resources, relevant 

community groups, or any other person 

or organization that provides translation 

services in the broiler grower’s 

geographic area. Reasonable efforts may 

also include allowing additional time to 

review the translated Disclosure 

Document. A live poultry dealer may 

not restrict a broiler grower or 

prospective broiler grower from 

discussing or sharing the Disclosure 

Document for purposes of translation 

with a person or organization that 

provides language translation services. 

AMS also added a provision to 

§ 201.100 preventing live poultry 

dealers from restricting growers from 

sharing the Disclosure Documents with 

legal counsel, accountants, family, 

business associates, and financial 

advisors or lenders. 

Nothing in the rule prevents 

companies from providing a translation, 

provided it is complete, accurate, and 

not misleading. As indicated previously, 

this rule is intended to improve 

transparency in poultry production 

contracting by providing poultry 

growers with relevant information to 

make more informed business decisions. 

These new requirements will enable the 

prospective or current poultry grower to 

better understand the information 

provided in the disclosures. 

C. Contract Terms 

Currently, § 201.100(c)—Contracts; 

contents—specifies certain information 

that must be included in a poultry 

growing arrangement. The live poultry 

dealer is required to specify the 

duration of the contract and conditions 

for termination of the contract by each 

of the parties, all terms relating to the 

poultry grower’s payment, and 

information about a performance 

improvement plan for the grower, if one 

exists. In the final rule, AMS did not 

reduce the requirements in § 201.100(c) 

for all live poultry dealers. AMS adds 

new § 201.102(h)—Contract terms— 

introducing additional requirements 

that apply exclusively to live poultry 

dealers engaged in the production of 

broilers. Paragraph 201.102(h) requires 

live poultry dealers engaged in the 

production of broilers to specify the 

minimum number of placements to be 

delivered to the broiler grower’s farm 

annually in each year of the contract, as 

well as the minimum stocking density 

of each of those placements. The 

minimum number of placements and 

the minimum stocking density of each 

placement under the broiler growing 

arrangement directly impact broiler 

grower revenues. Both figures are 

crucial to a current or prospective 

grower’s ability to evaluate potential 

earnings under the contract and their 

ability to meet financial obligations. 

Requiring live poultry dealers engaged 

in the production of broilers to include 

this information in broiler growing 

contracts will improve growers’ ability 

to understand and evaluate contracts 

offered by dealers, and prevent 

deceptive practices in the contracting 

process. Providing such information 

may also allow lenders and guarantors 

to better evaluate the desirability of 

broiler loans they are asked to consider. 

D. Poultry Grower Ranking Systems 

AMS adds a new § 201.104— 

Disclosures for broiler grower ranking 

system payments. This new section 

applies exclusively to live poultry 

dealers engaged in the production of 

broilers who use a poultry grower 

ranking system to calculate broiler 

grower payments. New § 201.104 

specifies the recordkeeping and 

disclosure requirements for such 

dealers. AMS amends § 201.2 to add 

definitions for terms used in new 

§ 201.104. In addition, § 201.100(f) of 

the current regulations, which contains 

requirements for grouping or ranking 

sheets and which AMS proposed to 

remove in the proposed rule, is retained 

in the final rule to reflect that the 

existing grouping or ranking sheet 

requirements continue to apply to all 

live poultry dealers, while the 

additional grouping or ranking sheet 

requirements at § 201.104(c) apply 

exclusively to live poultry dealers 

engaged in the production of broilers. 

Currently, live poultry dealers are 

required under the regulations at 

§ 201.100(d) to furnish poultry growers 

in poultry grower ranking systems with 

settlement sheets that show the grower’s 

precise position in the ranking for that 

tournament. AMS adds a requirement in 

new § 201.104(a)—Poultry grower 

ranking system records—that requires a 

live poultry dealer engaged in the 

production of broilers who calculates 

payment under a poultry grower ranking 

system to produce and maintain records 

showing how certain inputs were 

distributed among participants. Further, 

the dealer must maintain those records 

for 5 years. Maintaining records allows 

USDA or any other party with the 

proper legal authority to collect the 

records and access to records during an 

investigation or legal action. AMS adds 

to § 201.2 the term poultry grower 

ranking system, meaning a system 

where the contract between the live 

poultry dealer and the poultry grower 

provides for payment to the poultry 

grower based upon a grouping, ranking, 

or comparison of poultry growers 

delivering poultry during a specified 

period. AMS also adds the term inputs 

to § 201.2. Inputs is defined as the 

various contributions to be made by the 

live poultry dealer and the poultry 

grower as agreed upon by both under a 

poultry growing arrangement. The 

definition also states that such inputs 

may include, but are not limited to, 

animals, feed, veterinary services, 

medicines, labor, utilities, and fuel. 

Paragraph 201.104(b)—Placement 

disclosure—requires a live poultry 

dealer engaged in the production of 

broilers who uses a poultry grower 

ranking system to calculate broiler 

grower payments to provide certain 

information about the flock placed with 

the broiler grower within 24 hours of 

the placement on the grower’s farm. 

Specifically, the dealer must provide the 

flock’s stocking density, expressed as 

the number of poultry per facility square 

foot; the names and ratios of breeds of 

the flock delivered; the ratios of male 

and female birds in the flock if the sex 

had been determined; the breeder 


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facility identifier; the age of the egglaying breeder flock from which each 

broiler grower’s placement is produced; 

information regarding any known health 

impairments of the breeder flock and of 

the poultry delivered to the broiler 

grower; and what, if any, adjustments 

will be made to grower pay to reflect 

any of these inputs. As explained earlier 

in this document, each of these inputs 

may influence farm weight and feed 

conversion. In some cases, a broiler 

grower may adjust management 

practices in response to potential 

impacts of inputs on flock performance. 

This requirement provides the broiler 

grower with basic, accurate information 

about the placement at the outset of 

each growout period that may inform 

the grower’s management decisions 

during growout. Armed with this 

information, growers may be better able 

to efficiently allocate resources during 

flock growout and maximize their 

individual profitability. 

This rule adds definitions to § 201.2. 

Breeder facility identifier is defined as 

the identification a live poultry dealer 

permanently assigns to distinguish 

among breeder facilities supplying eggs 

for the poultry placed at the poultry 

grower’s facility. As permanent 

identifiers, these identifiers must be 

consistent flock to flock. Identifiers that 

remain the same from one growout 

period to the next allow growers to 

observe patterns, if any, related to the 

performance of flocks originating with 

different breeders. Live poultry dealers 

may assign alphabetic, numeric, or other 

identifiers to each farm to keep the 

identity of individual breeder facilities 

private. 

Breeder flock age means the age in 

weeks of the egg-laying flock that is the 

source of poultry placed at the poultry 

grower’s facility. Depending on the type 

and breed of poultry being raised, the 

age of the breeder flock producing the 

eggs from which poultry for growout are 

produced may influence the grower’s 

production decisions, for example, 

whether additional monitoring is 

necessary, or determining the 

appropriate height of waterers and 

feeders. 

Under § 201.104(c)—Poultry grower 

ranking system settlement documents— 

a live poultry dealer engaged in the 

production of broilers employing a 

poultry grower ranking system to 

calculate settlement payments for 

broiler growers must provide every 

grower within the tournament ranking 

system with settlement documents that 

show certain information about each 

grower’s ranking within the system, as 

well as the inputs each broiler grower 

received, for each growout period. 

Paragraph 201.104(c)(1) requires live 

poultry dealers engaged in the 

production of broilers to show the 

housing specifications for each grower 

grouped or ranked in the system during 

the specified growout period. 

Paragraph 201.104(c)(2) requires live 

poultry dealers engaged in the 

production of broilers to make visible to 

all grower participants in the poultry 

grower ranking system the distribution 

of dealer-controlled inputs provided to 

all participants. Specifically, dealers 

must disclose the stocking density at 

each grower’s placement, expressed as 

the number of poultry per facility square 

foot. The dealer must: disclose the 

names and ratios of the breeds of 

poultry and the ratios of male and 

female poultry, if the sex of the poultry 

has been identified (i.e., ‘‘sexed’’), 

placed at each broiler grower’s farm; 

indicate with the use of breeder facility 

identifiers the source of poultry placed 

at each broiler grower’s farm; disclose 

the age of the egg-laying breeder flock 

from which each broiler grower’s 

placement is produced; and, report the 

number of feed disruptions of 12 hours 

or more each grower experienced during 

the growout period. 

As mentioned above, live poultry 

dealers are currently required to provide 

settlement sheets showing each grower’s 

ranking within the poultry grower 

ranking system and to show the actual 

figures used to rank poultry growers for 

settlement purposes. However, poultry 

growers, in particular broiler chicken 

growers, have complained to USDA that 

the limited information they receive 

does not allow them to effectively 

evaluate their performance compared to 

others because they do not know how 

the inputs they receive compare to the 

inputs other growers receive. Nor do 

they know how their performance 

relates to housing specifications. 

Further, some growers believe other 

growers within the same poultry grower 

ranking system receive superior inputs 

to their own. 

The placement and settlement 

information required under § 201.104 

will enable broiler growers to make 

factual comparisons about their 

performance relative to other growers’ 

performance within the poultry grower 

ranking system. 

E. Severability 

AMS considers some but not all of the 

provisions of this final rule to be 

severable. Specifically, changes to 

§ 201.100—Records to be furnished 

poultry growers and sellers, and the 

provisions of new §§ 201.102— 

Disclosures for broiler production, and 

201.104—Disclosures for broiler grower 

ranking system payments, are generally 

severable within themselves and from 

each other. Thus, if a court were to find 

any of, some combination of, or some 

portion of those provisions to be 

unlawful or unenforceable, AMS 

intends that all other provisions as set 

forth in this rule would remain in effect 

to the maximum possible extent. 

For example, if a court were to find 

one of the required disclosure items in 

§ 201.102(c) or (d) unlawful, AMS 

would nevertheless intend the 

remaining disclosure requirements in 

§ 201.102 to stand. However, provision 

of those disclosures to broiler growers is 

dependent upon the requirement to do 

so in § 201.102(a), so AMS would intend 

that paragraph (a) in § 201.102 is not 

severable from paragraphs (c) or (d). In 

another example, AMS intends that the 

reference to Form PSD 6100 instructions 

in § 201.102 (g)(3) is severable from the 

requirement in the same paragraph to 

present Disclosure Document 

information in a clear, concise, and 

understandable manner. Thus, if the 

reference to Form PSD 6100 were to be 

invalidated, live poultry dealers would 

nevertheless be required to include all 

the elements of the Disclosure 

Document as described § 201.102 in a 

clear, concise, and understandable 

manner. 

AMS considers the provisions of 

§ 201.104 to be severable, except that 

the requirement to maintain records 

related to broiler grower production for 

5 years in § 201.104(a) is not intended 

to be severable from either paragraph (b) 

or (c) of that section. Records pertaining 

to the disclosures required in 

§ 201.104(b) and (c) must be maintained 

and available to PSD for compliance and 

enforcement purposes. 

AMS considers the changes to 

§ 201.1—Terms defined, to be 

inseverable, inasmuch as the newly 

defined terms in that section are 

necessary for the clear application of the 

provisions of new §§ 201.102 and 

201.104. The new definitions clarify the 

fundamental application of the rule to 

live poultry dealers, and cannot be 

severed from the policy effect of the 

rule. 

VI. Changes From the Proposed Rule 

After consideration of public 

comments, AMS determined to adopt 

the proposed changes with 

modification. This section provides an 

overview of how the final rule differs 

from the proposed rule. Additional 

discussion about AMS’s consideration 

of public comments is presented in 

Section VII. 

Two significant changes between the 

proposed rule and the final rule pertain 


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61This corresponds with Hyaena, et. al., who 

state ‘‘There is . . . more variation among 

production contracts with respect to division of 

risks and profits from growing turkeys than in the 

broiler industry.’’ See M. Hayenga, T. Schroeder, J. 

Lawrence, D. Hayes, T. Vukina, C. Ward, and W. 

Purcell, ‘‘Meat Packer Vertical Integration And 

Contract Linkages in the Beef and Pork Industries: 

An Economic Perspective’’ (2003), available at 

http://econ2.econ.iastate.edu/faculty/hayenga/ 

AMIfullreport.pdf (last accessed April 2023). 

62Turkey growers may only produce two flocks 

per year while broiler growers may produce five or 

more. See Poultry Industry Manual (2013) available 

at https://www.aphis.usda.gov/aphis/ourfocus/ 

animalhealth/emergency-management/CT_

fadprep_Industry_Manuals. 

63AMS underscores that the principles of full and 

fair disclosure by live poultry dealers to avoid 

deceptive practices apply throughout the industry, 

including with respect to turkey growers. Although 

the specific disclosure mandates of this rule will, 

at this time, apply only to the broiler chicken 

segment, AMS intends to continue to monitor the 

entire industry. 

to the application of the new disclosure 

requirements and the placement of the 

new requirements within 9 CFR part 

201. Under the proposed rule, AMS 

proposed additional disclosures that all 

live poultry dealers would be required 

to furnish to poultry growers with 

whom dealers make poultry growing 

arrangements. AMS also proposed to 

establish additional disclosure 

requirements for live poultry dealers 

who use a poultry ranking system to 

calculate grower payments. However, 

comments received noted that the 

proposed rule was largely based on 

research into the broiler industry and 

would be extremely difficult for turkey 

companies to implement due to 

differences between turkey and chicken 

production. AMS subject matter experts 

analyzed turkey production contracts 

from across the country and found more 

variability among them than in broiler 

contracts.61 The variability reflects the 

biological differences found in turkeys 

and longer placement times with 

growers, which can impact outcomes for 

producers.62 The variability in contracts 

results in less uniformity of grower 

compensation models in the turkey 

industry. Often, turkey grower 

compensation models are predicated on 

static square footage payments, and/or 

two-stage production, which reduce 

payment volatility and mitigate input 

variability. Much of the disclosed 

information would not be applicable or 

of significant value to turkey growers. 

While other turkey compensation 

models tend to rely on a relative ranking 

component similar to that for broilers, 

the benefit of disclosure is diluted, as 

discretionary dealer actions currently 

may have less impact on grower 

payments. As well, grower ranking 

systems account for a smaller 

percentage of grower payments. 

Other commenters stated the new 

disclosure requirements are largely 

meant for the broiler industry where 

most complaints arise. AMS has 

received few turkey grower complaints. 

Other (non-broiler chicken) poultry 

growers have similarly not expressed 

concerns regarding practices in their 

industry. AMS will continue to evaluate 

the presentation and operation of 

contracts and pay systems in the turkey 

industry, and other forms of poultry 

production to ensure growers can 

understand, evaluate, and compare 

contracts. However, AMS has 

determined that additional proposed 

disclosure requirements are not 

warranted for all live poultry dealers at 

this time.63 Thus, this final rule’s new 

disclosure requirements cover only live 

poultry dealers engaged in the 

production of broiler chickens. 

In the final rule, AMS did not revise 

§ 201.100 to require all live poultry 

dealers to provide certain additional 

disclosures to prospective or current 

growers. Instead, disclosure 

requirements for dealers engaged in 

broiler production are provided in new 

§ 201.102—Disclosures for broiler 

production—which applies exclusively 

to live poultry dealers engaged in the 

production of broilers. The final rule 

adds language in § 201.102(a) clarifying 

that in addition to complying with the 

existing requirements in § 201.100, live 

poultry dealers engaged in the 

production of broilers must comply 

with additional disclosure requirements 

in new § 201.102. 

The proposed rule in § 201.100(a) 

would have required a live poultry 

dealer engaged in the production of 

broilers seeking to renew, revise, or 

replace an existing broiler growing 

arrangement or to establish a new 

broiler growing arrangement that does 

not contemplate modifications to 

existing housing specifications to 

provide both the broiler growing 

arrangement and the Disclosure 

Document to the grower at least 7 

calendar days before the dealer executes 

the broiler growing arrangement. 

Several commenters from the grower 

and advocacy sectors said that this time 

period was inadequate, and urged AMS 

to require that the documents be 

provided 14 days or 30 days in advance 

of the broiler growing arrangement’s 

execution, to enable adequate time for 

growers to review and act upon the 

information provided in the documents. 

AMS also identified ambiguity in 

whether 7 days was business days or 

calendar days. 

This final rule revises the timing in 

§ 201.102(a)(1) to require that live 

poultry dealers provide growers with 

the required documents at least 14 

calendar days before the live poultry 

dealer executes the broiler growing 

arrangement, provided that the grower 

may waive up to 7 calendar days of that 

time period. AMS is making this change 

in response to some grower comments 

stating that growers need additional 

time to adequately review the 

documents. A central purpose of the 

Disclosure Document is to improve the 

understanding of production agreements 

to thwart deception, and adequate time 

to review the document is essential to 

the rule fulfilling its purpose. The 7-day 

waiver addresses other grower 

commenter concerns related to 

continuity of production. AMS does not 

wish to inadvertently insert unnecessary 

time delays into the grower’s planning 

process during contracting, in particular 

as this provision exclusively addresses 

the circumstance where the grower is 

not contemplating modifications to the 

farm housing specifications. The final 

rule seeks to maximize the grower’s 

ability to determine the length of time 

necessary to review the documents, 

whether that be a full 14 calendar days 

or a shorter time period if the grower 

determines that is more appropriate. 

The rule revises the review period to 14 

calendar days, but provides growers the 

option to waive 7 of those days if they 

prefer. Seven calendar days remains the 

minimum review time to provide 

growers with a guaranteed time to 

review the documents and thus protects 

growers from coercion by live poultry 

dealers—a risk also identified by 

commenters. Absent the provision, live 

poultry dealers could press growers to 

waive their entire review period rights. 

In AMS’s estimation, a 14-calendar-day 

period is useful to some growers to 

review and have the time to act on the 

documents in the circumstance of no 

contemplated housing modification, and 

that a 7-calendar-day period is 

minimally sufficient to enable growers 

to review the Disclosure Documents, 

and reduce the potential for coercive 

behavior where growers so choose that 

shorter time period. 

Where a live poultry dealer 

contemplates modifications to the 

housing specifications—such as in the 

circumstance of a new or additional 

capital investment or a modification to 

the housing specification—this rule 

provides the grower with significantly 

more time to review the contract and the 

Disclosure Document than current 

practice. Currently, growers commonly 

do not receive their contract until after 

a capital investment has occurred. In 

this rule, by requiring notice to the 


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grower at the same time as the new 

housing specification, growers receive 

the critical information embedded in the 

contract and Disclosure Document 

before the grower decides to engage in 

any construction or borrowing to make 

the necessary housing modifications. 

Capital investments generally take 

months, not days, and the grower is well 

positioned to control his or her review 

of the documents in the course of 

making any decisions regarding whether 

to engage in borrowing, construction, or 

contracting in relation to the potential 

broiler growing arrangement. 

Under proposed § 201.214, AMS 

proposed to establish recordkeeping and 

disclosure requirements for all live 

poultry dealers who use a poultry 

grower ranking system to calculate 

grower payments. Again, AMS 

determined the disclosure requirements 

proposed in § 201.214 are not warranted 

for all live poultry dealers who use a 

poultry grower ranking system to 

calculate grower payments based on its 

analysis of poultry contracts and grower 

complaints, as previously discussed. 

Therefore, in the final rule, AMS 

modified the proposed requirements to 

apply exclusively to live poultry dealers 

engaged in the production of broilers 

who use a poultry grower ranking 

system to calculate grower payments, 

moved the requirements from proposed 

new § 201.214 to new § 201.104, and 

renamed the section ‘‘Disclosures for 

broiler grower ranking system 

payments.’’ AMS also retained the 

requirements in § 201.100(f) of the 

current regulations, which it had 

proposed to move to new § 201.214 and 

modify in the proposed rule. AMS 

added language to § 201.104(c) to 

indicate that in addition to complying 

with the requirements of § 201.100, live 

poultry dealers engaged in the 

production of broilers who use a poultry 

grower ranking system to calculate 

grower payments must provide 

additional information in accordance 

with new § 201.104. 

To limit §§ 201.102 and 201.104 in 

the final rule to broiler contracts, AMS 

added to § 201.2 the definitions of 

broiler to mean any chicken raised for 

meat production, broiler grower to mean 

a poultry grower engaged in the 

production of broilers, broiler growing 

arrangement to mean a poultry growing 

arrangement pertaining to the 

production of broilers, and prospective 

broiler grower to mean a person or entity 

with whom the live poultry dealer is 

considering entering into a broiler 

growing arrangement. 

AMS proposed in § 201.100(b)(5) to 

require live poultry dealers to include in 

the Disclosure Document the minimum 

number of placements on the grower’s 

farm annually and the minimum 

stocking density of each flock. In the 

final rule, AMS moved this requirement 

to § 201.102(b)(5), which only applies to 

live poultry dealers engaged in the 

production of broilers. AMS also revised 

the introductory statement in 

§ 201.102(b)(5) of the final rule to add 

clarifying language. 

AMS proposed to require live poultry 

dealers to disclose a summary of all 

litigation with any poultry grower over 

the prior 6 years, as well as of all 

bankruptcy filings over the prior 6 years 

for the dealer and any parent, 

subsidiary, or related entity. However, 

commenters representing the poultry 

industry noted that the 6-year disclosure 

period associated with these 

requirements was inconsistent with 

other disclosure requirements covering 

the prior 5 years. Therefore, to ensure 

the uniformity of recordkeeping 

obligations and to reduce the burden on 

regulated entities, AMS revised 

§§ 201.102(c)(1) and (2) to require live 

poultry dealers engaged in the 

production of broilers to disclose 

litigation with any broiler grower over 

the prior 5 years, as well as bankruptcy 

filings in the prior 5 years by the dealer 

and any parent, subsidiary, or related 

entity. 

The proposed rule would have 

required live poultry dealers to make 

various financial disclosures to poultry 

growers, including a table showing 

‘‘average annual gross payments’’ made 

to growers at all complexes owned or 

operated by the live poultry dealer for 

the previous calendar year, as well as to 

growers at the local complex. Poultry 

and meat trade associations suggested 

AMS require dealers to disclose average 

annual gross payments only for the 

grower’s local complex. These 

commenters noted that complexes in 

different geographic areas face different 

economic conditions, arguing that 

information about payments at other 

complexes would not be useful and 

would potentially confuse growers. This 

final rule does not include the proposed 

requirement to disclose payment 

information for all complexes owned or 

operated by the dealer. This final rule 

does maintain the proposed requirement 

for live poultry dealers engaged in the 

production of broilers to disclose 

payment information only relating to 

the broiler grower’s local complex at 

§ 201.102(d)(1). 

Both growers and live poultry dealers 

also requested that AMS provide more 

specificity on how to calculate average 

annual gross payments. While the 

proposed rule provided detail on 

calculations, the commenters felt the 

instructions lacked sufficient specificity 

to assure that live poultry dealers could 

comply and that poultry growers 

received adequate data on which to base 

business decisions. Therefore, AMS 

developed more in-depth instructions 

on how to calculate average annual 

gross payments, which are included in 

Form PSD 6100. This final rule provides 

that, if there are nine or fewer growers 

at a local complex, live poultry dealers 

will be required to report only the mean 

and one standard deviation from the 

mean of the average annual gross 

payment to growers at the local complex 

rather than average annual gross 

payments distributed by quintile. This 

modification from the proposed rule is 

necessary because disclosing average 

annual gross payments distributed by 

quintile in these circumstances would 

result in disclosure of the unique 

payment information of one or more 

growers, which AMS considers to be 

confidential business information. 

AMS added to § 201.2 the definition 

of gross payments to mean the total 

compensation a poultry grower receives 

from the live poultry dealer, including 

but not limited to base payments, new 

housing allowances, energy allowances, 

square footage payments, extended layout time payments, equipment 

allowances, bonus payments, additional 

capital investment payments, poultry 

litter payments, etc., before deductions 

or assignments are made. 

In the proposed rule, AMS requested 

comment on proposed disclosures 

regarding the financial health and 

integrity of the live poultry dealer, and 

whether those were adequate to enable 

growers to make sound business 

decisions. Commenters suggested that 

growers could utilize other information 

in addition to information specified in 

the proposed rule in making their 

business decisions. Specifically, 

commenters recommended that AMS 

also require disclosure of grower 

turnover data. Grower turnover rates are 

among the data growers may find 

valuable when making business 

decisions, as they relate to the risk of 

termination or non-renewal when 

contracting with a live poultry dealer. 

Just as growers will be able to rely on 

other required disclosures to 

contemplate their production and 

financial risks, this information would 

allow growers to compare the turnover 

rates of multiple live poultry dealers as 

a risk factor when making contracting 

decisions. Because grower turnover 

rates can be used in a manner similar to 

other required disclosures, AMS added 

a provision at § 201.102(c)(5) of the final 

rule requiring live poultry dealers 

engaged in the production of broilers to 


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disclose average annual broiler grower 

turnover rates for the previous calendar 

year and the average of the 5 previous 

calendar years at both the company 

level and the local complex level. 

Instructions for how to calculate average 

annual broiler grower turnover rates are 

included in Form PSD 6100. 

AMS proposed requirements for 

several disclosures of specific data and 

information advising growers of their 

rights. AMS did not specifically propose 

to require live poultry dealers to 

disclose their policies on grower 

payment with respect to increased layout time, diseased flocks, natural 

disasters and other depopulation events, 

feed issues or outages, or policies on 

grower appeal rights and processes, 

although in the proposed rule, AMS 

asked whether the final rule should 

require disclosures on these types of 

topics. Multiple commenters suggested 

AMS include these disclosures. The 

commenters stated that these 

disclosures would aid growers in 

decision making and reduce confusion 

during times of disease or other disaster. 

Therefore, this final rule requires live 

poultry dealers engaged in the 

production of broilers to disclose 

policies and procedures on increased 

lay-out time; sick, diseased, or high 

early-mortality flocks; natural disasters, 

weather events, or other events 

adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; other events 

potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability, 

as well as any appeal rights arising out 

of these events. 

The proposed rule proposed to 

exempt live poultry dealers, including 

all parent and subsidiary companies, 

slaughtering fewer than 2 million live 

pounds of poultry weekly (104 million 

pounds annually) from the Disclosure 

Document requirements if the new, 

renewed, or replacement contract 

offered by one of these dealers does not 

include revisions to existing housing 

specifications that would require the 

grower to make new or additional 

capital investments. This final rule 

limits the proposed exemption to clarify 

that the exemption applies if the live 

poultry dealer engaged in the 

production of broilers that together with 

all companies controlled by or under 

common control with the dealer 

slaughter fewer than 2 million live 

pounds of poultry weekly (104 million 

pounds annually). 

The proposed rule would have 

required dealers to establish, maintain, 

and enforce a governance framework 

reasonably designed to audit the 

accuracy and completeness of the 

disclosures in the Disclosure Document, 

which must include audits and testing, 

as well as reviews of an appropriate 

sampling of Disclosure Documents by 

the principal executive officer or 

officers. AMS determined that the 

requirement in § 201.102(f)(2) for the 

principal executive officer or officers to 

certify the governance framework and 

the accuracy of the Disclosure 

Document adequately covers the 

intended requirement for officers of this 

level to be focused on the effectiveness 

of the governance framework. AMS 

concluded that this level of detail about 

the audit process for the Disclosure 

Document was not necessary, because 

AMS finds the certification requirement 

regarding the governance framework to 

be sufficient to ensure a reasonable level 

of accuracy of these statements. The 

company will still need to maintain a 

governance framework for ensuring the 

reliability of the statements, which the 

certification attests to. The principal 

executive officer will need to tailor the 

framework to the particular levels of 

complexity of the company and its 

poultry business, its approach to 

internal controls, and other factors such 

as its track record of regulatory 

compliance, to ensuring the accuracy of 

statements. 

In some circumstances, audit, testing, 

and reviews by senior officers may be 

necessary to ensure compliance, but that 

may not be the case in all 

circumstances. The requirements of this 

final rule place the opportunity—and 

the responsibility—on the principal 

executive officer to tailor the needs of 

the compliance program to the 

particulars of the business and its own 

compliance culture, as reflected in the 

governance framework. A ‘‘reasonably 

designed’’ framework depends on the 

particular facts and circumstances of the 

poultry company and its growers, with 

larger, more complex processors 

adopting more comprehensive systems 

appropriate to the scope of their 

operations. AMS will evaluate the 

effectiveness of the governance 

framework in part through examining 

the reliability of producing accurate 

disclosures but may also examine a 

dealer’s internal controls and other 

factors relevant to the facts and 

circumstances of the dealer, such as its 

recent track record of compliance with 

relevant laws and regulations. 

AMS will investigate questions of 

statement inaccuracy and may take 

enforcement actions against companies 

that do not maintain sufficient 

governance frameworks. Violations may 

result in issuance of a Notice of 

Violation or referral to the Attorney 

General of the United States for 

prosecution pursuant to Section 404 of 

the P&S Act, 7 U.S.C. 224. Growers may 

also bring private cases in response to 

inaccurate or misleading disclosures 

under the Act or under other laws. 

Therefore, AMS removed the 

requirement proposed in 

§ 201.100(f)(1)(i) for audit, testing, and 

reviews of an appropriate sampling of 

Disclosure Documents by the principal 

executive officer or officers. 

The proposed rule would have 

required dealers to include a statement 

on the Disclosure Document’s grower 

signature page advising growers that a 

dealer’s failure to deliver the document 

within the required timeframe, as well 

as false or misleading statements or 

material omissions within the 

Disclosure Document, may violate 

Federal and State laws, and that such 

violations could be determined to be 

unfair, unjustly discriminatory, or 

deceptive and unlawful under the Act. 

The proposed statement further 

informed growers that allegations of 

such violations could be reported to 

AMS’s PSD. The final rule retains the 

required advisory statements; however, 

they have been modified to inform 

growers they may submit complaints to 

USDA’s Farmer Fairness portal at 

https://www.usda.gov/farmerfairness or 

by telephone at 1–833–DIAL–PSD (1– 

833–342–3773) if they suspect a 

violation of the Act or any other Federal 

law governing fair and competitive 

markets, including contract growing, of 

livestock and poultry. 

The proposed rule would have 

required live poultry dealers to obtain a 

poultry grower’s signature to verify 

delivery of the Disclosure Document. 

Live poultry dealers noted that there 

may be instances in which obtaining a 

grower signature is not possible, such as 

grower unavailability or refusal to sign. 

AMS recognizes there is no mechanism 

to require growers to sign for receipt of 

the Disclosure Document. Commenters 

said it is appropriate in these instances 

to have other means available for the 

live poultry dealer to verify delivery of 

the Disclosure Document to the grower. 

AMS agrees it is necessary to have 

alternative methods of compliance. 

Therefore, this final rule allows 

flexibility for live poultry dealers 

engaged in the production of broilers to 

have alternative means to prove delivery 

and to demonstrate that best efforts were 

used to obtain grower receipt. In those 

circumstances, this final rule does not 

require a specific method of delivery but 

requires dealers to obtain and maintain 

evidence that the live poultry dealer 


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64Abby Budimen, ‘‘Hmong in the U.S. Fact 

Sheet,’’ Pew Research Center’s Social & 

Demographic Trends Project (May 24, 2022), 

available at https://www.pewresearch.org/socialtrends/fact-sheet/asian-americans-hmong-in-the-us/ (last accessed April 2023). 

delivered the Disclosure Document to 

the grower or prospective grower in the 

required timeframe and that best efforts 

were used to obtain grower receipt. 

Based on its experience, AMS expects 

live poultry dealers to engage in 

personal communications with the 

growers in the course of the contracting 

process, and so expects that best efforts 

include personal communication with 

growers in the course of delivering the 

Disclosure Document and seeking 

grower receipt. Where a grower refuses 

to sign or has made him or herself 

unavailable to the live poultry dealer, 

alternative documentation includes 

proof of delivery and statements or 

affidavits to support the communication 

and grower’s refusal to sign receipt, or 

the circumstances of the grower’s 

unavailability. AMS expects 

unavailability to be a rare circumstance 

requiring exceptional justification, given 

the nature of the contracting process 

between live poultry dealers and 

growers. The proof of delivery and bestefforts requirement, as an alternative, 

provide the best assurance possible in 

those circumstances that the grower 

receives and is able to evaluate in a 

timely manner the Disclosure 

Document. The grower receipt 

requirement, and this alternative, is 

important to AMS achieving the 

purposes of the rule because it 

minimizes the risk that live poultry 

dealer may deliver the Disclosure 

Document through means that may, in 

practice, not be read or noticed by the 

grower under the time frames provided, 

and so obstruct the purposes of ensuring 

the grower can evaluate the information 

before the grower makes significant 

decisions. AMS notes that grower and 

advocacy commenters supported the 

retention of the grower receipt 

requirement principally for those 

purposes. 

The proposed rule would have 

required live poultry dealers to make 

several disclosures to poultry growers 

but did not include the exact language 

and wording they should use. 

Numerous commenters from the grower 

and live poultry dealer sectors said that 

these provisions should be in plain and 

unambiguous language to avoid 

discrepancies in interpretation among 

the various parties, regulators, and 

courts. One purpose of the Disclosure 

Document is to improve the 

understanding of production agreements 

to thwart deception; thus clear, concise, 

and understandable language is 

necessary. Therefore, this final rule adds 

a new § 201.102(g)(3) to the final rule to 

require live poultry dealers engaged in 

the production of broilers to present the 

information in the Disclosure Document 

in a clear, concise, and understandable 

manner for growers. Paragraph 

§ 201.102(g)(3) also notes that dealers 

may refer to Form PSD 6100 for further 

instructions on the presentation of 

information and certain calculations. 

Some commenters also indicated a 

need to ensure growers who are not 

native speakers of English can 

understand the disclosures. As noted by 

multiple commenters, non-native 

speakers of English are engaged in 

poultry growing. For example, in the 

early 2000s, large numbers of firstgeneration immigrant Hmong people, 

many of whom had been farmers in 

their native Laos, moved from urban 

areas in California, Minnesota, and 

North Carolina to the Ozark region in 

and around southwest Missouri and 

started growing poultry. Pew Research 

Center studies show that the English 

proficiency of the Hmong population in 

the U.S. in 2019 was only 68% and, 

among foreign-born Hmong, English 

proficiency is just 43%.64 Data supports 

the concerns expressed by commenters 

regarding providing poultry growers 

information in a manner growers are 

able to understand. AMS agrees that 

providing documents in the language 

growers best understand ensures 

fairness and reduces the risk of 

deception. Therefore, AMS added new 

§ 201.102(g)(4) to the final rule to 

require that live poultry dealers must 

make reasonable efforts to ensure that 

growers are aware of their right to 

request translation assistance and to 

assist the grower in translating the 

Disclosure Document. This must be 

provided at least 14 calendar days 

before the live poultry dealer executes 

the broiler growing arrangement that 

does not contemplate modifications to 

the existing housing specifications 

(provided that the grower may waive up 

to 7 calendar days of that time period). 

Where modifications to the existing 

housing specifications are 

contemplated, it must be provided when 

the live poultry dealer provides the 

grower with the Disclosure Document. 

The timing requirement aligns with the 

provision of the Disclosure Document 

by the live poultry dealer as set forth in 

§ 201.102(a) as discussed above. 

Although they are not required to do so, 

nothing in the rule prevents companies 

from providing a translation, provided it 

is complete, accurate, and not 

misleading. 

The final rule makes several other 

changes to the definitions proposed in 

§ 201.2 of the proposed rule. It revises 

the definitions of grower variable costs, 

growout, and growout period and 

changes the latter two terms to poultry 

growout and poultry growout period. 

The proposed rule would have 

defined grower variable costs as ‘‘those 

costs related to poultry production that 

may be borne by the poultry grower, 

including, but not limited to, utilities, 

fuel, water, labor, repairs and 

maintenance, and liability insurance.’’ 

Commenters representing the grower 

sector shared concern that the definition 

would mandate that the costs listed 

were the only ones to potentially be 

borne by the grower. Commenters 

stressed that these costs are often the 

subject of negotiation between grower 

and live poultry dealer, with some costs 

being paid by the live poultry dealer. 

Therefore, AMS modified the definition 

in § 201.2 of the final rule to replace the 

words ‘‘including, but not limited to’’ 

with the words ‘‘which may include, 

but are not limited to.’’ While this does 

not substantively change the legal 

standard, this modification emphasizes 

that these are examples of costs, yet still 

retains a definition that allows the listed 

costs to be treated as grower variable 

costs under a poultry growing 

arrangement if the parties choose to 

contract for them in some other manner. 

AMS also proposed to define growout 

as ‘‘the process of raising and caring for 

livestock or poultry in anticipation of 

slaughter’’ and growout period as ‘‘the 

period of time between placement of 

livestock or poultry at a grower’s facility 

and the harvest or delivery of such 

animals for slaughter, during which the 

feeding and care of such livestock or 

poultry are under the control of the 

grower.’’ However, a commenter said 

the references to ‘‘livestock or poultry’’ 

in the proposed definition of growout 

period may have unintended 

consequences across other segments of 

the protein industry that do not use 

tournament pay systems, as the 

definition of livestock in the Act 

includes ‘‘cattle, sheep, swine, horses, 

mules, or goats.’’ Therefore, in the final 

rule, AMS modified the definitions of 

these two terms to remove references to 

livestock. In addition, AMS revised 

these terms to refer to poultry growout 

and poultry growout period to clarify 

that it intends these definitions to apply 

only in the poultry context for the 

purposes of this rule. 

AMS also made a few minor changes 

for clarification purposes. One change is 

found in § 201.104(a), substituting the 

word ‘‘these’’ for ‘‘such’’ in reference to 

poultry growing ranking system records. 


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The change was made to add specificity 

for the records that are required to be 

maintained by live poultry dealers. 

Another change was made in 

§ 201.102(b)(8), substituting the word 

‘‘statement’’ for ‘‘sentence’’. This is a 

clarifying change to both maintain 

uniformity in the language used 

throughout the regulatory text and to 

ensure dealers understand the entire 

statement provided by 201.102(b)(8) 

must be disclosed to growers. 

Table 1 summarizes key differences 

between the proposed rule and the final 

rule. 

TABLE 1—KEY DIFFERENCES BETWEEN THE PROPOSED RULE AND FINAL RULE

Provision Proposed rule Changes to final rule 

Applicability .............. All proposed requirements related to disclosures and contract terms are in § 201.100—Disclosures and records to 

be furnished poultry growers and sellers (existing section 

with proposed revision of heading).

Creates new section § 201.102—Disclosures for broiler 

production covering requirements for live poultry dealers 

engaged in the production of broilers, while retaining requirements in current § 201.100 for all live poultry dealers. 

§ 201.100(a) All live poultry dealers must provide Live 

Poultry Dealer Disclosure Document and related documents to prospective or current poultry growers.

§ 201.102(a) Changes requirements to apply only to live 

poultry dealers engaged in the production of broilers. 

Adds wording to emphasize that these requirements apply 

in addition to the existing requirements in § 201.100(a) 

for live poultry dealers engaged in the production of 

broilers. 

Removes § 201.100(f)—Grouping or ranking sheets of existing rule.Retains § 201.100(f). 

§ 201.100(a)(1) When no modifications to housing specifications are contemplated, a live poultry dealer must 

provide the poultry growing arrangement and the Disclosure Document at least 7 days before the live poultry 

dealer executes the poultry growing arrangement.

§ 201.102(a)(1) Changes the timing to 14 calendar days, 

provided that the grower may waive up to 7 calendar 

days of that time period. 

Conforming changes made to the prominent disclosures to 

be provided the grower and to receipt by growers. 

§ 201.102(b)(6)(i), § 201.102(g)(4). 

§ 201.100(h) Clarifies that the right to discuss the terms of 

the poultry growing arrangement offer also applies to 

prospective poultry growers and to the accompanying 

Disclosure Document.

§ 201.100(b) Revises wording to emphasize that the right 

for poultry growers or prospective poultry growers to discuss the terms of the poultry growing arrangement offer 

applies to the Disclosure Document if that document is 

applicable. 

§ 201.100(i)(2) All live poultry dealers must include minimum annual flock placements and minimum stocking 

density in contract.

§ 201.102(h) Moves requirements to § 201.102 and revises 

them to apply only to live poultry dealers engaged in the 

production of broilers. 

All provisions related to disclosures upon flock placement 

or settlement are in proposed new § 201.214—Transparency in poultry grower ranking pay systems.

Renumbers section and revises heading to § 201.104—Disclosures for broiler grower ranking system payments. 

§ 201.214(b) All live poultry dealers who use a poultry 

grower ranking system to calculate grower payments 

must provide certain disclosures upon flock placement.

§ 201.104(b) Changes requirements to apply only to live 

poultry dealers engaged in the production of broilers. 

§ 201.214(c) All live poultry dealers who use a poultry 

grower ranking system to calculate grower payments 

must provide certain disclosures upon settlement.

§ 201.104(c) Changes requirements to apply only to live 

poultry dealers engaged in the production of broilers. 

Clarifies that these dealers also must comply with the existing grouping or ranking sheet requirements in retained 

§ 201.100 and that disclosures need not show the names 

of other growers. 

§ 201.214(c)(1) Live poultry dealers who use a poultry 

grower ranking system to calculate grower payments 

must provide the grower a copy of a grouping or ranking 

sheet showing the grower’s precise position for that period. This sheet does not need to show the names of 

other growers, but must show their housing specification 

and the actual figures the grouping or ranking for each 

grower in the group during the period is based on.

§ 201.104(c)(1) Removes requirements duplicated in retained § 201.100(f), leaving only the requirement for 

grouping or ranking sheets to show each grower’s housing specification as applicable exclusively to live poultry 

dealers engaged in the production of broilers. 

Terminology throughout rule refers to poultry, poultry growers, poultry growing arrangements, prospective poultry 

growers, and live poultry dealers.

Updates terminology to specifically refer to broilers, broiler 

growers, broiler growing arrangements, prospective broiler growers, and live poultry dealers engaged in the production of broilers where necessary to describe which 

entities must comply with new requirements. 

Required Disclosures 

Following the 

Cover Page 

(§ 201.102(c)).

§ 201.100(c)(1) Live poultry dealers must disclose summary of litigation with any poultry grower over the prior 6 

years.

§ 201.100(c)(2) Live poultry dealers must disclose summary of bankruptcy filings by dealer and any parent, subsidiary, or related entity over the prior 6 years.

§ 201.102(c)(1) Live poultry dealers engaged in the production of broilers must disclose summary of litigation with 

any broiler grower over the prior 5 years. 

§ 201.102(c)(2) Live poultry dealers engaged in the production of broilers must disclose summary of bankruptcy filings by dealer and any parent, subsidiary, or related entity over the prior 5 years. 

Not in proposed rule ............................................................. § 201.102(c)(4) Adds requirement that live poultry dealers 

engaged in the production of broilers must include description of policies, procedures, and appeal rights in 

Disclosure Document. 


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TABLE 1—KEY DIFFERENCES BETWEEN THE PROPOSED RULE AND FINAL RULE—Continued 

Provision Proposed rule Changes to final rule 

Not in proposed rule ............................................................. § 201.102(c)(5) Adds requirement that live poultry dealers 

engaged in the production of broilers must include grower turnover rate data in Disclosure Document. 

Financial Disclosures 

(§ 201.102(d)).

§ 201.100(d)(1) As part of required financial disclosures, 

live poultry dealers must provide 1 year of average annual gross payments to growers for all complexes the 

dealer owns or operates.

Removed from final rule. 

§ 201.102(d)(1) Revises paragraph to specify that live poultry dealers engaged in the production of broilers must 

only calculate average annual gross payments for growers at the local complex distributed by quintiles for complexes with 10 or more growers, and for complexes with 

nine or fewer growers, must calculate the mean payment 

and one standard deviation from the mean. 

Small Live Poultry 

Dealer Financial 

Disclosures 

(§ 201.102(e)).

§ 201.100(e) A live poultry dealer, including all parent and 

subsidiary companies, slaughtering fewer than 2 million 

live pounds of poultry weekly (104 million pounds annually) is exempt from Disclosure Document requirements 

if contract does not contemplate revisions to existing 

housing specifications that would require poultry grower 

to make capital investments.

§ 201.102(e) Revises provision to provide that exemption 

applies for live poultry dealers engaged in the production 

of broilers if the dealer together with all companies controlled by or under common control with the dealer 

slaughters fewer than 2 million live pounds of broilers 

weekly (104 million pounds annually). 

Governance and Certification 

(§ 201.102(f)).

§ 201.100(f)(1)(i) Live poultry dealer governance framework 

must include audits, testing, and review of sample of 

Disclosure Documents.

Removed from final rule. 

Receipt by Growers 

(§ 201.102(g)).

§ 201.100(g)(1) Disclosure Document must include grower 

signature page containing specific statement regarding 

grower rights related to document.

§ 201.100(g)(1) Adds language to statement regarding 

grower rights to state that growers may report potential 

violations to USDA and DOJ portal at https://

www.farmerfairness.gov. or by phone at 1–833–DIAL– 

PSD (1–833–342–3773) and obtain further information 

on rights and responsibilities under the Act at 

www.ams.usda.gov. 

§ 201.100(g)(2) Live poultry dealers must verify grower receipt by obtaining grower’s dated signature on signature 

page of Disclosure Document.

§ 201.102(g)(2) Adds provision allowing live poultry dealers 

engaged in the production of broilers to obtain alternative 

documentation to evidence delivery and that best efforts 

were used to obtain grower receipt. 

Not in proposed rule ............................................................. § 201.102(g)(3) Adds requirements for live poultry dealers 

engaged in the production of broilers to ensure that the 

Disclosure Document is written in clear, concise, and understandable manner for growers. 

Not in proposed rule ............................................................. § 201.102(g)(4) Adds requirement that the dealer must 

make reasonable efforts to ensure that growers are 

aware of their right to request translation assistance, and 

to assist the grower in obtaining a translation or understanding the Disclosure Document at least 14 calendar 

days before executing a growing arrangement that does 

not contemplate modifications to the existing housing 

specifications (provided that the grower may waive up to 

7 calendar days of that time period). Where modifications to the existing housing specifications are contemplated, it must be provided when the live poultry 

dealer provides the grower with the Disclosure Document. 

Not in proposed rule ............................................................. Adds definitions for broiler, broiler grower, broiler growing 

arrangement, and prospective broiler grower. 

Not in proposed rule ............................................................. Adds definition for gross payments. 

Grower variable costs is defined as those costs related to 

poultry production that may be borne by the poultry 

grower, including, but not limited to, utilities, fuel, water, 

labor, repairs and maintenance, and liability insurance.

Revises definition to refer to costs ‘‘which may include, but 

are not limited to’’ the listed costs rather than ‘‘including, 

but not limited to,’’ these costs. 

Terms Defined 

(§ 201.2).

Growout is defined as the process of raising and caring for 

livestock or poultry in anticipation of slaughter.

Revises definition to refer to term as poultry growout and 

exclude livestock. 

Growout period is defined as the period of time between 

placement of livestock or poultry at a grower’s facility 

and the harvest or delivery of such animals for slaughter, 

during which the feeding and care of such livestock or 

poultry are under the control of the grower.

Revises definition to refer to term as poultry growout period 

and exclude livestock. 


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65Liability insurance may be a fixed cost for 

many growers, but we include it here because that 

may not be so in all circumstances, while the 

purpose of this rule is to provide enhanced 

information to all growers. 

66See Jennifer Rhodes, Extension Educator, et al, 

University of Maryland, ‘‘Broiler Product 

Management for Potential and Existing Grower,’’ 

Tables 1 and 2, available at Poultry Budgets, 

Enterprise Budgets, Agricultural and Resource 

Economics, North Carolina State University 

Extension, https://cals.ncsu.edu/are-extension/ 

business-planning-and-operations/enterprisebudgets/poultry-budgets/ (last accessed April 2023). 

Also see Dan L. Cunningham and Brian D. 

Fairchild, University of Georgia Cooperative 

Extension, ‘‘Broiler Production Systems in Georgia 

Costs and Returns Analysis 2011–2012,’’ Bulletin 

1240, and Tomislav Vukina, ‘‘Vertical Integration 

and Contracting in the Poultry Sector,’’ Journal of 

Food Distribution Research (July 2001). 

VII. Comment Analysis 

AMS received 504 comments on the 

proposed rule, some with multiple 

signatories. Comments received were 

generally more supportive of the 

proposed rule than opposed. Many 

commenters generally agreed with the 

proposed rule’s justification and 

implementation. These commenters 

stated that the proposed rule would be 

helpful because it would provide for 

fairer treatment of growers and enable 

growers to better understand, evaluate, 

and compare contracts among dealers, 

enhancing growers’ ability to bargain 

efficiently. Commenters stated further 

that the proposed rule would reduce the 

power of large corporations in the 

industry, improve public trust in 

agriculture, and increase transparency 

regarding food products. 

Other commenters were generally 

critical of the proposed rule. These 

commenters expressed general 

disagreement with AMS proposing a 

rule at all, arguing the current system is 

fair and efficient and that the 

tournament system rewards growers for 

efficiency, innovation, and raising the 

best birds possible. Several commenters 

stated the proposed rule is not fair and 

would result in a less efficient industry 

because it would reward less productive 

growers, disincentivize hard work, and 

add more paperwork. 

The public comments are summarized 

by topic below and include AMS’s 

responses. 

A. Proposed Definitions 

AMS proposed to revise § 201.2 

containing relevant definitions by 

removing the paragraph designations 

within the section, reorganizing the 

definitions alphabetically, and adding 

definitions for new terms used in the 

proposed rule. In addition, to ensure a 

common understanding of the use and 

meaning of certain terms already used 

in the regulations and included in the 

revisions, AMS proposed to incorporate 

the statutory definitions for those terms. 

Grower Variable Costs 

AMS proposed defining grower 

variable costs as ‘‘those costs related to 

poultry production that may be borne by 

the poultry grower, including, but not 

limited to, utilities, fuel, water, labor, 

repairs and maintenance, and liability 

insurance.’’ 65

Comment: Some commenters shared 

concern that the definition of grower 

variable costs creates the impression 

that it is a regulatory requirement or 

expectation that the costs listed therein 

are to be borne by the grower, thereby 

harming growers’ ability to negotiate 

those terms. Commenters stressed that 

these costs are sometimes the subject of 

negotiation between grower and live 

poultry dealer, with some costs being 

paid by the live poultry dealer. 

AMS response: AMS modified the 

definition of grower variable costs to 

replace the words ‘‘including, but not 

limited to’’ with the words ‘‘which may 

include, but are not limited to.’’ The 

modification in the definition, in 

particular the use of the term ‘‘may,’’ 

underscores that the requirement to 

provide transparency for any grower 

costs, including those listed in the 

definition, do not create a mandate 

upon the live poultry dealer or grower 

with respect to who bears any of the 

specific listed costs. In many, if not 

most contracts today, based on AMS’s 

experience, the listed examples would 

be considered grower variable costs.66

But the rule does not prevent the parties 

from negotiating other arrangements, 

such as the live poultry dealer accepting 

responsibility for the payment of those 

cost items. This approach is consistent 

with the rule’s general approach of 

enhancing transparency. 

AMS considered whether to remove 

the list of potential variable costs, as 

requested by the commenter. AMS 

rejected that approach because it poses 

a risk of complexity or confusion in 

compliance, as live poultry dealers may 

not know which types of grower 

variable costs are generally required to 

be disclosed under most contracts 

today. AMS notes that the listing of any 

particular grower variable cost does not 

prevent the parties from contracting for 

other arrangements regarding who bears 

the burden of any particular grower 

variable costs. 

Growout and Growout Period 

AMS proposed to define growout as 

the process of raising and caring for 

livestock or poultry in anticipation of 

slaughter and growout period as the 

period of time between placement of 

livestock or poultry at a grower’s facility 

and the harvest or delivery of such 

animals for slaughter, during which the 

feeding and care of such livestock or 

poultry are under the control of the 

grower. 

Comment: A meat and poultry 

industry trade association made up of 

processors commented that the 

references to ‘‘livestock or poultry’’ in 

the proposed definition of growout 

period may have unintended 

consequences across other segments of 

the protein industry that do not use 

tournament pay systems, as the 

definition of livestock in the Act 

includes ‘‘cattle, sheep, swine, horses, 

mules, or goats.’’ The commenter stated 

that it is not aware of uses of the 

tournament system in the production of 

these species and AMS has not provided 

any facts to suggest that those species 

have a growout period as the term 

would be employed in the poultry 

industry. The commenter recommended 

AMS revise this definition to eliminate 

‘‘livestock’’ and review all definitions to 

avoid unintended consequences for 

other protein segments. 

AMS response: This final rule 

modifies the proposed definitions for 

growout period and growout to apply 

only to poultry. The references to 

livestock in the proposed definitions 

were offered to provide a more generally 

applicable definition but are not needed 

at this time and are therefore removed. 

To improve clarity, we also changed the 

proposed terms growout and growout 

period in § 201.2 to instead refer to 

poultry growout and poultry growout 

period, respectively. 

Housing Specifications 

AMS proposed to define housing 

specifications as a description of—or a 

document relating to—a list of 

equipment, products, systems, and other 

technical poultry housing components 

required by a live poultry dealer for the 

production of live poultry. 

Comment: A poultry industry trade 

association commented that the 

proposed definition of housing 

specifications is unnecessarily vague 

and lends itself to multiple 

interpretations. The commenter said 

there are endless combinations of 

equipment, products, systems, and other 

technical poultry housing components 

that could result in dealers having to 

organize dozens of housing 

specifications, adding significant 

complexity for the dealer, and creating 

confusion for the grower. The 

commenter stated that because farms are 

built with the technology in use at the 

time, the housing types and technology 


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67 54 FR 16356, April 24, 1989. 

in use generally correlate with the age 

of the facility. 

To simplify the categorization of 

housing specifications in Disclosure 

Documents and settlement sheets, the 

commenter recommended that AMS 

revise the definition to clarify that live 

poultry dealers are permitted to devise 

their own categories of housing 

specification for the purposes of the 

Disclosure Documents and settlement 

sheets, which will allow dealers to 

prepare and present data based on the 

types of housing that their growers use 

to raise birds for them. The commenter 

noted, at the least, AMS should revise 

the definition to narrow the housing 

specification to key elements of 

housing, namely, the type of ventilation 

(for example, curtain or tunnel 

ventilation) and whether the house is a 

brood and growout house or only 

accommodates the growout stage. 

AMS response: AMS does not agree 

and will not revise the proposed 

definition of housing specifications in 

response to this comment. The 

definition does not limit dealers’ ability 

to categorize poultry housing. Dealers 

are free to list the minimum or required 

equipment or technical specifications 

that would qualify under a given 

housing specification category. 

Poultry Grower Ranking System 

AMS proposed to define poultry 

grower ranking system as a system 

where the contract between the live 

poultry dealer and the poultry grower 

provides for payment to the poultry 

grower based upon a grouping, ranking, 

or comparison of poultry growers 

delivering poultry during a specified 

period. 

Comment: Several commenters argued 

that the proposed definition of poultry 

grower ranking system lacks sufficient 

flexibility. These commenters stated 

that the regulations appear to 

contemplate only two contract types— 

flat payment or a tournament system— 

and do not encompass the many forms 

of contracting in use in today’s market, 

let alone innovative contracting 

arrangements. 

Comments recommended that AMS 

revise the definition to exclude from the 

scope of the proposed rule poultry 

grower compensation systems where 

there is a fixed base pay, regardless of 

how any incentive-based bonus may be 

calculated. They recommended revising 

the definition of poultry grower ranking 

system to mean ‘‘a system where the 

contract between the live poultry dealer 

and the poultry grower provides for base 

payment to the poultry grower based 

upon a grouping, ranking, or 

comparison of poultry growers 

delivering poultry during a specified 

period.’’ 

AMS response: AMS has fully 

considered the applicability of ‘‘poultry 

grower ranking system’’ to a wide range 

of possible compensation systems and 

intends for the relevant provisions of 

this rule governing comparisons to be 

applied broadly. AMS recognizes that 

certain designs of grower comparisons 

may provide more desirable outcomes 

for contracting participants in different 

circumstances, and in issuing this final 

rule, AMS is creating transparency in 

payment systems. However, 

commenters’ recommendation would 

limit the disclosures of this rule only to 

those instances of variable base pay, 

even when comparison rankings affect 

performance pay in a manner that, 

under current conditions, is opaque and 

misleading to the grower. Addressing 

this widespread deceptive practice is 

squarely the purpose of this final rule. 

The definition was developed to be 

consistent with the approach set forth in 

current § 201.100(f)—Growing or 

ranking sheets, that has been in place 

since 1989,67 and provides transparency 

to growers who are paid based on the 

live poultry dealer’s grouping or ranking 

of poultry growers delivering poultry 

during a specified period. 

AMS does not agree that it is 

necessary or appropriate to distinguish 

between types of ranking systems for the 

purposes of this rule. Commentors 

asserted that fix-based pay systems that 

included bonuses for better rankings are 

distinguishable from systems that have 

a variable base pay established by the 

grower’s ranking. Their proposal would 

limit the disclosures of this rule to those 

instances of variable base pay, even 

when there are other comparison 

rankings. In AMS’s view, any 

comparison of growers is a ranking 

system because when growers are 

compared to each other, the basis for 

grower payment is changed. No longer 

is payment based only upon the 

intrinsic work of one particular grower. 

Instead, payment is based upon a 

relative outcome between growers, 

where similarities or differences 

between them become especially 

important. For example, under any 

system of grower ranking, comparative 

information about inputs may 

illuminate and magnify differences 

where those differences can impact 

performance and payment. 

In particular, AMS rejects the 

suggested limitation of grower ranking 

systems either to the calculation of basepay-plus-incentive payment or entirely 

to base pay. In either circumstance, 

growers are exposed to comparisons in 

the context of performance payments, 

which could make up a sizable, if not 

an overwhelming, portion of their 

compensation and be subject to 

significant variability for reasons 

outside of their control or awareness. 

Regardless of what type of ranking 

system is used, growers are entitled to 

know the reasons behind payment 

differences that may relate to inputs or 

other important differences affecting the 

outcome because that information is 

necessary to avoid deception for the 

reasons described throughout this final 

rule. 

AMS recognizes that payment systems 

may evolve and that parties may wish 

to innovate in payment systems to the 

extent those systems are transparent and 

free of potential deception. 

Transparency is fully compatible with 

such innovation because it encourages a 

responsible, accountable form of that 

innovation. The rule’s required 

disclosures regarding input differences 

provide growers with the information 

they need to be able to adjust to any 

input differences that may exist, 

including in advance of input delivery 

and over time when comparing 

outcomes of a series of growouts. 

Accordingly, AMS is not changing the 

definition of poultry grower ranking 

system as proposed based on these 

comments. Poultry companies and 

growers should contact AMS to discuss 

questions about compensation systems. 

AMS provides an estimate of the 

value of improved transparency in the 

regulatory analysis section. 

Other Comments on Definitions 

Comment: Several non-profit 

organizations suggested AMS add 

several new definitions to § 201.2. First, 

the commenters noted that the proposed 

rule, as well as current regulations 

under the Act, appear to use the term 

‘‘facility’’ to refer to a poultry grower’s 

poultry houses collectively, rather than 

individually. Therefore, they 

recommended that AMS add a 

definition for poultry house to allow for 

clarity in circumstances where it needs 

to refer to individual poultry houses. 

Second, the commenters noted that the 

proposed rule uses the term 

‘‘tournament system’’ in a manner that 

appears to be synonymous with 

‘‘poultry grower ranking system.’’ 

Therefore, they recommended that AMS 

define tournament system to be 

synonymous with poultry grower 

ranking system. 

AMS response: This rule applies at 

the farm level and therefore does not 

require specification of a separate term 

to refer to an individual poultry house 


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beyond that already provided by 

housing specification. In addition, the 

term ‘‘tournament system’’ does not 

appear in the rule text itself. Therefore, 

AMS made no changes to the definition 

of poultry grower ranking system in the 

final rule. 

B. Applicability 

AMS proposed to revise § 201.100(a) 

to require a live poultry dealer to 

provide certain documents to a 

prospective poultry grower when the 

live poultry dealer seeks to establish a 

poultry growing arrangement, or to a 

current poultry grower when a live 

poultry dealer seeks to modify an 

existing poultry growing arrangement. 

AMS proposed to apply this Disclosure 

Document requirement to live poultry 

dealers in all segments of the poultry 

production industry. Poultry is defined 

in section 182(6) of the Act to include 

chickens, turkeys, ducks, geese, and 

other domestic fowl. AMS requested 

comments on whether the disclosure 

requirements should apply to all 

segments of the poultry production 

industry, or if the requirements should 

be limited to broiler and turkey 

production. 

Comment: Comments received stated 

that the disclosure requirements should 

only apply to contractual agreements 

within the tournament system of 

growing poultry and noted the 

disclosures are largely meant for the 

broiler industry, where many of the 

complaints arise. 

An association representing the 

turkey industry noted the provisions of 

the proposed rule were not based on 

substantial research into the turkey 

industry and asserted many of the 

provisions would be difficult or 

impossible for turkey companies to 

implement, citing differences in turkey 

growing cycles, flock densities, bird 

gender distributions, and other factors 

dissimilar to those involved in broiler 

production. 

AMS response: As discussed 

previously, AMS subject matter experts 

analyzed turkey production contracts 

from across the country and found more 

variability than in broiler contracts. The 

variability reflects the biological 

differences found among turkey breeds 

and longer placement times of turkeys 

with growers that can impact payments 

to producers. AMS has not received 

many complaints from turkey growers. 

Similarly, other (non-broiler chicken) 

poultry growers have not expressed 

concerns regarding practices in their 

industry. AMS determined it is 

appropriate at this time to limit the 

scope of the disclosure requirements in 

this rule to apply only to broiler 

production under a poultry growing 

arrangement. 

This final rule contains a new section 

§ 201.102 containing these disclosure 

provisions and specifying that they 

apply exclusively to live poultry dealers 

engaged in the production of broilers, 

while maintaining the current 

requirements at § 201.100, which 

continue to apply to all live poultry 

dealers. This rule also makes 

conforming changes to § 201.2 to define 

broiler as ‘‘any chicken raised for meat 

production,’’ broiler grower as ‘‘a 

poultry grower engaged in the 

production of broilers,’’ broiler growing 

arrangement as ‘‘a poultry growing 

arrangement pertaining to the 

production of broilers,’’ and prospective 

poultry grower as ‘‘a person or entity 

with whom the live poultry dealer is 

considering entering into a broiler 

growing arrangement.’’ This final rule 

further clarifies that the right of current 

or prospective poultry growers to 

discuss the terms of a poultry growing 

arrangement offer applies to the 

Disclosure Document in circumstances 

that require dealers to provide this 

document. All poultry growers are 

protected by the Act’s prohibitions on 

deceptive practices, and AMS has the 

authority to address instances or 

circumstances where poultry growers 

are not provided sufficient information 

to make informed decisions on poultry 

growing arrangements or changes 

thereto, including additional capital 

investments. 

Because this final rule limits all the 

new disclosure requirements to broiler 

production, this rule modifies the 

proposed requirement for live poultry 

dealers to include in their contracts the 

minimum number of flock placements 

to be delivered to growers annually and 

the minimum stocking density of those 

placements, applying it exclusively to 

live poultry dealers engaged in the 

production of broilers. This final rule 

also changes the proposed requirement 

in § 201.214 to apply exclusively to live 

poultry dealers engaged in the 

production of broilers who use a poultry 

grower ranking system to calculate 

grower payments. AMS retains the 

current grouping or ranking sheet 

requirements for all live poultry dealers 

in § 201.100(f) of the current rule. 

Comment: Several commenters said 

the rule should apply to pullet and 

breeder hen growers as well as broiler 

growers because pullet and breeder hen 

production is also controlled by live 

poultry dealers. 

AMS response: Although live poultry 

dealers may control pullet and breeder 

hen production, those birds are 

typically raised for egg and chick 

production and not for slaughter 

purposes. The Act’s poultry provisions 

cover only poultry raised for slaughter. 

Because there is no provision for doing 

so under the Act, AMS is not making 

this rule applicable to pullet and 

breeder hen production. 

C. Disclosure Document and Letter of 

Intent 

AMS proposed to amend § 201.100 to 

revise the list of disclosures and 

information live poultry dealers must 

provide to poultry growers and sellers 

with whom dealers make poultry 

growing arrangements. Currently, when 

a live poultry dealer offers an 

arrangement with a poultry grower, the 

dealer must furnish a true written copy 

of the growing arrangement. In the 

proposed rule, AMS proposed to require 

a live poultry dealer who seeks to 

establish a new growing arrangement; 

renew, revise, or replace an existing 

arrangement; or enter an arrangement 

with a poultry grower or prospective 

poultry grower that will require original 

capital investment to also provide a 

Disclosure Document that contains 

specific information. When the 

arrangement requires an original capital 

investment or modifications to existing 

housing specifications that could 

require the poultry grower to make an 

additional capital investment, AMS 

proposed to require the dealer to 

provide a letter of intent that can be 

relied upon by the grower to obtain 

additional capital investment. 

Utility of Information Provided 

Comment: AMS asked whether the 

information in the proposed rule’s 

required disclosures would help poultry 

growers make informed business 

decisions and better understand poultry 

growing arrangements, or otherwise 

better address deceptive practices faced 

by poultry growers. Most commenters 

supported requiring the Disclosure 

Document information as proposed, 

saying the information will help poultry 

growers make more informed business 

decisions and reduce risks of deception. 

However, some commenters said the 

rule will be costly and will confuse 

poultry growers. These commenters 

stated that relevant information is 

already provided to growers and the 

additional proposed disclosures would 

not be helpful. 

AMS response: AMS does not agree 

with the comments received in 

opposition to the proposed information 

disclosures. Requirements for disclosing 

information to broilers are not new to 

live poultry dealers. The current 

regulations at § 201.100 already require 

disclosures from live poultry dealers. 


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68Comments on Proposed Rule: Transparency in 

Poultry Grower Contracting and Tournaments, 

(Aug. 2022), https://www.regulations.gov/comment/ 

AMS-FTPP-21-0044-0479 (See, for instance, 

Background section in this rulemaking, which cites 

comments from numerous growers about how they 

lacked important information to make informed 

growing decisions and about how. required 

disclosure of such information would greatly 

benefit them. Moreover, integrators typically 

already collect such information for their own use 

without disclosing it to growers.). 

69All live poultry dealers are required to annually 

file PSD form 3002 ‘‘Annual Report of Live Poultry 

Dealers,’’ OMB control number 0581–0308. The 

annual report form is available to the public at 

https://www.ams.usda.gov/sites/default/files/ 

media/PSP3002.pdf. 

70For example, a small organic chicken company 

started in Virginia using old growout houses that 

were no longer suitable for use in larger operations. 

See Andrew Jenner, ‘‘In Virginia, an organic 

chicken empire is growing—using old barns big 

poultry companies left empty,’’ The Counter, 

(March 9, 2020) available at https://thecounter.org/ 

organic-chicken-contract-farming-shenandoahvalley/ (last accessed April 2023). 

This final rule expands the information 

that live poultry dealers are required to 

provide to boiler growers. AMS’s 

experience in reviewing live poultry 

dealers’ records suggest that live poultry 

dealers already keep records of most of 

the information that the final rule would 

require them to disclose. Although the 

final rule does impose additional costs 

on live poultry dealers, the additional 

costs associated with the disclosures 

consist primarily of assembling the 

information and distributing it to 

growers. AMS expects that the 

additional costs that live poultry dealers 

would face will amount to $2.43 million 

in the first year and $6.04 million over 

ten years. 

AMS expects that the benefits or 

utility of the information disclosed to 

broiler growers will outweigh the costs 

of producing and distributing the 

information. AMS estimated the benefits 

to broiler growers from reduced revenue 

uncertainty to be $2.7 million in the 

first year and $26.9 million over ten 

years. Comments received from growers 

indicated that with additional 

information, they might have made 

different business decisions with regard 

to poultry growing arrangements.68

Further, the information provided in the 

disclosures should not confuse those 

currently in the business of growing 

broilers, provided it is explained in 

clear language. Prospective broiler 

growers are expected to benefit from the 

disclosed information as they more fully 

appreciate and consider aspects of the 

business that need their careful 

attention. Accordingly, AMS made no 

changes to the rule as proposed based 

on these comments. 

Partial Exemption for Small Dealers 

In proposed § 201.100(e)—Small live 

poultry dealer financial disclosures— 

AMS proposed to exempt live poultry 

dealers who, in conjunction with any 

parent and subsidiary companies, 

slaughter fewer than 2 million live 

pounds of poultry weekly (104 million 

pounds annually) from the requirement 

to provide the Disclosure Document 

under proposed § 201.100(a)(1). As 

proposed, the exemption would apply 

only if the new, renewed, or 

replacement contract offered by one of 

these dealers does not include revisions 

to existing housing specifications that 

would require the grower to make new 

or additional capital investments. AMS 

requested comments on the proposed 

partial exemption, including whether 

AMS should consider other approaches, 

such as different thresholds, for 

applying the small live poultry dealer 

partial exemption. 

Comment: Some commenters said 

they opposed the proposed rule’s partial 

exemption from the disclosure 

requirements for live poultry dealers 

that slaughter fewer than 2 million live 

pounds of poultry weekly because it 

would exempt almost half of the live 

poultry dealer industry from these 

requirements, arguing that growers and 

flocks involved with small dealers could 

suffer the same disadvantages as others 

in the industry without receiving the 

benefits of the rule. These commenters 

noted that, according to AMS’s analysis, 

the exemption would apply to 47 out of 

89 live poultry dealers. 

AMS response: The total production 

volume exempted, rather than the 

number of live poultry dealers, provides 

a better picture of the extent to which 

portions of the industry will be affected 

by the exemption. The exemption 

pertains to only 0.20% of total broiler 

production volume and 2.0% of total 

broiler contracts, as calculated for 

broiler firms filing an annual report 

with PSD in 2021.69 In § 201.102(e) of 

the final rule, AMS maintains the partial 

exemption for small live poultry dealers 

but revises the language originally 

proposed to clarify that the partial 

exemption applies to a live poultry 

dealer engaged in the production of 

broilers that, together with all 

companies controlled by or under 

common control with the live poultry 

dealer, slaughters fewer than 2 million 

live pounds of broilers weekly (104 

million pounds annually). 

Comment: A meat industry trade 

association said the partial exemption 

for small live poultry dealers would 

result in a non-level playing field based 

on a live poultry dealer’s size. A poultry 

industry trade association asserted if the 

need for the rule is valid, then no live 

poultry dealer should be exempt. This 

commenter expressed concern that the 

exemption could result in poultry 

growers leaving larger live poultry 

dealers that comply with the rule to join 

smaller live poultry dealers that do not 

need to comply. One commenter 

representing the turkey sector indicated 

it had no objection to this provision. 

One poultry grower commenter said 

small live poultry dealers should not be 

exempt, but that there should be a 

revenue threshold tailored to small 

dealers because of the expense of 

recordkeeping. 

AMS response: In the spirit of the 

Regulatory Flexibility Act, AMS is 

attempting to fit regulatory and 

informational requirements to the scale 

of the businesses, organizations, and 

governmental jurisdictions subject to 

regulation.’’ AMS intends for the 

exemption to reflect the fact that 

deceptive practices are less likely to be 

observed among smaller live poultry 

dealer operations in AMS experience. 

The exemption is also expected to ease 

the regulatory compliance burden on 

live poultry dealers with lower 

production volume, as described in the 

previous comment response. Based on 

AMS’s experience, smaller operators 

tend not to compete directly with the 

larger live poultry dealers, often have 

smaller grower pools, generally dictate 

less complicated or expensive housing 

requirements, and use different business 

models.70 These smaller dealers tend to 

fall into two types. In the first type, 

these smaller operators rely on growers 

whose facilities have been used in 

production for many years and who are 

not usually required to make changes. 

The growout services they require of 

their growers are commonly more 

intermittent. In the other type, 

specialized operators—often start-ups or 

companies that focus on certain highend products—serve discrete markets 

where dealers often have higher profit 

margins, which reduces the need for 

ongoing grower financial investment on 

the part of growers to achieve greater 

efficiency, and as a result rely less on 

certain poultry growout arrangements 

that have been associated with the types 

of deception addressed by this rule. 

Neither commonly employs contracts or 

practices that require growers to invest 

in particularized housing 

specifications—a key reason why the 

small operator exemption does not 

include those who do. Also, neither 

tends to deploy the degree of dealer 

discretion in the provision of inputs or 

other operational matters common to 

larger, more commoditized operations. 


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These simpler, more straightforward 

growing arrangements have less grower 

payment variability and fewer financial 

and other risks relating to dealer 

discretion in the operation of the 

poultry growing arrangement. As a 

result of the differences in these 

markets, growers for these smaller live 

poultry dealers tend to face reduced risk 

of deception. Current market realities 

would not, at present, seem to justify 

the effort and expense to develop the 

Disclosure Document required of larger 

business entities. 

To ensure that this smaller business 

exception captures only the two types of 

smaller live poultry dealers discussed 

above, this rule only exempts smaller 

live poultry dealers from disclosure 

where no capital investments are 

contemplated. Based on AMS’s 

experience, the need for original or 

additional capital investment on the 

part of the grower suggests the presence 

of the more intensive performancebased economic pressure from the live 

poultry dealer on the grower, which in 

turn characterizes a market where the 

dealer will exert greater discretion in 

the operation of the contract and where 

grower outcomes are more variable due 

to factors outside of their control and 

knowledge. The presence of capital 

investments also raise the risks to 

growers from any deception that may 

arise by subjecting growers to debt 

burdens and making it more difficult for 

them to change poultry-processing 

companies. Under the regulation, 

smaller live poultry dealers face the 

same disclosure obligations as larger 

ones when dealing with a new poultry 

growing arrangement that will require 

an original capital investment or 

modifications to existing housing 

specifications that would reasonably 

require an additional capital 

investment. 

AMS rejects the argument that the 

exemption could result in poultry 

growers leaving larger live poultry 

dealers that comply with the rule to join 

smaller live poultry dealers that do not 

need to comply. The commenter does 

not provide evidence that this would 

occur in markets that, in AMS’s 

experience, are structured differently 

and respond to different incentives. To 

the extent it did occur in one or more 

places, some dealers may also grow to 

become covered by the rule. Regardless, 

AMS will remain attentive to potential 

instances of deceptive practices across 

the poultry industry. 

Changes to Requirements 

Comment: In the proposed rule, AMS 

asked what items might be added to or 

deleted from the Disclosure Document. 

Several industry commenters said AMS 

should not require disclosures for any 

item that would be included in the 

poultry grower contract arrangement, as 

providing information about these items 

in the Disclosure Document as well 

would be an unnecessary burden. A 

commenter noted the live poultry 

dealer’s name, type of business, 

organization, principal business 

address, telephone number, primary 

internet website address, and the length 

of the term of the arrangement are 

already provided in dealer contracts. 

Several non-profit organizations said 

AMS should require disclosure of all 

possible variables that could affect a 

contract grower’s settlement pay, along 

with whether and how the tournament 

ranking formula compensates for such 

variables. These commenters also said 

AMS should require additional 

disclosures for live poultry dealers 

proposing or requiring modification to 

existing infrastructure. A farm bureau 

commenter said AMS should add 

language preventing live poultry dealers 

from requiring name-brand equipment 

for an equipment mandate when poultry 

housing is modified, unless the live 

poultry dealer can demonstrate the 

mandate is scientifically justified. 

AMS response: Together, the 

Disclosure Document and production 

agreement will ensure growers are better 

informed of their obligations and risks. 

The Disclosure Document refers to and 

highlights information also contained in 

the production agreement to emphasize 

selected important information 

contained there. Requiring name and 

contact information assures the grower 

the Disclosure Documents pertain to the 

poultry growing arrangement in 

question, highlights points of contact 

and their contact information, and 

underscores certain basic information in 

the contract, such as its length of term. 

Providing such information, which is 

readily available to the live poultry 

dealer and already included in the 

contract itself, is not an overly 

burdensome requirement. 

AMS recognizes that the Disclosure 

Document cannot list all potential 

variables in poultry production nor 

properly assess the industry burden of 

disclosing how the tournament formula 

compensates for each of those variables. 

However, AMS has targeted the 

requirements to disclosure of variables 

most frequently cited by industry 

commenters and what the agency 

understands to be most useful to 

growers to assess their risks, in the 

context of the dependent nature of their 

contractual relationship with live 

poultry dealers. This includes 

disclosures at tournament settlement of 

information regarding inputs and 

housing specifications to enable growers 

to assess the relationship between 

inputs and housing specifications. AMS 

intends to monitor the market and may 

examine in the future whether any 

additional information may be useful to 

help growers understand what factors 

affect tournament outcomes, whether 

located in the Disclosure Document or 

in settlement disclosures. 

This final rule does not require 

additional disclosures beyond the 

requirements of the Disclosure 

Document for live poultry dealers 

proposing or requiring modification to 

existing infrastructure. Nor are we 

addressing whether requiring name 

brand equipment without scientific 

justification is permissible or not, as 

that would fall outside the scope of this 

transparency rule. However, AMS is 

sensitive to grower concerns in these 

areas and notes that equipment 

limitations are subject to review under 

additional capital investment criteria in 

current § 201.216. Additionally, AMS is 

considering future rulemaking to 

address capital improvement programs 

in poultry growing contracts, as 

explored in the Advanced Notice of 

Proposed Rulemaking ‘‘Poultry Growing 

Tournament Systems: Fairness and 

Related Concerns.’’ (See 87 FR 34814; 

June 8, 2022.) Accordingly, AMS is 

making no changes to this transparency 

rule as proposed based on these 

comments. 

In related comments, grower groups 

expressed a desire for a disclosure that 

communicates information about the 

rate of grower turnover, or grower 

churn, for live poultry dealers. AMS 

agrees that knowing the dealer’s recent 

history with respect to grower churn 

would give current and prospective 

growers a decision-useful data point 

with which to evaluate the stability of 

the live poultry dealer’s grower roster, 

which may serve as an imperfect but 

adequate proxy for grower satisfaction. 

Some dealers may be prone to engage in 

practices that growers broadly dislike, 

creating dissension between growers 

and dealers, and often resulting in 

contract termination and/or litigation 

between the parties, which is reflected 

in the turnover rate. Accordingly, in 

response to comments on the proposed 

rule, we modified the proposal by 

adding the requirement in 

§ 201.102(c)(5) of the final rule that 

dealers must disclose average annual 

broiler grower turnover rates for the 

previous calendar year and the 5 

previous calendar years at a company 

level and a local complex level. 


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Burdens to Dealers 

Comment: In the proposed rule, AMS 

asked what burdens or challenges 

dealers could face in collecting and 

disseminating information to include in 

the Disclosure Document and whether 

these burdens would require dealers to 

modify their business model. Multiple 

poultry industry commenters said live 

poultry dealers would need to develop 

new recordkeeping systems, hire 

additional employees, and implement 

archival systems to maintain the 

required records under the rule, leading 

to increased administrative costs. 

Commenters argued these burdens will 

make the U.S. poultry industry less 

competitive in the global marketplace. 

An academic institution said large 

poultry companies may choose to 

increase prices for consumers to recoup 

administrative costs associated with the 

rule but noted the large poultry 

companies have benefited from their 

market power and have been making 

record profits despite global 

disruptions. 

AMS response: AMS does not agree 

that the recordkeeping required will 

lead to meaningfully increased 

administrative costs. Further, AMS does 

not expect any cost increases from the 

rule, including recordkeeping costs, to 

impact consumer chicken prices 

because the increases in costs are 

immeasurably small compared to 

industry revenues. AMS notes in the 

Regulatory Impact Analysis that 

Chicken sales in the U.S. for 2019 were 

approximately $58.6 billion and that the 

total quantified cost of §§ 201.102 and 

201.104, including recordkeeping costs 

is estimated at $3.4 million when it is 

greatest in the first year, or 0.0006 

percent of revenues. 

In USDA’s extensive experience with 

live poultry dealer business practices 

indicates most of this information is 

already routinely collected by live 

poultry dealers. The information 

contained in the Disclosure Document is 

designed to aid poultry growers in 

making business decisions by allowing 

growers to better understand, evaluate, 

and compare contracts. Information 

relating to performance and payments of 

all growers at a particular complex is 

useful to growers in reducing deceptive 

practices and allows growers to make 

more informed business decisions. 

Timeline To Provide Disclosure 

Document 

Comment: AMS proposed in 

§ 201.100(a)(1) to require live poultry 

dealers to provide the Disclosure 

Document to current or prospective 

poultry growers at least 7 calendar days 

before executing a poultry growing 

arrangement in several circumstances. 

These disclosure requirements apply 

when the live poultry dealer seeks to 

renew, revise, or replace an existing 

arrangement or to establish a new 

arrangement that does not contemplate 

modifications to the existing housing 

specifications. Several commenters 

advocated for lengthening this timeline. 

These commenters said the 7-day 

timeline does not give growers enough 

time to review the contract and consult 

as needed with relevant entities. One of 

these commenters suggested AMS 

implement a 14-day timeline, while 

another suggested a 30-day timeline. 

AMS response: AMS underscores the 

importance of giving growers the 

opportunity to meaningfully review and 

understand the disclosures, as that is an 

essential part of achieving the purposes 

of the rule to reduce deception and 

empower growers to make effective 

decisions. At the same time, we 

recognize the importance to both 

growers and dealers of keeping existing 

poultry houses in production. The timebased requirement of § 201.102(a)(1) 

only applies when capital investment is 

not contemplated; other situations 

where required investment would 

expose growers to new risks have 

different requirements due to the 

necessary lending and investment 

process and those timelines (which 

commonly occur over several months 

and are more controlled by the grower’s 

decisions around any lending and 

construction). In most cases, growers 

considering a new, renewed, revised, or 

replacement poultry growing 

arrangement that does not contemplate 

modifications to existing poultry 

housing already have a relationship 

with the live poultry dealer and know 

whether or not they wish to continue 

that relationship. 

AMS agrees with the comments from 

the grower and advocacy sectors that 

said at least 14 calendar days in advance 

of the broiler growing arrangement’s 

execution would provide a more 

appropriate length of time for some 

growers to adequately review and act 

upon the information provided in the 

documents. At the same time, AMS 

recognizes that growers in some 

circumstances may be under pressure by 

dealers to execute a contract without 

fully considering its contents and 

implications. For instance, AMS is 

aware that some dealers currently 

provide only 3 business days for 

growers to review a contract. 

Furthermore, where a grower may be 

switching dealers without a capital 

investment, dialogue can be expected to 

be ongoing. In addition, sec. 208 of the 

Act gives poultry growers 3 business 

days after a poultry growing 

arrangement is executed to cancel the 

arrangement. 

AMS also recognizes that broiler 

growers have an interest in continuity of 

production, and does not wish to 

inadvertently insert unnecessary time 

delays into the grower’s planning 

process during contracting, in particular 

as this provision exclusively addresses 

the circumstance where the grower is 

not contemplating modifications to the 

housing specification of the grow house. 

Lengthy waiting periods as suggested by 

some commenters may result in delayed 

placements and idle farms, and may 

also expose both dealers and growers to 

other financial risks relating to changing 

economic circumstances. 

The final rule seeks to maximize the 

grower’s ability to determine the length 

of time necessary to review the 

documents. It provides a of full 14 

calendar days of notice unless the 

grower elects to waive 7 calendar days 

of the period. It also retains the 7- 

calendar-day minimum review period to 

mitigate the potential for coercive 

behavior. Growers expressed that they 

need more time to review the 

disclosure, which is a valid concern in 

some situations, but we are concerned 

that the additional time might prevent 

other growers from receiving timely 

placements in other situations, while 

the default is now a 14-day period for 

disclosure, we are allowing growers to 

elect to reduce that period to 7 calendar 

days for their convenience. Because we 

think live poultry dealers may apply 

undue pressure if the rule permitted a 

period of less than 7 calendar days, 

AMS is not permitting growers to waive 

notice entirely. Accordingly, this final 

rule revises § 201.102(a)(1) to require 

that live poultry dealers provide 

growers with the required documents at 

least 14 calendar days before the live 

poultry dealer executes the broiler 

growing arrangement, provided that the 

grower may waive up to 7 calendar days 

of that time period. 

Comment: A poultry industry trade 

association said AMS should require 

live poultry dealers to furnish the 

Disclosure Document at the initial 

signing of a poultry growing 

arrangement, and then on a periodic 

basis, such as every year. 

AMS response: AMS designed the 

proposed rule to specifically prevent 

deception at the time of contracting and 

thus intends for disclosure information 

to be tied to the production contract. 

That is, a new disclosure is required 

whenever production contracts change, 

without regard to how much time has 

passed since any prior disclosures. This 


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71See https://www.ftc.gov/news-events/news/ 

press-releases/2022/09/ftc-chair-lina-m-khan-filescomment-supporting-proposed-usda-protectionspoultry-farmers. 

gives the grower a chance to evaluate 

dealer disclosures in connection with 

the new, renewed, or revised contract 

before taking action on it. Requiring 

dealers to provide the Disclosure 

Document on a periodic schedule, 

regardless of whether changes are made 

to an existing contract, would be 

unnecessarily burdensome to dealers. 

Therefore, in the final rule, AMS 

maintains the requirement for live 

poultry dealers to furnish the Disclosure 

Document whenever production 

contracts change rather than on a 

periodic basis. 

Comment: A poultry industry trade 

association said AMS should provide 

additional clarity on how, and in what 

timeframe, live poultry dealers should 

communicate changes in disclosure 

information to growers. For example, 

this commenter asked whether a change 

to the placement or stocking density 

resulting from disease, weather, or 

changed economic demand would 

require the live poultry dealer to 

provide a new Disclosure Document and 

what the required timeframe would be 

for providing the document. 

AMS response: AMS requires that live 

poultry dealers provide a new 

Disclosure Document when a live 

poultry dealer seeks to renew, revise, or 

replace an existing broiler growing 

arrangement, or to establish a new 

broiler growing arrangement. This is 

important for providing growers with 

the information they need because it ties 

disclosure requirements to the 

production contract. As dealers must 

include placements and densities in the 

contracts, any changes to these terms 

would necessitate changes to the 

contracts, and thus the provision of a 

new Disclosure Document. The 

provision of such information up front 

is important for prospective growers, 

and for current growers that may be 

making a change based on a new 

housing specification, to understand, 

evaluate, and compare contracts. 

Updating disclosures when there are 

changes in the production contract 

provides similar protections for growers 

when contracts may change. To the 

extent that growers may not wish to 

accept the contract, for example, where 

they may consider growing for another 

live poultry dealer, the additional 

transparency at those times is useful. 

Additionally, while growers may not, as 

a practical matter, have a choice 

regarding certain changes to ongoing 

poultry production contracts, the 

additional transparency provided by the 

disclosures will enable growers to better 

plan their management of those 

contracts.71

Additional Advisories 

Comment: In response to AMS’s 

request for information regarding 

whether additional changes to the 

Disclosure Document would be 

appropriate, several non-profit 

organizations said AMS should require 

live poultry dealers that revise a signed 

contract to compensate poultry growers 

if the revisions lead to losses for the 

growers. The commenters said the point 

of the disclosures is to provide 

transparency about the arrangement; 

therefore, any changes to the 

arrangement at the expense of the 

poultry grower should be compensated 

or considered fraudulent. 

AMS response: The scope of this rule 

is transparency in agreements between 

live poultry dealers and poultry growers 

with whom they contract. AMS 

recognizes the issue raised by the 

commenters is a concern because 

growers rely upon the contract terms 

when entering the agreement, and it is 

problematic if subsequent revisions 

result in financial losses that 

presumably would not have occurred 

under the original terms. However, the 

remedy proposed by the commenters is 

not within the scope of this rule. If a live 

poultry dealer deceives a grower 

through a ‘‘bait and switch’’ agreement 

as described, remedies may exist 

through enforcement by USDA and DOJ, 

or in private actions by the grower in 

Federal or state court. Therefore, AMS 

made no changes to the rule as proposed 

based on these comments. 

Readability of Disclosure Document and 

Provision in Additional Languages 

Comment: In the proposed rule, AMS 

asked whether the wording of the 

Disclosure Document was clear and 

what changes could be made to improve 

clarity. Several groups representing 

poultry growers said AMS should 

ensure the Disclosure Document and 

other disclosures are in plain language 

and understandable to a wide range of 

poultry growers. They said the language 

should also be unambiguous to avoid 

discrepancies in interpretation between 

the agency and other regulators, the 

courts, and live poultry dealers. 

AMS also asked whether there are 

circumstances in which live poultry 

dealers should be required to provide 

the Disclosure Document in a language 

other than English. Commenters 

representing both poultry growers and 

live poultry dealers supported providing 

disclosures in the preferred language of 

poultry growers who are not native 

speakers of English. A commenter said 

the grower or prospective grower should 

have the right to request that the dealer 

provide the Disclosure Document in 

their primary language and that all time 

limits be tolled until the dealer provides 

an adequate translation, noting the 

burden on non-native English speakers 

to navigate the arrangement in English 

is significantly greater than the burden 

on a dealer to provide the information 

in the grower’s language. Commenters 

noted the substantial number of farmers 

who speak languages other than English 

and stressed the importance of making 

sure language barriers do not prevent 

poultry growers from fully 

understanding the potential costs and 

benefits of a poultry growing 

arrangement. In addition, several 

commenters recommended that AMS 

provide educational outreach to nonEnglish-speaking communities in their 

native languages. 

AMS response: This rule is intended 

to promote transparency in poultry 

production contracting and give poultry 

growers and prospective poultry 

growers relevant information with 

which to make more informed business 

decisions. For the disclosure 

information to have value and be of use 

to a poultry grower, the poultry grower 

must have basic comprehension of the 

information’s meaning so that the 

provision of this information can reduce 

the potential for deception. 

Accordingly, in response to comments, 

AMS added § 201.102(g)(3), which 

requires live poultry dealers to present 

Disclosure Document information 

clearly, concisely, and understandably 

for growers. More generally, standard 

plain language practice is to write 

informational materials in plain, easy to 

understand language appropriate for the 

subject and for the intended audience. 

We expect dealers to ensure that 

growers can easily understand the 

disclosures, and in our examinations 

may test that to determine whether 

dealers are complying with 

§ 201.102(g)(3). Further, in response to 

comments, AMS added a requirement in 

§ 201.102(g)(4) that in the event a 

prospective or current broiler grower 

notifies the live poultry dealer that they 

have limited proficiency in the 

disclosure’s written language, or in the 

event the dealer is already aware of such 

limited proficiency, the live poultry 

dealer must make reasonable efforts to 

assist the grower in translating the 

Disclosure Document at least 14 

calendar days before the live poultry 


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72As noted previously, Pew Research Center 

studies show that the English proficiency of the 

Hmong population in the U.S. in 2019 was only 

68% and among foreign born Hmong, English 

proficiency is just 43%. Abby Budimen, ‘‘Hmong in 

the U.S. Fact Sheet,’’ Pew Research Center, 

available at https://www.pewresearch.org/socialtrends/fact-sheet/asian-americans-hmong-in-the-us/ (last accessed April 2023). 

73 Jess Anna Spier, ‘‘Hmong Farmers: In the 

Market and on the Move,’’ (January 1, 2007) 

Farmers Legal Action Group, available at http://

www.flaginc.org/wp-content/uploads/2013/03/CLE_

JAS.pdf last accessed 04/06/2023. 

74FTC Policy Statement on Deception, Oct. 14, 

1983 (Appended to Cliffdale Associates, Inc., 103 

F.T.C. 110, 174 (1984)), available at https://

www.ftc.gov/system/files/documents/public_

statements/410531/831014deceptionstmt.pdf. 

dealer executes the broiler growing 

arrangement, provided that the grower 

may waive up to 7 calendar days of that 

time period.72

As noted by commenters, non-English 

speaking growers, including U.S. 

natives and immigrants, have played 

important roles in the poultry growing 

market in multiple localities. Grower 

groups have noted concerns over many 

years regarding non-English speaking 

growers’ ability to understand and 

evaluate their contracts and the risks 

they are taking in poultry growing.73

The intention of this rule is to assist all 

broiler growers in understanding the 

information about their poultry growing 

arrangement. This includes providing 

the information to growers in a language 

with which they are familiar. Under this 

final rule, the live poultry dealer must 

make reasonable efforts to ensure that 

growers are aware of their right to 

request translation assistance, and to 

assist the grower in translating the 

Disclosure Document at least 14 

calendar days before the live poultry 

dealer executes the broiler growing 

arrangement (provided that the grower 

may waive up to 7 calendar days of that 

time period). The timing aligns with the 

requirements on the live poultry dealer 

under § 201.102(a) to provide the 

contract and Disclosure Document to 

the grower. Reasonable efforts include 

but are not limited to providing current 

contact information for professional 

translation service providers, trade 

associations with translator resources, 

relevant community groups, or any 

other person or organization that 

provides translation services in the 

broiler grower’s geographic area. A live 

poultry dealer may not restrict a broiler 

grower or prospective broiler grower 

from discussing or sharing the 

Disclosure Document for purposes of 

translation with a person or 

organization that provides language 

translation services. Live poultry 

dealers, as parties regularly engaged in 

executing poultry growing 

arrangements, can be expected to be 

able to identify for growers affordable 

translation services in a timely manner, 

which will assist the grower in 

obtaining any necessary translation 

services quickly. 

AMS is requiring that live poultry 

dealers take reasonable efforts to ensure 

that growers are made aware of their 

right to request translation assistance so 

that growers can reasonably access the 

assistance with limited risks of 

prejudice or discrimination. AMS is not 

requiring dealers to provide a 

translation because it would be costly 

and could deter poultry companies from 

working with non-English speaking 

growers. Instead, the requirement to 

assist growers in obtaining translation 

services is a more cost-effective and 

flexible approach that conforms with 

existing regulatory requirements that 

protect growers’ ability to access other 

services, such as accounting, financial, 

and legal advisors, that growers may 

engage to meet their needs in reviewing 

what can be multi-hundred-thousand or 

million-dollar investments and business 

risks. Accordingly, to ensure grower 

access to those services, § 201.102(g)(4) 

prohibits any restriction on growers’ 

ability to share the documentation with 

translation service providers. 

Furthermore, nothing in the rule 

prevents companies from providing a 

translation provided it is complete, 

accurate, and not misleading. Poultry 

dealers are strongly encouraged to do so. 

To preserve the minimum time period 

for grower review, AMS’s requirement 

that live poultry dealers assist growers 

with accessing translation services must 

occur 14 calendar days before executing 

the poultry growing arrangement 

(provided that the grower may waive up 

to 7 calendar days of that time period). 

AMS has aligned the translation timing 

with the general requirement that the 

Disclosure Document be provided 14 

calendar days before executing the 

poultry arrangement to minimize 

complexity in the rule, provided that 

the grower may waive up to 7 calendar 

days of that time period. As discussed 

elsewhere in this final rule, the 14-day 

timing requirement only applies where 

no additional capital investment is 

being made. Where additional capital 

investments are being made the 

Disclosure Document must be delivered 

with the housing specification, which 

occurs before the capital investment. As 

noted elsewhere in this final rule, 

circumstances where no capital 

investments are being made tend to 

reflect continuity and an established 

relationship between the grower and the 

live poultry dealer, or circumstances 

where a grower is switching without 

capital investment. In either case, the 

dealer and grower can be expected to be 

in ongoing dialogue in the run up to the 

period before review, which should 

allow for more flexible timing by both 

parties. 

The suggestion that AMS provide 

educational outreach to non-Englishspeaking communities in their native 

languages is noted, and while a 

provision for outreach is not included in 

this rule, AMS will publish educational 

materials online in multiple commonly 

spoken languages to provide a basic 

level of outreach, in addition to 

exploring more opportunities to provide 

additional educational outreach. 

Other Improvements to Proposed 

Disclosure Regime 

Comment: In the proposed rule, AMS 

invited comments on what else USDA 

can do to improve the proposed 

disclosure regime, including whether 

AMS should provide more information 

about the scope of the definition of 

deception under the Act. Several nonprofit organizations suggested AMS 

establish a definition of deception to 

give growers, regulated entities, and 

courts a clear understanding of the 

intent of the rule. 

AMS response: AMS is making no 

change based on comments received. 

While the particular facts and 

circumstances in any individual case 

will determine the application of the 

prohibition on deceptive practices 

under the Act, well- established 

principles of deceptive practices under 

the Act squarely cover the information 

required to be disclosed in this rule. 

Taking the formulation set forth in the 

1983 FTC Policy Statement on 

Deception, deception would require that 

the representation, omission, or practice 

be likely to mislead the grower, from the 

perspective of the grower acting 

reasonably in the circumstances, and be 

likely to affect their conduct or decision 

with regard to the poultry growing 

arrangement.74 AMS has crafted this 

rule to meet that standard in the 

prevention of deception: to provide 

information that is important to 

reasonable poultry growers’ decisions 

relating to contracting and the operation 

of their contracts and that addresses 

representations, omissions, and 

practices that are likely to mislead 

growers. Accordingly, AMS finds no 

need to further define deception in this 

rule. 

AMS notes, also, that additional 

concepts, formulations, or applications 

of deception may be presented in a 

separate rulemaking. Other deceptive 


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practices are outside the scope of this 

disclosure-based rulemaking. 

D. Disclosure Document Advisories 

In proposed § 201.100(b)(6), (7), and 

(8), AMS proposed the Disclosure 

Document contain specific verbatim 

advisories. The advisories would 

summarize provisions of the poultry 

grower’s poultry growing arrangement, 

the grower’s right to carefully read the 

Disclosure Document and all 

accompanying material, and the 

grower’s right to share the document 

with certain others for counsel. The 

Disclosure Document advisories would 

describe the requirement that the live 

poultry dealer furnish a copy of the 

Disclosure Document and growing 

arrangement a minimum of 14 calendar 

days before the dealer executes the 

growing arrangement, provided that the 

grower may waive up to 7 calendar days 

of that time period. When the live 

poultry dealer seeks to offer or impose 

new or additional housing 

specifications that could lead the 

poultry grower to make a capital 

investment, the advisories would 

describe the requirement to provide the 

Disclosure Document simultaneously 

with a copy of the growing arrangement, 

any new or modified housing 

specifications that require original or 

additional capital investment, and a 

letter of intent. The advisories would 

also include a provision explaining that 

the information is not verified by USDA, 

and that false or misleading statements 

or material omissions by the live poultry 

dealer in the disclosure could constitute 

a violation of Federal law, State law, or 

both. Inaccurate information provided 

in disclosure to growers, as well as other 

bait-and-switch tactics, such as making 

a material policy change but not through 

a new or revised contract, would be 

covered under this section. This is 

designed to help growers understand 

that conduct which violates the rule is 

a violation of sec. 202(a) of the Act and 

may result in a notice of violation from 

USDA or prosecution by the Department 

of Justice and that, furthermore, growers 

may be able to tap additional remedies 

for misrepresentations in these 

disclosures under the Act and other 

laws as well. 

Statement of Grower’s Rights 

Comment: Several non-profit 

organizations suggested AMS should 

add a requirement that dealers provide 

in the Disclosure Document USDA 

contact information that would allow 

current or prospective poultry growers 

to obtain further guidance regarding 

their rights and protections. 

AMS response: AMS agrees with this 

comment, and has amended the 

proposed requirements for the 

Disclosure Document to include the 

Packers and Stockyard Division hotline 

number, along with the address for the 

AMS complaint portal, which was 

included in the proposed rule. AMS has 

additionally included a reference to the 

AMS website where live poultry dealers 

and growers may access further 

information about rights and 

responsibilities under the Act. 

Providing this contact information to 

growers will signal AMS’s intent to 

enforce the rule and further facilitate 

growers’ ability to contact USDA 

regarding potential violations. 

Comment: AMS received several 

comments about the provision allowing 

poultry growers to discuss their 

arrangements with business associates. 

A non-profit organization suggested that 

the rule should ensure a grower’s right 

to speak freely about their contracts. 

Several commenters said the rule 

should increase transparency by 

explicitly permitting poultry growers to 

discuss poultry growing arrangement 

offers and Disclosure Documents with 

anyone. 

AMS response: AMS continues to 

agree growers must be able to consult 

with the entities listed in § 201.100(b) 

about entering into, renewing, and 

operating under such contracts because 

those parties are essential for assisting 

growers in appreciating the legal, 

financial, and operational risks that they 

may face. Moreover, the Disclosure 

Documents provide critical information 

that is core to their ability to provide 

that assistance. However, adding to the 

particular entities listed in § 201.100(b) 

is outside the scope of this rulemaking. 

AMS will monitor whether nondisclosure requirements are impeding 

the ability of growers to make the most 

efficient use of the Disclosure 

Documents, including whether such 

non-disclosure agreements impede the 

ability of growers to seek and obtain 

better offers from competing live poultry 

dealers. Accordingly, AMS will monitor 

and evaluate whether rulemaking to 

expand the entities listed in § 201.100(b) 

is needed, but made no changes to the 

rule as proposed based on these 

comments. 

Comment: Several live poultry dealers 

said the verbatim advisories required by 

the proposed rule on the right to obtain 

counsel on a contract from certain 

trusted advisors and the right to seek 

redress from AMS for violations of the 

Act are unnecessary because they 

distract from the clear terms of the 

contract and do not require contractual 

provisions to be effective. These 

commenters suggested AMS engage in 

targeted educational outreach, work 

with State agriculture extension 

services, and coordinate with other 

industry stakeholders as an alternative 

to these advisories. 

AMS Response: Based on AMS’s 

experience, some growers may not be 

aware of their rights under the Act or 

may be confused, intimidated, or misled 

about asserting those rights where 

contracts include confidentiality 

clauses. The mandated disclosures 

promote transparency and allow 

growers to better understand, evaluate, 

and compare contracts among dealers. 

This minimizes the risk of deception in 

the contracting process by ensuring 

growers know they have the right to 

understand and evaluate offered 

contracts by seeking business, legal, and 

financial counsel from the entities listed 

in § 201.100(b). It is true that certain 

information provided by State extension 

services, USDA resources, and other 

poultry growers under contract with the 

same live poultry dealer can help 

growers assess the feasibility and 

operation of new or revised poultry 

growing arrangements. Grower 

commenters at listening sessions, 

however—in response to rulemaking 

proposals—have reported to USDA they 

are not sure their contracts allow them 

to seek advice from others. Growers 

should be assured that seeking such 

guidance is not prohibited, regardless of 

confidentiality clauses in offered 

contracts. Further, AMS agrees that 

educational outreach is valuable to the 

industry and intends to continue and 

enhance efforts in those areas. 

Educational outreach, however, is not a 

replacement for legal protection. This 

rule provides this protection by 

requiring inclusion of the advisory 

disclosures in the Disclosure Document. 

Accordingly, AMS made no change to 

the proposed rule based on these 

comments. 

Comment: A poultry industry trade 

association said AMS should omit 

requirements that are irrelevant to 

determining grower income, such as the 

requirement to provide information 

about general rights and obligations 

under the Act. 

AMS Response: AMS does not agree 

that disclosures should focus only on 

grower income. Each of the disclosure 

elements required in this final rule will 

have a meaningful impact on growers’ 

ability to understand and evaluate the 

production agreement. At earlier 

listening sessions and competition 

workshops, USDA heard from growers 

that certain information is critical to 

their decision making and ultimate 

success, and they have urged AMS to 


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75Agricultural Marketing Service, ‘‘Inclusive 

Competition and Market Integrity,’’ Proposed Rule, 

Oct. 3, 2022, 87 FR 60010, available at https://

www.federalregister.gov/documents/2022/10/03/ 

2022-21114/inclusive-competition-and-marketintegrity-under-the-packers-and-stockyards-act. 

require dealers to provide this 

information. For example, growers have 

told us that knowing the live poultry 

dealer’s policies related to the sale or 

transfer of a poultry growing operation 

before they enter a contract and make 

associated capital investments would 

help them evaluate the long-range risks 

of doing so. In another example, growers 

knowing the dealer’s policy regarding 

feed outages will be better prepared to 

avoid such situations or react 

appropriately in a timely manner to 

minimize the impact of an outage on the 

flock. While having such information 

forestalls confusion, misunderstanding, 

and unnecessary delays for growers, live 

poultry dealers also benefit from 

providing such information by avoiding 

potentially misleading or deceptive 

communications and by maximizing 

business outcomes efficiently. 

Accordingly, AMS made no changes to 

the rule as proposed in response to this 

comment. 

Comment: A poultry industry trade 

association said AMS should clarify 

what constitutes a ‘‘material omission’’ 

or ‘‘misleading statement’’ for the 

purposes of proposed § 201.100(b)(8) 

and asked whether an incorrect forecast 

or an unforeseen market change not 

contemplated by a disclosure would be 

considered ‘‘misleading.’’ 

AMS Response: The sufficiency and 

reliability of disclosures depend heavily 

on the facts and circumstances. 

Moreover, contract causes of action are, 

in general, a function of State law, and 

State courts may have different 

standards for interpreting ‘‘material 

omission’’ and ‘‘misleading statement.’’ 

The law around ‘‘material omissions’’ or 

‘‘misleading statements’’ is a wellestablished part of the law of deception 

under the Act, the FTC Act, and other 

relevant Federal and State disclosure 

laws. AMS made no changes to the rule 

as proposed based on this comment. 

Comment: A meat industry trade 

association said AMS should modify the 

rule to consider proprietary and 

confidential information that would be 

provided to potential growers who 

would not necessarily end up with a 

business relationship with the live 

poultry dealer. 

AMS response: AMS has already 

explained why the information in the 

Disclosure Document does not give rise 

to confidential or propriety business 

information. 

Recommendations for Additional 

Advisories 

Comment: Multiple commenters 

urged AMS to establish that it would be 

a violation of the Act for a live poultry 

dealer to threaten to retaliate against a 

poultry grower who installs a feed scale 

to verify the accuracy of feed deliveries, 

and that live poultry dealers should 

have to disclose this right in the 

Disclosure Document. One commenter 

said this right is important because the 

tournament system values the growers’ 

feed-to-weight conversion ratio, and if a 

live poultry dealer reports having 

provided a higher amount of feed than 

was actually provided, the grower is 

improperly penalized for having a lower 

ratio. 

AMS response: This issue is outside 

the scope of this rule. This rule focuses 

on providing enhanced transparency to 

poultry growers and does not address 

retaliation and related matters. In 

addition, AMS has proposed a rule that 

would address retaliation against 

producers including poultry growers.75

AMS is also considering additional 

steps to address unfair practices as set 

forth in the June 8, 2022, Advanced 

Notice of Proposed Rulemaking 

‘‘Poultry Growing Tournament Systems: 

Fairness and Related Concerns.’’ 

Therefore, AMS made no changes to the 

rule as proposed based on this 

comment. 

Comment: Multiple commenters said 

the Disclosure Document should 

include a warning about the dangers of 

breathing dust and ammonia, as well as 

information about how poultry growers 

can protect themselves and their 

employees from these dangers. Several 

of these commenters said AMS should 

provide a fact sheet on respiratory 

health hazards. Similarly, a commenter 

said AMS should require disclosures to 

farmers and to the public of what goes 

into the feed for poultry, saying poultry 

growers could be irreparably harmed by 

handling dangerous chemicals and 

consumers could be harmed by 

ingesting these chemicals. 

AMS response: This issue is outside 

the scope of this rule. The rule focuses 

on transparency regarding the financial 

risks and benefits of raising poultry 

under a poultry growing arrangement. 

AMS does not discount the commenters’ 

concerns here and recognizes there are 

risks associated with growing poultry 

that are not directly financial. Nor does 

AMS discount the possibility that 

deception and unfair practices may 

extend to injuries beyond promises of 

financial gain. Because this comment is 

outside the scope of the rule, AMS made 

no changes to the rule based on these 

comments. AMS, however, encourages 

all potential and current poultry 

growers to educate themselves on the 

various health and safety risks 

associated with growing poultry. 

E. Financial Disclosures 

AMS proposed to require live poultry 

dealers to provide various financial 

disclosures to poultry growers, 

including disclosure of bankruptcy 

filings, grower terminations, and grower 

payment history and projections. 

Disclosure of Bankruptcy Filings 

AMS proposed in § 201.100(c)(2) to 

require the Disclosure Document to 

contain a summary of bankruptcy filings 

in the prior 6 years for the live poultry 

dealer and any parent, subsidiary, and 

related entity. 

Comment: Several poultry and meat 

industry trade associations argued that 

the requirement to disclose past 

bankruptcy filings is unnecessary. For 

example, a commenter said bankruptcy 

filings are rare among live poultry 

dealers and are already public if 

interested parties wish to obtain them. 

Another commenter noted that this 

information would be difficult to 

maintain for larger companies with 

multiple subsidiaries and said it is 

unclear why disclosing a live poultry 

dealer’s bankruptcy history would be 

relevant to determining a poultry 

grower’s earnings under a contract, or 

why this requirement is for a 6-year 

period rather than 5 years as with other 

disclosure requirements in the rule. 

AMS response: The financial stability 

of a dealer is a relevant factor for 

prospective growers to consider. Dealers 

or complexes that are underperforming 

financially may be subject to closure or 

reduced production levels, resulting in 

negative effects on grower revenue and 

potential contract termination. For 

example, numerous grower contracts 

were terminated as a result of the 

Pilgrim’s Pride bankruptcy in 2008. Had 

those growers understood the financial 

state of the company and the risk to 

their operations, they may have elected 

to work with a different dealer, not 

entered the business at all, or taken 

other measures to protect themselves 

from the risk of financial loss. In 

addition, because corporate 

relationships may not be known to 

growers, the public nature of filings may 

be inadequate to effectively 

communicate this type of risk. However, 

to improve the uniformity of 

recordkeeping for this disclosure regime 

in the final rule, and in response to 

comments, AMS has elected to adjust 

the bankruptcy information reporting 

period required by § 201.102(c)(2) to 5 

years. 


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76 In a case involving Arkansas growers, Judge 

Higginson wrote ‘‘[c]iting a downturn in the poultry 

industry, PPC terminated its contracts with the 

Growers and filed for bankruptcy.’’ Growers v. 

Pilgrim’s Pride Corp. (In re Pilgrim’s Pride Corp.), 

706 F.3d 636, 638 (5th Cir. 2013). In a case 

involving terminated Florida growers, a Pilgrim’s 

Pride executive was reported to have testified that 

‘‘terminating the contracts (was) necessary and the 

best option . . . slowing or stopping operations at 

Pilgrim’s Pride plants is expected to save the 

company $250 million this year,’’ from ‘‘Pilgrim’s 

Pride cut growers based on production factors,’’ 

Meat + Poultry (March 11, 2009). 

Grower Termination and Bankruptcy 

Disclosures 

In the proposed rule, AMS asked if it 

should require dealers to disclose the 

contractual grounds for termination or 

suspension of the poultry growing 

arrangement. 

Comment: Several commenters 

suggested AMS should require live 

poultry dealers to disclose the 

contractual grounds for termination or 

suspension of the poultry growing 

arrangement. These commenters said it 

is important for poultry growers to 

know the circumstances under which 

the company can terminate the contract 

and leave the grower without income 

because growers make a substantial 

investment under the contract 

arrangement. 

AMS response: Current regulatory 

requirements adequately cover this 

issue. Under existing regulations at 

§ 201.100(c)(1), live poultry dealers are 

required to provide growers a copy of 

their contract that includes, among 

other things, ‘‘the duration of the 

contract and conditions for the 

termination of the contract by each of 

the parties.’’ Existing regulations at 

§ 201.100(h) also require live poultry 

dealers to provide terminated growers 

with written notice, including the 

reason for termination and appeal 

rights. This information is shared 

between dealers and individual 

contracted growers only, and is not part 

of the Disclosure Document required of 

broiler dealers under § 201.102. AMS 

made no changes to the current 

regulations based on these comments. 

Comment: In other responses to 

AMS’s request for input about contract 

terminations, multiple non-profit 

organizations asked AMS to require live 

poultry dealers to disclose the annual 

percentage of contracts they terminated 

over a certain period. The commenters 

said these disclosures would give 

growers a sense of the nature of the 

contract relationship, as well as the 

range of contract cancellation risks. One 

commenter noted this information is 

necessary for growers to determine the 

likelihood of failure. One commenter 

also suggested AMS require dealers to 

provide information about the most 

common reasons for termination. This 

commenter further suggested that live 

poultry dealers should include a 

summary of the average rate of 

bankruptcies among growers who have 

worked with that dealer over the past 5 

years, as well as information on the 

most common reasons why growers may 

have filed for bankruptcy. 

AMS response: In the proposed rule, 

AMS had not required live poultry 

dealers to provide information about 

grower turnover rates. However, AMS 

agrees with commenters’ suggestions 

that disclosures related to the rates of 

contract termination and non-renewal 

with a live poultry dealer could help 

current and prospective poultry growers 

better assess the stability of the dealer’s 

contract relationships. In requesting 

disclosure of bankruptcy and litigation, 

AMS was seeking to capture the risk 

that might arise from termination or 

unstable relationships. Grower turnover 

rates are, in AMS’s views, a useful 

metric to assess those risks, as well as 

to assess grower satisfaction with the 

dealer. In AMS’s experience regulating 

the industry, grower turnover rates 

commonly reflect changes to poultry 

sales in the wholesale and retail 

marketplace, as well as general live 

poultry dealer grower management 

practices. Local turnover rates might 

stem from regional management 

practices, local agent practices, or 

changes in local agricultural or even 

labor markets. Local turnover rates may 

also reflect company-wide policy and 

management of poultry production, 

suggesting that growers need to 

understand and compare both local 

complex and company-wide grower 

turnover history in order to evaluate 

offered poultry growing arrangements.76

As such, grower turnover rates provide 

information that is similar to, but also 

more holistic, than bankruptcy or 

litigation, and assist the grower in 

evaluating the risk of termination or an 

unstable or unsatisfactory relationship. 

Accordingly, AMS has added a 

requirement to incorporate broiler 

grower turnover rates at the local 

complex and company level into the 

Disclosure Document. This information 

will allow growers to compare the 

turnover rates of multiple live poultry 

dealers as a risk factor when making 

contracting decisions. Section 

201.102(c)(5) is added to the final rule 

and requires live poultry dealers 

engaged in the production of broilers to 

disclose average annual broiler grower 

turnover rates for the previous calendar 

year and the average of the 5 previous 

calendar years at both the company 

level and the local complex level. 

AMS is requiring grower turnover 

rates for the previous year and the 

average of the 5 previous years at both 

the complex and company level, 

whereas it is requiring dealers to 

provide previous-year average grower 

payment information only at the 

complex level and not at the company 

level (as in proposed § 201.100(d)(1)). 

AMS is adopting this distinction 

because company-wide grower turnover 

metrics provide the grower with an 

important picture of termination or 

other risks that may arise from company 

decision-making relating to sales market 

fluctuations—for example, if a dealer 

terminates growers quickly in response 

to sales changes. Complex level 

turnover rates are also important to 

growers because they are likely to 

provide insight into how the company, 

and in particular its local agents, 

interact with growers. AMS developed 

detailed instructions for how to 

calculate average annual broiler grower 

turnover rates, which are included in 

Form PSD 6100, to facilitate ease of 

compliance by live poultry dealers. 

As explained in the previous 

comment response, live poultry dealers 

are required to provide individual 

terminated growers with written notice, 

including the reason for termination and 

the grower’s appeal rights. However, 

AMS has determined that this final rule 

should not require dealers to explain the 

reasons for terminations of other grower 

contracts on a complex- or companywide basis in the Disclosure Document. 

AMS knows through experience 

working with the industry that poultry 

dealers and growers can have widely 

different perspectives on the causes and 

circumstances for contract terminations. 

Similar to a grower’s evaluation of a 

dealer’s bankruptcy or litigation history, 

growers can consider grower turnover 

rates when evaluating offered contracts, 

but live poultry dealers cannot 

reasonably be expected to convey the 

varying reasons that may be the basis for 

terminating contracts as that would at a 

minimum be burdensome and may in 

some circumstances reveal proprietary 

business information or create litigation 

risks to the company. 

AMS also does not agree that dealers 

should be required to furnish 

information about the rates and causes 

for grower bankruptcies. AMS does not 

expect live poultry dealers to know all 

the rates or reasons for individual 

growers’ personal or business decisions 

to file for bankruptcy, which may or 

may not have anything to do with the 

poultry growing arrangement. 

Accordingly, no changes to the rule as 


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77USDA Farm Service Agency, Guaranteed Loan 

Making and Servicing 2–FLP (Revision 1) pp.8–86 

(October 2008). https://www.fsa.usda.gov/internet/ 

FSA_fFile/2-flp.pdf; accessed 1/3/2022. 

proposed were made on the basis of 

these comments. 

Facilitating Harmful Coordination by 

Integrators 

In the proposed rule, AMS asked 

whether certain types of financial 

disclosures could facilitate harmful 

coordination by integrators and, if so, 

how this risk could be mitigated. 

Comment: A non-profit organization 

said the large market share held by a 

few large companies, along with the 

existence of specialized data companies 

that service large integrators, has 

already led to harmful coordination to 

reduce both contract grower payments 

and wages for poultry industry workers. 

This commenter said the solution to 

avoid harmful coordination by 

integrators would be for USDA to work 

with DOJ to crack down on 

anticompetitive practices, rather than to 

limit disclosure of information to 

prospective and current contract 

growers. 

AMS response: AMS is committed to 

working with DOJ to curb illegal trade 

practices, including antitrust violations, 

but antitrust violations are not the only 

behavior regulated by the Act. This rule 

is focused on providing enhanced 

transparency to current and prospective 

poultry growers because of the 

persistent challenges they have faced for 

many years with respect to their poultry 

growing arrangements. Enhancing 

transparency and reducing information 

asymmetry through this rule will allow 

growers to better understand evaluate, 

and compare contracts to reduce 

deceptive practices. AMS made no 

changes to the rule as proposed based 

on this comment. 

Effect of Financial Disclosures on 

Lending System 

In the proposed rule, AMS requested 

comment on the effect the proposed 

financial disclosures would have on the 

lending system and on the provision of 

credit to growers. 

Comment: A non-profit organization 

said poultry growers finance the barns 

they use through loans, which are often 

guaranteed through USDA’s Farm 

Services Agency (FSA) or the Small 

Business Administration (SBA). 

According to this commenter, when 

growers are unable to pay their loans 

because of inadequate pay from the 

tournament system, taxpayers end up 

paying for them. This commenter said 

FSA should use the information 

disclosed under the proposed rule to 

refuse to guarantee loans unless the 

contract terms are at least as long as the 

life of the loan. 

AMS response: AMS noted in the 

proposed rule that FSA has recognized 

repayment reliability concerns related to 

informational asymmetries and their 

effect on poultry grower payments and 

total revenues. Under the loan 

repayment program, FSA assesses the 

‘‘dependability’’ of poultry production 

contracts and requires contracts to 

provide assurance of the grower’s 

opportunity to generate enough income 

to ensure repayment of the loan by 

incorporating requirements such as a 

minimum number of flocks per year or 

similar quantifiable requirements.77

The commenter’s request that FSA 

require contract length match 

repayment term is outside the scope of 

this rulemaking. However, AMS is 

committed to working with FSA and 

SBA on poultry industry lending 

practices. AMS made no changes to the 

rule as proposed based on this 

comment. 

Disclosure of Grower Payment History 

and Projections 

In § 201.100(d) (1), (2), and (3) of the 

proposed rule, AMS proposed to require 

the Disclosure Document to contain two 

tables. One table would show the 

average annual gross payments, in U.S. 

dollars per farm facility square foot, to 

poultry growers for the previous 

calendar year for all complexes owned 

or operated by the live poultry dealer. 

The second table would show the 

average annual payments, in U.S. 

dollars per farm facility square foot, to 

poultry growers at the local complex. 

The proposed rule also specified how 

the tables should be organized and how 

values should be calculated. 

Under the proposed rule, if a live 

poultry dealer modified the building 

specifications such that the grower 

would be required to make additional 

capital investment, or the tables of 

payment history would not accurately 

represent projected grower annual 

payments, the live poultry dealer would 

be required to provide additional 

information. The dealer would be 

required to provide tables presenting 

projections of average annual gross 

payments to growers under contract 

with the complex, and having the same 

housing specifications, for the term of 

the poultry growing arrangement, at five 

quintile levels expressed as dollars per 

farm facility square foot. Dealers would 

further be required to explain why the 

payment history information would not 

accurately represent projected future 

payments. 

AMS asked whether the proposed 

grower payment history and projection 

disclosures were adequate to enable 

growers to make sound business 

decisions. 

Comment: Several grower groups and 

State attorneys general indicated 

support for the proposed grower 

payment history information and 

projection disclosures. Commenters said 

the information should increase 

transparency for growers and that 

having information about real growers’ 

outcomes in the region would help 

potential growers make decisions about 

entering into poultry growing 

arrangements. Commenters said that 

reporting average grower pay in 

quintiles helps prospective growers 

understand and compare income 

variations and evaluate their own 

income variation risk accordingly. On 

commenter explained that having 

realistic payment information would 

allow farmers to plan financing more 

accurately and avoid such predicaments 

as revenue shortfall in the face of 

equipment replacement and repair 

costs. 

AMS Response: AMS notes 

widespread support among commenters 

for the utility of the proposed 

disclosures for growers. In this industry 

as well as many others, past 

performance is a commonly relied-upon 

predictor of future performance. As 

explained in this section and elsewhere 

in this document, dealer discretion with 

respect to production inputs, and 

grower discretion with respect to flock 

management decisions and applied 

skills, are also determinative factors in 

grower outcomes. Thus, historical 

payment data and future projections 

become the baseline upon which 

growers can evaluate likelihood of their 

success or failure under poultry growing 

arrangements. 

Comment: A number of industry 

groups said providing the disclosures 

would impose significant costs on 

dealers but would be of little value to 

poultry growers. 

AMS response: As detailed in the 

Regulatory Impact Analysis below, AMS 

has determined that except for the first 

year that the rule is effective, the 

benefits of this rule to growers exceed 

costs to dealers. Benefits include 

reduced uncertainty in the broiler 

grower’s revenue stream, reduced risk of 

retaliation and potential for fraud and 

deception, and more optimal allocation 

of capital and labor resources, leading to 

improved efficiencies across the entire 

industry. First-year costs to live poultry 

dealers—following the effective date of 


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78Forecasts of a variable are often based on past 

values of that variable. J.C. Brocklebank, D.A. 

Dickey, and B.S. Choi, SAS for Forecasting Time 

Series (2018): 23. 

79 James M. MacDonald, ‘‘Technology, 

Organization, and Financial Performance in U.S. 

Broiler Production.’’ U.S. Department of Agriculture 

Economic Research Service, Economic Information 

Bulletin No. 126 (June 2014). 

80Charles R. Knoeber and Walter N. Thurman. 

‘‘Testing the Theory of Tournaments: An Empirical 

Analysis of Broiler Production. ’’Journal of Labor 

Economics 12 (April 1994). Armando Levy and 

Tomislav Vukina. ‘‘The League Composition Effect 

in Tournaments with Heterogeneous Players: An 

Empirical Analysis of Broiler Contracts.’’ Journal of 

Labor Economics 22 (2004). 

81 In the last available survey of local markets 

(2011), MacDonald and Key found that about one 

quarter of contract growers reported that there was 

just one live poultry dealer in their area; another 

quarter reported two; another quarter reported 

three; and the rest reported four or more. James M. 

MacDonald, Technology, Organization, and 

Financial Performance in U.S. Broiler Production, 

EIB–126, U.S. Department of Agriculture, Economic 

Research Service, June 2014: 30, https://

www.ers.usda.gov/webdocs/publications/43869/ 

48159_eib126.pdf?v=0. 

the rule—include expenses for setting 

up new reporting and recordkeeping 

processes, which will decrease in 

succeeding years. Additionally, in 

economic terms, AMS expects total 

costs to the industry from the rule—as 

with total benefits—will be very small 

in relation to the total value of industry 

production. Significant benefits in the 

form of decision-making tools will 

nevertheless accrue to individual 

growers given the opportunity to 

understand, evaluate, and compare 

contract data provided by live poultry 

dealers in Disclosure Documents 

pertaining to their poultry growing 

arrangements. 

Comment: One commenter said that 

the disclosures would be of little value 

to growers because past economic 

performance is not a reliable predictor 

of future economic conditions. The 

commenter asserted that the grower’s 

income is determined as specified in the 

contract and driven primarily by the 

grower’s skill and care. 

AMS Response: AMS acknowledges 

that items specified in the contract, and 

the grower’s skill and care, play 

important roles in grower performance. 

However, the live poultry dealer 

determines many items not specified in 

the contract that significantly impact the 

grower’s income, such as how many 

flocks a grower receives annually and 

the number of birds in those flocks. In 

addition, in tournament systems, the 

grower’s skill and care are supposed to 

be rewarded in reference to the skill and 

care provided by other growers settling 

with them under relative performance 

payment contracts. The disclosed 

information provides a history of past 

grower performances representing the 

range of skill and care of the pool of 

growers with whom they will be settled, 

and who operate under the same 

contract at the same complex. This 

information will provide the potential 

grower a firmer basis for forming 

performance expectations than a copy of 

the contract and a self-estimation of 

their skill and commitment in isolation. 

It is true that past economic 

performance may not always be a 

reliable predictor of future economic 

conditions. For example, past economic 

performance could not have predicted 

U.S. economic conditions following 

unanticipated events like a worldwide 

pandemic, foreign conflicts, social 

upheaval, or an avian flu epidemic. 

Nevertheless, past economic 

performance is commonly used in many 

industries to help predict and plan for 

future economic performance. 

Actual payment information from the 

recent past illustrates how a live poultry 

dealer wields its discretion in the 

contract. It offers one of, if not the, best 

pieces of available information to 

provide growers with a reasonable range 

of what their incomes may be, reflecting 

the range of grower skills and other 

factors present in the marketplace.78

Further, providing only the average, or 

no information regarding variability, is 

deceptive in the face of payment 

variability—a significant complaint that 

AMS has received over the years from 

growers. Based on AMS’s experience 

monitoring these markets, payments to 

growers frequently encompass a wide 

range above and below the mean 

payment level, as well as significant 

variation between specific contracts and 

grower pools. 

In data drawn from a 2011 nationally 

representative sample of broiler 

growers, the mean payment received by 

contract growers was 5.77 cents per 

pound, but 10 percent of growers earned 

at least 7.02 cents per pound, while 10 

percent earned less than 4.32 cents per 

pound.79 While the data reported above 

range across all growers and all 

contracts, payments also range widely 

for specific contracts and grower 

pools.80 Presenting payment history 

information broken out by quintiles (or, 

for very small complexes, by mean and 

standard deviation) gives insight into 

the variability of cash flow within 

recent years. As commenters pointed 

out, not even the best economic models 

can predict the future with a high 

degree of certainty, so presenting recent 

payment information broken out by 

quintiles (or, for very small complexes, 

mean and standard deviation) to share 

the range of performance is designed to 

enable growers to evaluate whether their 

potential earnings would be sufficient to 

meet personal and business financial 

obligations, as well as to better handle 

risk and improve farm management. The 

rule also recognizes that economic 

conditions may vary, and so provides 

the opportunity for live poultry dealers 

to explain why any future projections 

may differ from past outcomes. 

Comment: Several commenters 

representing poultry industry interests 

expressed concerns that any data on 

potential future payments is misleading 

to growers, given the number of factors 

that affect payments and the role of a 

grower’s own skill. 

AMS response: Grower skill does play 

a role in flock performance and 

therefore per-flock payments. The 

projection quintiles required in this rule 

are specifically designed to capture a 

wide range of grower performance. 

Therefore, the bulk of variability in 

future projections—and presumably the 

reason for offering projections in lieu of 

historical information in the first 

place—would be due to anticipated 

changes in dealer-controlled factors 

such as flock placement frequency and 

flock density, changes in production 

needs, and changes to the length of 

grower contracts. The supposition that 

payment disclosures would be 

misleading would only be true to the 

extent that dealers supply misleading 

data related to factors they control. To 

do so would be deceptive and a 

violation of the Act. Accordingly, AMS 

made no changes to the rule as proposed 

based on these comments. 

Comment: Several poultry and meat 

industry trade associations requested 

that AMS require only grower payment 

history information for the grower’s 

complex rather than for all complexes 

owned by the live poultry dealer. These 

commenters noted that complexes in 

other geographic areas face different 

economic conditions, such as cost of 

living, labor costs, and State and local 

taxes, arguing that payment information 

for these complexes would not be useful 

to poultry growers and would 

potentially confuse them. 

AMS response: Payment history for 

complexes in other geographic areas 

may be useful to growers in some 

circumstances, in particular, in areas 

with only one or two live poultry 

dealers where there may not be the 

ready availability for growers to 

compare what they might earn from 

providing poultry growout services.81

However, some factors may vary 

regionally, such as labor costs, which 

could reduce the usability of the 

information. This rule does not require 

payment information for complexes in 

other geographic areas. Therefore, in the 


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82Agricultural Marketing Service, USDA, 

‘‘Poultry Growing Tournament Systems: Fairness 

and Related Concerns,’’ 87 FR 34814, June 8, 2022, 

available at https://www.federalregister.gov/ 

documents/2022/06/08/2022-11998/poultrygrowing-tournament-systems-fairness-and-relatedconcerns. 

final rule, AMS removed the proposed 

requirement in § 201.100(d)(1) that live 

poultry dealers provide grower payment 

history information for all complexes 

they own, instead requiring in 

§ 201.102(d)(1) that live poultry dealers 

engaged in the production of broilers 

provide only tables showing average 

annual gross payments to broiler 

growers at the local complex. 

Comment: A poultry industry trade 

association urged AMS not to require 

future projections, saying it would be 

difficult for dealers to accurately make 

such projections, given that they depend 

in part on the economic climate and on 

other factors that cannot reasonably be 

foreseen. This commenter said if AMS 

requires projections, they should be 

qualified and exempt from 

certifications. A trade association 

suggested disclosure should include a 

disclaimer that past income does not 

guarantee future results and that income 

will be governed by the terms of the 

contract, the party’s performance, and 

additional factors neither party has 

control over. 

AMS response: AMS intends for live 

poultry dealers to make and disclose 

assumptions relating to projections, 

allowing poultry growers to better assess 

the context behind them. This final rule 

does not require disclosure of 

projections to include a disclaimer that 

past performance is not likely to reflect 

future results but does not prohibit it 

either. AMS will carefully monitor the 

use of disclaimers to prevent confusion 

and deception. To the extent that a 

disclaimer is provided in a manner that 

helps the growers understand that past 

income is not a contractual guarantee to 

the grower of such income, it may be 

acceptable. But such a disclaimer is not 

required, as the Disclosure Document 

should already clearly differentiate 

between past income and future 

projections that are made because past 

performance is not likely to reflect 

future results. AMS underscores that a 

live poultry dealer may not disclaim or 

absolve itself of any obligation to 

disclose information required to be 

disclosed in this rule, waive any 

liability under this rule, or confuse or 

discourage growers from reviewing the 

disclosures set forth under this rule. 

Additionally, in the final rule, AMS 

has clarified that certifications by 

principal executives are made with 

respect to the sufficiency of the 

governance framework for delivering 

accurate and reliable disclosures, rather 

than to the specific accuracy of 

disclosures to particular growers 

because, as discussed elsewhere, such a 

certification is more appropriate with 

respect to the role of the principal 

executive in providing the necessary 

governance and controls to reasonably 

provide for accuracy in disclosures. 

Comment: Commenters from both the 

grower and live poultry dealer sectors 

requested more specificity on how to 

calculate average annual gross 

payments. Although the proposed rule 

provided detail on calculations, 

commenters stated the instructions 

lacked sufficient specificity to assure 

that live poultry dealers could comply 

and that poultry growers would receive 

adequate data on which to base business 

decisions. 

AMS response: In response to 

commenters’ request for specificity on 

how to calculate average annual gross 

payments, AMS developed detailed 

instructions for how to calculate average 

annual broiler grower turnover rates, 

which are included in Form PSD 6100. 

AMS also added a definition in § 201.2 

for gross payments, which means the 

total compensation a poultry grower 

receives from the live poultry dealer, 

including, but not limited to, base 

payments, new housing allowances, 

energy allowances, square footage 

payments, extended lay-out time 

payments, equipment allowances, bonus 

payments, additional capital investment 

payments, poultry litter payments, etc., 

before deductions or assignments are 

made. 

Comment: Multiple commenters 

asked AMS to require the Disclosure 

Document to include a maximum 

percentage variance from the base pay 

rate under the contract. These 

commenters said this information 

would give growers a better idea of the 

true range of potential incomes. 

AMS response: The disclosure of 

payment quintiles or mean and standard 

deviation provides substantially more 

data points useful to assess payment 

variance and range of potential 

outcomes compared to maximum 

percentage variance, as quintiles show 

pay broken down into five bands. Live 

poultry dealers will report only a mean 

and standard deviation if there are nine 

or fewer growers, which provides a 

measure of expected outcome and 

expected volatility around that outcome. 

The base price and the maximum 

variance would not give an expected 

outcome or volatility measure, nor 

would it provide context useful to 

establish probabilities of where a grower 

would fall in the range. While AMS 

understands that growers have 

expressed concerns regarding the 

maximum variability of pay from the 

base pay, the financial disclosures in 

§ 201.102(d) provide objectively more 

data points and create a more 

appropriate context for assessment 

compared to a maximum variance. 

While outside the scope of this rule, 

AMS is considering other changes to the 

poultry grower payment systems. See 

June 2022 Advance Notice of Proposed 

Rulemaking on ‘‘Poultry Growing 

Tournament Systems: Fairness and 

Related Concerns.’’ 82 Therefore, AMS 

has not required in this final rule 

disclosure of maximum percentage 

variance from the base pay under the 

contract in the financial disclosures. 

Grower Variable Costs 

Proposed § 201.100(d)(4) would have 

required the live poultry dealer to 

provide a summary of the information it 

collects or maintains relating to grower 

variable costs inherent to poultry 

production, or costs that may be borne 

by the grower. AMS asked whether the 

proposed rule listed the appropriate 

items regarding grower variable costs 

that dealers should list and disclose to 

growers. AMS asked whether it should 

require dealers to disclose, for example, 

information about costs related to 

compliance with environmental 

regulations, energy, water, and waste 

disposal and whether the timing of 

housing upgrades is reasonably 

predictable enough for those costs to be 

included in grower variable costs during 

the poultry growing arrangement. 

Comment: Several farm bureau 

commenters suggested AMS consider 

variable costs in different regions, as 

these costs vary from region to region 

rather than being a ‘‘one size fits all’’ 

disclosure. These commenters also said 

the rule should require disclosure of all 

information a dealer intends to collect, 

and that all information should be 

housed in an encrypted system and not 

subject to Freedom of Information Act 

requests to protect the privacy of the 

grower. A live poultry dealer said 

different farms would have different 

views on which variable costs are 

inherent in poultry production, offering 

as examples labor and insurance costs. 

A poultry industry trade association 

said it is inappropriate for a live poultry 

dealer to be required to collect, produce, 

or certify the accuracy of information 

about grower variable costs, arguing that 

growers are responsible for 

understanding and controlling their 

costs of production. A poultry grower 

said AMS should require live poultry 

dealers to disclose variable costs 

including livestock, housing upgrades, 


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financing costs, and any cost related to 

environmental compliance. 

AMS response: Growers benefit from 

the disclosure of this information on a 

local or regional level because it will 

better enable them to analyze the 

potential profitability of their poultry 

growing arrangement or changes thereto. 

Such information may be available to 

growers through market research 

services or in some cases USDA 

resources, but to the extent that live 

poultry dealers have this information, it 

would facilitate growers’ ability to 

access it and, consequently, also reduce 

information asymmetry, which creates 

risks in the contracting process. Based 

on AMS’s experience auditing and 

investigating live poultry dealers, and 

the observation that dealers provide 

grower allowances from time to time, 

such as for energy, AMS knows that 

many live poultry dealers already are 

cognizant of factors affecting local and 

regional cost structures. This rule does 

not require live poultry dealers to 

collect the information, but rather 

requires that information be disclosed to 

growers if live poultry dealers do in fact 

collect it. AMS encourages dealers to 

disclose the information at the most 

granular level that is reasonable and 

will work with live poultry dealers to 

address questions during 

implementation. No changes to the rule 

as proposed were made in response to 

these comments. 

Comment: Multiple commenters 

requested that AMS take action to 

prevent growers from having to bear the 

costs of environmental compliance and 

waste disposal, saying that these costs 

are related to the system of production 

the live poultry dealers dictate and 

should not be treated as grower variable 

costs. 

AMS response: The contractual 

distribution of liabilities related to 

environmental compliance and waste 

disposal are outside the scope of this 

rule. To the extent that the costs of 

environmental compliance and waste 

disposal are grower variable costs under 

particular poultry growing 

arrangements, they should be disclosed 

by the live poultry dealer under the 

requirement to disclose information 

relating to grower variable costs. 

Therefore, AMS made no changes to the 

rule as proposed based on these 

comments. 

Comment: Several non-profit 

organizations said AMS should impose 

a recordkeeping requirement to ensure 

that live poultry dealers cannot skirt the 

rules on grower variable costs by failing 

to maintain information relating to these 

costs. A meat industry trade association 

said the proposed requirement to 

produce a summary of information the 

live poultry dealer collects or maintains 

relating to grower variable costs 

inherent in poultry production is 

arbitrary and capricious because it lacks 

a cost-benefit justification. The 

commenter said further that dealers may 

have concerns about sharing such data 

because they use it for confidential or 

proprietary business purposes, and that 

dealers are not the best source of 

information on grower variable costs 

since they do not experience such costs 

themselves. A poultry industry trade 

association commented that live poultry 

dealers do not systematically maintain 

all this information. Several non-profit 

organizations contended that poultry 

companies share detailed market and 

grower information with each other 

through private data collection firms. 

AMS response: The final rule adopts 

the proposal that requires live poultry 

dealers to include in Disclosure 

Documents a summary of information 

that is collected by live poultry dealers 

pertaining to grower variable costs. The 

grower variable cost information is 

general, not specific to an individual 

grower; thus, if a live poultry dealer 

collects this information, they will need 

to disclose a summary of it. 

Variable costs play a role in grower 

profitability, and understanding the 

information helps the grower manage 

cash flow. Improved grower cash flow 

management allows growers to continue 

in a productive capacity, benefiting live 

poultry dealers as well as themselves. 

These costs are directly attributable to 

grower production. AMS does not 

understand how summarized 

information related to these costs could 

be construed as confidential business 

information. The benefits of disclosing 

these costs to growers outweigh the 

potential business confidentiality 

issues. 

Often this type of information takes 

the form of sample cash flow budgets or 

similar documents, which live poultry 

dealers can use to show differences in 

variable costs between housing 

specifications, allowing growers to 

assess differences in fixed costs against 

changes in variable costs. In balancing 

the live poultry dealer burden against 

the grower benefits, AMS sought to 

ensure growers have access to this type 

of information to the extent that dealers 

collect it. For growers contracted with 

dealers who do not collect this 

information, there are other resources 

via the extension service and producer 

organizations that may be able to 

provide similar types of information. 

Section 401 of the Act provides for 

recordkeeping requirements of this type; 

no new requirements are necessary for 

this provision. 

This type of information has value to 

many dealers, and AMS does not want 

to discourage its collection with 

inflexible requirements. AMS will 

investigate failures to provide these 

summaries where data is collected. 

Accordingly, no changes to the rule as 

proposed were made in response to 

these comments. 

Comment: One commenter asked 

whether grower variable cost 

information has been used collusively, 

suggesting that AMS and DOJ 

investigate this information and that 

poultry growers receive access to it. 

AMS Response: Whether live poultry 

dealers have used grower variable cost 

information collusively is outside the 

scope of this final rule, and AMS has 

made no changes to the rule as proposed 

based on this comment. 

Informational Service Contact 

Information 

Comment: Poultry grower groups 

expressed support for the proposed 

rule’s requirement that the Disclosure 

Document include current contact 

information for the State university 

extension service office or county farm 

advisor’s office that can provide 

information about poultry grower costs 

and poultry farm financial management 

in the grower’s geographic area. Other 

commenters from the poultry industry 

said this information is already 

provided and should not be mandated 

by regulation. 

AMS response: The Act affords 

growers the right to understand, 

evaluate, and compare contracts among 

dealers to inhibit deceptive practices. 

Access to any information about poultry 

grower costs and farm financial 

management can help growers make 

informed business decisions and avoid 

their being misled regarding the 

advisability of offered contracts. Based 

on its experience with record reviews, 

AMS is aware and appreciates that some 

dealers already include the required 

contact information in their contracts, 

and wants all growers to have access to 

the same information. Further, the 

additional burden to dealers associated 

with providing this information is 

small, as described in the costs section 

of the Regulatory Impact Analysis 

below. Accordingly, AMS made no 

changes to the rule as proposed based 

on these comments. 

Other Financial Disclosures Not 

Currently Included 

Comment: A State farm bureau 

commenter said that companies should 

disclose any requirements for a poultry 


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grower to make additional capital 

investments and whether the grower is 

being paid enough to cover these costs. 

According to the commenter, requiring 

these disclosures are important because 

equipment and housing upgrades 

typically benefit the live poultry dealer 

at the expense of the poultry grower. 

AMS response: The Act requires all 

poultry growing contracts to contain the 

following language: ‘‘additional large 

capital investments may be required of 

the poultry grower or swine production 

contract grower during the term of the 

poultry growing arrangement or swine 

production contract.’’ 7 U.S.C. 197a 

(b)(1). Additionally, § 201.102(d)(2) of 

this rule requires live poultry dealers to 

provide a new Disclosure Document, 

which includes revenue projections, 

when ‘‘housing specifications are 

modified such that an additional capital 

investment may be required.’’ The 

required revenue projections are 

intended to help growers and their 

business advisers evaluate the proposed 

capital improvements to determine 

feasibility of the contract. With adequate 

information, growers should be capable 

of determining whether the projected 

revenues are likely adequate to cover 

the costs of capital improvements. 

Dealers, for whom there is a potential 

conflict of interest, should not be 

expected to advise growers about 

whether projected revenues will cover 

capital improvement costs. AMS agrees 

with the concerns raised by growers and 

has addressed them. 

F. Other Disclosures 

Sale-of-Farm Disclosures 

In proposed § 201.100(c)(3), AMS 

proposed to require the live poultry 

dealer to include in the Disclosure 

Document a statement that describes the 

dealer’s procedures regarding the 

potential sale or reassignment of the 

poultry grower’s facility. AMS requested 

comment on whether the proposed saleof-farm policies are adequate to ensure 

transparency and effective grower 

decision making. 

Comment: Poultry grower groups 

expressed support for requiring live 

poultry dealers to include a statement 

regarding the potential sale or 

reassignment of the poultry grower’s 

facility. These commenters stated 

significant financial harm comes from 

dealers revoking the contract for a 

grower’s farm, making it unsellable. 

Poultry industry groups opposed the 

sale-of-farm disclosures, contending the 

requirement does not have any bearing 

on how much a grower can expect to 

earn, is not feasible because a dealer 

must consider numerous factors when 

deciding to offer a poultry growing 

arrangement to a successive buyer of a 

farm, and would require disclosure of 

confidential information about dealer 

business practices. 

AMS response: The ability to exit an 

industry or a particular farm location for 

whatever reason is an important factor 

in understanding and evaluating a 

contractual relationship. Although a 

dealer’s sale-of-farm policies may not 

affect the grower’s immediate earnings 

from poultry production, those policies 

could very well affect the value of the 

grower’s capital investment upon 

retirement, for example if the grower 

anticipating retirement is unable to sell 

the farm to a prospective poultry grower 

at a fair price. A grower considering a 

poultry growing arrangement must not 

be deceived into believing they would 

be free to transfer their operations to 

prospective buyers or heirs if the live 

poultry dealer would not be willing to 

consider offering a poultry growing 

arrangement to the grower’s successor. 

Thus, growers need to understand 

dealers’ policies regarding sale or 

transfer of the farm and poultry growing 

operation before entering contracts with 

dealers and before encountering future 

scenarios where they choose or are 

forced to exit poultry farming. Growers 

informed of dealers’ policies and 

procedures will have the opportunity to 

develop a coherent exit strategy. 

Markets become more competitive 

with lower hurdles for participants to 

enter and exit an industry. If extra 

profits are to be made, new entrants will 

be attracted. If profits are too low, some 

participants will exit the industry. 

Greater transparency into the relevant 

factors that live poultry dealers use to 

evaluate entry and exit from the 

industry will aid both growers and live 

poultry dealers by providing additional 

certainty to growers about the 

conditions under which they can enter 

and exit. This will enable growers to 

better align their sale-of-farm choices to 

the needs of live poultry dealers. More 

information about the conditions to exit 

the industry allows growers to 

understand, evaluate, and compare 

contracts, preventing deceptive 

practices. 

AMS does not require that dealers 

establish a policy and procedure where 

no consistent policy or procedure truly 

exists in practice. However, when there 

is in fact no policy or procedure —an 

assertion which AMS may scrutinize to 

ensure compliance with the rule—the 

lack of such a policy and procedure 

should be disclosed. Similarly, where 

the dealer looks to certain facts and 

circumstances in practice to evaluate 

sale-of-farm circumstances, those facts 

and circumstances should be disclosed 

as the dealer’s policies and procedures. 

AMS recognizes that dealers must 

consider a number of factors when 

deciding whether to offer a poultry 

growing arrangement to a grower’s 

successor, and that not every factor may 

be known at the time the original grower 

is offered a contract. The rule simply 

requires dealers to accurately disclose 

their policies or procedures as a 

safeguard against grower deception. 

Thus, in the final rule AMS is 

maintaining the sale-of-farm disclosure 

requirement. 

Finally, AMS is not requiring the 

disclosure of dealers’ potentially 

sensitive confidential business 

information, such as expansion or 

reduction strategies. However, to the 

extent that a grower’s ability to exit, 

including through retirement, depends 

upon such factors at any given time, the 

implications of those factors should be 

disclosed. Accordingly, AMS made no 

changes to the rule based on these 

comments. 

Policies and Procedures Disclosures 

AMS requested comment on whether 

it should require live poultry dealers to 

disclose policies and procedures for 

determining whether a disaster or sick 

flock was caused by the dealer or 

grower, and how a grower is 

compensated under each of these 

scenarios. It further sought comment on 

whether it should require disclosure of 

sick-flock risk when a dealer maintains 

policies that do not remove sick flocks 

from the tournament. 

Comment: Multiple commenters 

suggested AMS include requirements 

for disclosing live poultry dealer 

policies on dealing with sick or diseased 

flocks, natural disasters, and other 

depopulation events, as well as policies 

on grower appeal rights and processes. 

These commenters cited the inherent 

risk of disease spread among confined 

poultry, the potential for growers to face 

financial impact from depopulation 

events outside of their control, and the 

effects of low-quality inputs on 

tournament performance. Several 

commenters also expressed the need for 

clarity regarding processes to address 

issues such as feed quality or delivery 

timing discrepancies. 

AMS response: AMS notes the 

significant impact on grower 

performance and resulting incomes due 

to sick or diseased flocks, natural 

disasters, and other depopulation 

events, e.g., the COVID–19 pandemic, 

avian influenza, weather events, or 

other possibly impactful events outside 

the grower’s control. Although the event 

itself is not under the dealer’s control, 


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the dealer may have and apply formal 

company policies to management of 

those events. For example, a dealer may 

follow a company policy of increased 

layout time or special treatment for sick, 

diseased, or high early-mortality flocks. 

However, growers may be unaware of 

these policies, in which case they have 

agreed to grow poultry for the dealer 

without fully receiving key information. 

Dealers are in the best position to 

inform growers about both the 

disastrous events that may occur in 

connection with poultry growing and 

how the dealers’ policy decisions in 

those situations will impact growers’ 

income. Without up-front clarity about 

this information, the dealers’ practices 

may be deceptive. AMS has in the past 

received a range of complaints regarding 

differential treatment between growers 

under the same live poultry dealer in 

these circumstances. If dealers disclose 

their formal disaster response policies— 

or the lack of such policies—to growers, 

growers can be better prepared for the 

possibility that they may be impacted 

differentially in certain situations. Such 

transparency is intended to mitigate 

potential deception. 

The types of disclosures requested by 

the commenters will provide critical 

information up front to growers and 

safeguard against such deception. 

Therefore, this final rule adds a 

provision at § 201.102(c)(4) requiring 

live poultry dealers engaged in the 

production of broilers to disclose their 

policies and procedures to address key 

events to growers. These events include: 

increased layout time; sick, diseased, or 

high early-mortality flocks; natural 

disasters, weather events, or other 

events adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; other events that 

could result in significant flock 

depopulation, affecting grower 

payments; feed outages, including 

outage times; and grower complaints 

relating to feed quality, formulation, or 

suitability; as well as any appeal rights 

arising out of these events. The policies 

and procedures that live poultry dealers 

disclose and implement may vary. For 

example, a live poultry dealer may 

establish an adjusted calculated 

payment to growers due to sick, 

diseased, or high early mortality flocks, 

or the dealer may have a policy that 

clarifies an appeals process. AMS does 

not require that dealers establish or 

follow any one policy and procedure, 

but does require dealer’s accurate 

disclosure and implementation of any 

such policy or procedure as a safeguard 

against grower deception. Live poultry 

dealers that modify or replace a 

disclosed policy would be required to 

provide new disclosures to remain 

compliant with the rule. 

Comment: A commenter 

recommended that AMS require live 

poultry dealers to disclose both their 

own animal welfare policies and those 

of the relevant industry trade groups to 

give poultry growers a more holistic 

view of their obligations when entering 

into the contract and to reduce potential 

animal welfare concerns. 

AMS response: To the extent live 

poultry dealers seek to incorporate 

animal welfare and other special 

growout requirements, such as for 

sustainability or other premium 

products, those obligations would need 

to be reflected in the contract if they are 

to be enforced, and under current 

regulations must be provided to the 

grower before entering into the poultry 

growing arrangement. The Disclosure 

Document does not seek to reproduce 

the entire contract. Instead, it will 

highlight aspects of the contract or 

poultry growing arrangement that are 

generally not disclosed or are presented 

in ways that may be misleading or 

otherwise create risks of deception. The 

information in the Disclosure Document 

will allow growers to analyze the 

profitability and financial risks of the 

poultry growing arrangement. If animal 

welfare and other special growout 

requirements give rise to profitability 

and financial risks, they would be 

considered variable costs for growers 

and are required to be disclosed in 

accordance with the variable cost 

disclosure requirements of this rule. In 

addition, the disclosures of average 

annual gross payments to broiler 

growers would also aid growers in 

identification of profitability and 

financial risk holistically, which would 

incorporate impacts from animal 

welfare policies and procedures. 

Accordingly, AMS made no changes to 

the rule in response to this comment. 

Legal Disclosures 

In proposed § 201.100(c)(1), AMS 

proposed to require the live poultry 

dealer to disclose in the Disclosure 

Document a summary of litigation over 

the prior 6 years between the live 

poultry dealer and any poultry grower. 

This summary would include the nature 

of the litigation, the party that initiated 

the litigation, a brief description of the 

controversy, and any resolution to the 

litigation. AMS also requested comment 

on whether legal violations or other 

matters that could call into question the 

financial integrity of the live poultry 

dealer should be disclosed. 

Comment: Poultry grower groups and 

State attorneys general expressed 

support for the proposed requirement 

for live poultry dealers to disclose a 

summary of litigation with any poultry 

grower in the previous 6 years. 

Commenters indicated that access to 

live poultry dealers’ ongoing and 

previous litigation would increase 

transparency in the poultry industry 

and lead to more economic stability for 

growers. Several commenters also 

suggested requiring disclosure of 

additional litigation, such as litigation 

accusing the dealer or any of its growers 

of poultry mistreatment; litigation by 

employees; litigation the dealer has 

been subject to from DOJ, USDA, or 

other Federal agencies; and litigation 

brought against corporate successors 

and assignees of the dealer. 

Multiple poultry industry 

commenters raised concerns about the 

litigation disclosure requirement, 

including that it is overly broad and 

does not consider the merits of the 

litigation or the reality that cases with 

little or no merit often settle. Several 

industry commenters also noted the 

proposed 6-year period for litigation 

disclosures is inconsistent with other 

disclosure periods in the rule, 

suggesting AMS should limit this period 

to 5 years. 

AMS response: AMS agrees that 

disclosure of litigation between the live 

poultry dealer and other poultry 

growers is an important piece of 

information for growers. AMS does not 

agree that this disclosure is overly 

burdensome because it is known by the 

company and may be disclosed in other 

contexts. The litigation disclosure is 

important for appreciating the financial 

and performance risks that growers may 

face, as litigation reflects the company’s 

approach to compliance and 

performance as they relate to treatment 

of growers. AMS is unconvinced 

litigation related to animal welfare 

issues and employees is correlated with 

grower risks and treatment. For grower 

disclosure purposes AMS sees 

advantages in limiting this disclosure to 

grower and live poultry dealer actions. 

Similar to the reasoning above, adding 

governmental actions would likely 

capture controversies unrelated to 

grower risks and treatment, and where 

overlap exists, very often a private case 

will run parallel to a government case. 

No changes were made to the rule based 

on these comments. 

However, to improve the uniformity 

of recordkeeping for this disclosure 

regime, this final rule changes the 

period for which a dealer’s litigation 

must be summarized to 5 years, instead 

of 6 years as originally proposed. 

Because contracts and grower 

relationships evolve over time, litigation 


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history covering the prior 5 years would 

provide information related to the most 

current contracts and contract terms. 

Requiring additional disclosures 

regarding litigation beyond a 5-year 

period would be overly burdensome and 

costly to dealers. 

Comment: A poultry grower group 

and an individual said AMS should 

require disclosure of any past 

government investigations, charges, 

arrests, or convictions of a dealer or its 

growers or agents for violations of 

animal-welfare-related law, such as 

State laws against animal cruelty, 

neglect, or abandonment. 

AMS response: While a live poultry 

dealer’s compliance with animal 

welfare-related laws could be relevant to 

the financial risks of the poultry 

growing, AMS does not agree that these 

additional suggested disclosures are 

necessary. AMS is not presently aware 

of such a pattern or practice of 

intentional or reckless noncompliance 

with animal welfare standards and 

makes no changes to the proposed rule 

based on these comments. 

Grower Appeals 

Comment: Multiple commenters 

representing poultry growers 

recommended that AMS require live 

poultry dealers to maintain an appeals 

process for growers to report any issues 

that affect how their flocks perform or 

how their pay is calculated. They also 

recommended the Disclosure Document 

disclose the details of the dealer’s 

appeals process, including the method 

for submitting an informal appeal of a 

live poultry dealer’s contract 

performance and how these appeals will 

be resolved. The commenters said such 

requirements would increase fairness 

and transparency for poultry growers. 

AMS response: As described in the 

preceding comment summaries, this 

final rule requires disclosure of live 

poultry dealers’ policies and procedures 

regarding certain matters or 

circumstances, including any grower 

rights to challenge or appeal dealer 

determinations arising from those 

matters or circumstances. This final rule 

also requires dealers to disclose policies 

regarding growers’ appeals procedures if 

they exist. AMS supports the creation of 

appeals policies; however, mandating 

their creation is outside the scope of this 

rulemaking. However, if a dealer has no 

such policies or procedures, this should 

be disclosed. Understanding whether 

and how growers may report issues 

affecting flock performance, or to 

challenge or appeal dealer 

determinations will aid growers in 

decision making and reduce confusion 

that may arise in times of disease or 

other disaster, or from uncertainty or the 

exercise of discretion by live poultry 

dealers and their agents in the field. 

Accordingly, in response to 

comments, AMS added a provision in 

§ 201.102(c)(4) of this final rule that 

requires live poultry dealers engaged in 

the production of broilers to disclose 

their policies and procedures on a 

number of specific matters or 

circumstances and to disclose any 

policies regarding grower appeal rights 

and processes arising out of these 

matters or circumstances. 

Other Comments About Disclosures 

Comment: Several organizations 

representing poultry growers suggested 

AMS require other types of disclosures 

that would provide more transparency 

for current and prospective poultry 

growers. These commenters said AMS 

should require live poultry dealers to 

prominently disclose the risk of entering 

a poultry contract in that area if there 

are fewer than three options. Some 

commenters suggested AMS should 

alert poultry growers to the business 

risks proposed by regional monopsony 

and provide integrator options within a 

50-mile radius of the prospective or 

current poultry grower’s facility. 

AMS response: AMS does not agree 

that further warnings are needed at this 

time, as the required disclosures aim to 

give poultry growers the information 

needed to understand the risks of 

entering into a poultry growing 

arrangement in any market, including 

where there are only a small number of 

dealers. No changes to the rule were 

made in response to these comments. 

Comment: Some commenters said a 

live poultry dealer should be required to 

disclose known health risks associated 

with birds that the live poultry dealer 

has supplied, the expected pre-slaughter 

mortality rate of the birds based on the 

live poultry dealer’s experience with 

similar growers, the most common 

causes of pre-slaughter death, and other 

aggregated health data known to the 

dealer. 

AMS response: AMS is maintaining 

without change in the final rule the 

proposed requirement that live poultry 

dealers disclose known flock health 

impairments. AMS does not agree with 

comments that disclosure of an 

expected mortality rate or information 

about the causes of pre-slaughter death 

or other aggregated health data should 

be included. The expected mortality rate 

is not data a dealer can readily 

determine, and the benefit to growers is 

not clear. This final rule requires live 

poultry dealers to include in the 

Disclosure Document contact 

information for local extension service 

offices that may be able to provide the 

type of information commenters seek. 

No changes to the rule as proposed were 

made based upon this comment. 

Comment: A commenter urged AMS 

to require disclosure of any poultrywelfare advocacy campaign launched 

against the live poultry dealer in the 

previous 6 years, along with a summary 

of the types of animal health and 

welfare-related complaints lodged 

against either the dealer or its growers. 

This commenter also recommended that 

AMS require dealers to disclose their 

animal health and welfare policies in 

pre-contract disclosures, saying that 

such policies affect potential grower 

earnings. The commenter stated further 

that health and welfare policy and 

litigation disclosure would let 

prospective growers make informed 

decisions about legal and reputational 

risk and potential animal suffering they 

might face. 

AMS response: It would be difficult 

for AMS—and possibly even for live 

poultry dealers—to determine what 

constitutes an animal welfare campaign 

or whether such a campaign has any 

validity. Presumably, such campaigns 

launched against live poultry dealers, 

including any associated litigation, are 

highlighted in the public media and 

available to interested growers. Whether 

or how such campaigns should be 

disclosed to growers is not 

contemplated in this final rule, which 

focuses on the information AMS knows 

to be essential for informed grower 

decision making. 

Most live poultry dealers require 

growers to follow prescribed animal 

welfare guidelines or policies, and 

dealers must include those policies in 

the poultry growing contracts if growers 

are to be held accountable for them. To 

minimize additional burden on live 

poultry dealers, the final rule requires 

the Disclosure Document to highlight 

only that contract information AMS 

finds to be most essential to grower 

decision making related to poultry 

grower contracting to ensure those 

provisions are transparent for growers. 

Under § 201.102 of the final rule, 

growers are provided with the 

Disclosure Document simultaneously 

with the offered poultry growing 

arrangement, and growers are given 

adequate time to review both prior to 

entering into or renewing contracts. 

Accordingly, AMS made no changes 

to the proposed disclosure requirements 

based on this comment. 

G. Governance and Certification 

The proposed rule included 

provisions on governance and 

certification in §§ 201.100(f) and (g). 


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83248 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

83U.S. Department of Agriculture, Agricultural 

Marketing Service—Packers and Stockyards 

Division. (2020). P&SP 2020 Annual Report. 

Retrieved from https://www.ams.usda.gov/sites/ 

default/files/media/PackersandStockyards

AnnualReport2020.pdf. 

AMS proposed to create a new 

§ 201.100(f) to require live poultry 

dealers to establish, maintain, and 

enforce a governance framework that is 

reasonably designed to ensure the 

accuracy and completeness of the 

Disclosure Document, and to ensure that 

live poultry dealers comply with all 

their obligations under the Act and its 

regulations. This proposed framework 

included audits and testing, as well as 

reviews of an appropriate sampling of 

Disclosure Documents by the principal 

executive officer or officers. AMS also 

proposed to require officers of the live 

poultry dealer’s company to certify that 

the company complies with the 

governance framework requirement and 

that the Disclosure Document is 

accurate and complete. In addition, 

AMS proposed to require live poultry 

dealers to include a signature page in 

the Disclosure Document containing a 

statement informing current and 

prospective growers of the potential for 

violations. The live poultry dealer 

would be required to obtain a grower’s 

dated signature on the signature page 

and to retain a copy of the dated 

signature page for 3 years following 

expiration, termination, or non-renewal 

of the poultry growing arrangement. 

In the proposed rule, AMS invited 

comments on whether the proposed 

governance structure is appropriate and 

sufficient for ensuring the accuracy of 

information provided in the Disclosure 

Document, whether it is appropriate for 

dealers, and whether there were other 

ways it could sufficiently ensure the 

completeness and accuracy of the 

Disclosure Document. AMS also invited 

comments on whether it should collect 

disclosure data and, if so, how it might 

use such data to enhance compliance 

and accuracy and monitor for possibly 

deceptive practices. AMS also proposed 

to require the principal executive officer 

or officers of the live poultry dealer’s 

company to certify accuracy and 

compliance and to require dealers to 

obtain a poultry grower’s dated 

signature to show receipt. 

Governance Structure Adequacy for 

Accurate Information 

Comment: Several commenters 

suggested USDA conduct audits, with 

some commenters also suggesting the 

audits be random or unannounced. 

These commenters indicated conducting 

audits would help ensure that live 

poultry dealers make accurate 

disclosures. 

AMS response: AMS agrees that 

regular compliance reviews are 

important tools to ensure compliance 

with the Act and regulations 

thereunder. Regular AMS audits and 

compliance reviews encourage live 

poultry dealers to put in place the 

oversight and internal procedures 

necessary to ensure compliance. Audits 

and compliance reviews may also 

enhance compliance by catching 

problems at an early stage, before they 

become violations that result in larger 

scale impacts. They also enhance AMS’s 

familiarity with industry practices, 

which enables more effective regulatory 

guidance and enforcement. AMS 

already conducts regular reviews of live 

poultry dealers’ compliance with 

regulations under the Act—as reported 

in AMS’s Packers and Stockyards 

Division Annual Report—and AMS 

intends to incorporate compliance with 

this final rule into those existing regular 

audits.83 Currently, a portion of those 

compliance reviews are unannounced. 

Therefore, AMS made no changes to the 

proposed rule based on these comments. 

Governance Structure Burden on 

Dealers 

Comment: Poultry industry 

commenters expressed concern about 

the necessity and costs of the proposed 

governance structure and its potential 

for creating liability issues. For instance, 

commenters noted that live poultry 

dealers already are required to meet fair 

dealing requirements under the Act and 

have incentive to provide accurate 

information to current or potential 

growers, making the proposed 

provisions redundant. Commenters 

asserted the proposed scheme would 

take away dealer flexibility to 

implement compliance programs that 

meet their needs. Commenters also state 

that the ‘‘principal executive officer or 

officers’’ of many companies are remote 

from day-to-day responsibilities related 

to the information proposed for 

inclusion in the Disclosure Document 

and are thus not in a position to certify 

it. Commenters suggested that AMS 

underestimated the costs of the 

proposed governance framework 

because it did not take into account its 

requirement that firms evaluate their 

obligations under all regulatory 

requirements contained in the Act 

rather than just those contained in the 

proposal. An industry association 

asserted the agency cannot point to an 

authority within the Act that allows it 

to impose a ‘‘burdensome and 

unnecessary governance and audit 

framework’’ on live poultry dealers. 

This commenter also argued the 

proposed governance requirements are 

arbitrary and capricious as they reflect 

a fundamental lack of understanding of 

the management structure and 

governance of live poultry dealers. 

AMS response: Section 401 of the Act 

requires every poultry dealer to ‘‘keep 

such accounts, records, and memoranda 

as fully and correctly disclose all 

transactions involved in his business.’’ 

Under the Act, the Secretary may 

‘‘prescribe the manner and form in 

which such accounts, records, and 

memoranda as fully and correctly 

disclose all transactions involved in his 

business.’’ The proposed rule requires 

that poultry dealers disclose important 

information to growers to prevent 

deception. Information furnished by 

dealers under the rule must be accurate 

and complete. In order to ensure that 

dealers can provide such required 

information accurately and 

continuously, AMS prescribes that 

dealers must at minimum establish a 

reasonably designed underlying 

governance framework and processes. 

Without such an established framework 

and processes, dealers would be 

providing this information to growers in 

an inconsistent manner that would 

increase the likelihood of inaccuracy 

and incompleteness and hence increase 

deception. 

In building on longstanding, existing 

requirements under the Act to maintain 

books and records, AMS recognizes that 

additional steps are necessary owing to 

the more complex disclosure process 

contemplated by this final rule and the 

reliance that growers will place on it in 

avoiding deception. To help strike the 

right balance between stringency in the 

controls necessary to achieve accuracy 

and the flexibility necessary to 

accommodate diverse business 

operations, AMS takes note of the 

experience of—and mandates 

governing—other Federal regulatory 

agencies engaged in setting 

requirements for companies to provide 

disclosures to market participants that 

depend upon them. It also considers 

similar compliance mandates, such as 

the certification mandates set forth 

under the Sarbanes-Oxley Act of 2002 

(section 302) and the provisions of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 named 

after former Federal Reserve chairman 

Paul Volcker, commonly known as the 

Volcker Rule (section 619). In the case 

of those financial and market regulatory 

reforms, Congress and regulators saw it 

necessary to enhance the accountability 

of senior officers to achieve the goal of 

effective and reliable disclosure and 

compliance by larger companies for the 

benefit of smaller, more diffuse market 


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84Plea Agreement: U.S. v. Pilgrim’s Pride Corp., 

Feb. 23, 2021, 20–cr–00330–RM, available at 

https://www.justice.gov/atr/case-document/file/ 

1373956/download. Consent Decree: U.S. v. Cargill 

Meat Solutions. Corp., et al. (Sanderson Farms, Inc., 

Wayne Farms, LLC), July 25, 2022, 1:22–cv–01821– 

ELH, available at https://www.justice.gov/opa/pr/ 

justice-department-files-lawsuit-and-proposedconsent-decrees-end-long-running-conspiracy. 

85On the other hand, as they facilitate packers 

and live poultry dealers’ control across the supply 

chain, contracts can shift certain risks onto or 

between producers. See, e.g., Michael Kades, 

‘‘Protecting Livestock Producers and Chicken 

Growers,’’ Washington Center for Equitable Growth 

(May 5, 2022), available at https://

equitablegrowth.org/research-paper/protectinglivestock-producers-and-chicken-growers/; Steven 

Y. Wu and James MacDonald, ‘‘Economics of 

Agricultural Contract Grower Protection 

Legislation,’’ Choices, Third Quarter, 2015: 1–6, 

available at http://choicesmagazine.org/choicesmagazine/theme-articles/current-issues-inagricultural-contracts/economics-of-agriculturalcontract-grower-protection-legislation; Department 

of Justice. ‘‘Competition and Agriculture: Voices 

from the Workshops on Agriculture and Antitrust 

Enforcement in our 21st Century Economy and 

Thoughts on the Way Forward.’’ May 2012. 

Available at https://www.justice.gov/atr/page/file/ 

1534736/download; Mary K. Hendrickson, et al., 

‘‘The Food System: Concentration and Its Impacts,’’ 

A Special Report for Farm Family Action Alliance, 

May 2021, available at https://farmaction.us/ 

concentrationreport/; C. Robert Taylor, ‘‘Harvested 

Cattle, Slaughtered Markets,’’ April 27, 2022, 

available at https://www.antitrustinstitute.org/workproduct/aai-advisor-robert-taylor-issues-newanalysis-on-the-market-power-problem-in-beef-laysout-new-policy-framework-for-ensuringcompetition-and-fairness-in-cattle-and-beefmarkets/; Peter Carstensen, ‘‘Buyer Power and the 

Horizontal Merger Guidelines: Minor Progress on an 

Important Issue,’’ 14 U. Pa. J. Bus. L. 775 (2012), 

available at https://repository.law.wisc.edu/s/ 

uwlaw/item/29746. 

86See generally 15 U.S.C. 78u–5(c); 17 CFR 

229.303. 

participants. Large-scale financial 

scandals highlighted the insufficiency of 

relying on generic fair dealing or 

liability requirements or other marketdriven incentives to provide accurate 

information. Criminal and civil price 

fixing in the poultry sector, including a 

guilty plea in 2021 by one of the largest 

poultry processors and civil consent 

decrees relating to a conspiracy to 

suppress wages under Section 1 of the 

Sherman Act, 15 U.S.C. 1, and 

deception under the Packers and 

Stockyards Act,84 underscores the 

presence of similar risks in the poultry 

sector. The sizable imbalance of power 

between poultry processors and 

growers—including as reflected in the 

longstanding series of concerns around 

retaliation—further underscores the 

need for heightened accountability 

requirements set forth preemptively 

through a governance framework as 

provided for in this rule.85

The role of the governance framework 

required by this final rule is to ensure 

that the company has in place specific 

steps that it will take to comply with 

this rule. The governance framework is 

intended to be strict enough to achieve 

its intended compliance goal of 

ensuring accurate and reliable 

disclosures that are necessary for 

growers to understand, evaluate, and 

compare contracts and operational risk. 

Yet AMS also intended for the 

requirement to be flexible enough to 

provide a framework that works for 

differently situated businesses. To 

ensure they are flexible yet effective 

measures to promote accuracy in the 

provision of disclosures to growers, 

AMS included language in the rule 

providing that the governance 

framework should be ‘‘reasonably 

designed’’ to audit the required 

disclosures and ensure compliance with 

obligations under the Act. Consistent 

with other regulatory frameworks that 

ask for forward-looking statements in 

disclosures, such as the FTC’s Franchise 

Rule and the Federal securities laws, 

AMS also intended for forward-looking 

projections to be subject to less stringent 

standards of precision and verification 

than past or present factual matters. For 

example, the assumptions or beliefs that 

form reasoned bases of the projections 

need to be accurately disclosed, 

reasonable, and then reasonably used to 

make the projections.86 Also consistent 

with the approach of other regulatory 

regimes with respect to internal 

controls, one goal of the governance 

provisions is to ensure that live poultry 

dealers adopt and follow processes that 

are appropriately tailored to the scope 

and nature of their operation. 

However, AMS determined that the 

requirement in proposed § 201.100(f)(2) 

for the principal executive officer or 

officers to certify the governance 

framework and the accuracy of the 

Disclosure Document adequately covers 

the intended requirement for officers of 

this level to be focused on the 

effectiveness of the governance 

framework. AMS concluded that the 

level of detail in proposed 

§ 201.100(f)(1)(i) about the Disclosure 

Document audit process was not 

necessary, particularly as AMS seeks to 

balance the need to ensure reliability of 

these statements with the burden on the 

principal executive officers with respect 

to particular details of the governance 

process. Therefore, AMS removed from 

the final rule the requirements proposed 

in § 201.100(f)(1)(i) for principal 

executive officers to audit, test, and 

review an appropriate sampling of 

Disclosure Documents. AMS 

underscores that the accuracy of the 

information disclosed (including the 

reasonableness of the projections based 

on the honest and accurately disclosed 

assumptions) and the design and 

compliance with the governance 

framework (including the 

reasonableness of its design and 

compliance with it) remain fully 

enforceable under the final rule. AMS 

will also monitor implementation and 

expects to examine governance 

frameworks to assess their effectiveness 

in delivering accuracy and reliability of 

information to growers. In the event that 

information is found to be inaccurate or 

incomplete, AMS will investigate. 

Violations may result in issuance of a 

Notice of Violation or referral to the 

Attorney General of the United States 

for prosecution pursuant to Section 404 

of the P&S Act, 7 U.S.C. 224. Growers 

may also bring private cases in response 

to inaccurate or misleading disclosures 

under the Act or under other laws. 

Other AMS Actions To Ensure 

Completeness and Accuracy 

Comment: State attorneys general 

contended the proposed audit process 

does not go far enough, stating that the 

stipulation in proposed § 201.100(f) that 

poultry processors establish a 

governance framework might present a 

problem by giving processors too much 

control over the governance structure. 

The State attorneys general 

recommended mandating either 

government or external auditor 

involvement in a company’s audit and 

testing program, saying this step would 

increase the likelihood that the program 

is rigorous and that the financial 

disclosures provide useful and accurate 

information to poultry growers. The 

commenters also suggested 

strengthening the language in proposed 

§ 201.100(f) to provide clearer 

requirements for governance systems 

and increase live poultry dealer 

accountability to USDA and to State 

attorneys general for the initial years 

after their implementation. Poultry 

grower organizations urged AMS to be 

more specific about the procedures it 

will use to ensure the completeness and 

accuracy of the disclosure data, 

suggesting that the final rule should 

include more details on the auditing 

process to ensure accurate information 

and prevent circumvention by live 

poultry dealers. Commenters 

recommended measures such as 

specifying the minimum number of live 

poultry dealer audits USDA will 

conduct per year and requiring dealers 

to submit Disclosure Documents 

annually to PSD. Several commenters 

also mentioned other resources that 

might be a model for governance 

actions. A poultry industry trade 

association said AMS should simplify 

and clarify the requirements for a 

governance framework, including 


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83250 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

87As noted above, AMS has looked to the 

certification mandates set forth under the SarbanesOxley Act of 2002 (section 302) and the provisions 

of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 named after 

former Federal Reserve chairman Paul Volcker, 

commonly known as the Volcker Rule (section 619). 

88 ‘‘Management’s Reports on Internal Control 

Over Financial Reporting and Certification of 

Disclosure in Exchange Act Periodic Reports,’’ SEC 

Release No. 33–8238 (June 5, 2003) (‘‘SEC Final 

Rule 2003,’’ which required disclosure of material 

weakness and other assessments in annual reports 

for publicly traded securities). 

89See, e.g., William C. Dudley, ‘‘Enhancing 

Financial Stability by Improving Culture in the 

Financial Services Industry,’’ Federal Reserve Bank 

of New York, October 20, 2014, available at https:// 

www.newyorkfed.org/newsevents/speeches/2014/ 

dud141020a; Group of Thirty, ‘‘Banking Conduct 

and Culture: A Call for Sustained and 

Comprehensive Reform,’’ 2015, available at https:// 

group30.org/publications/detail/166. 

providing details on what ‘‘reasonably 

designed’’ means and on how AMS will 

inspect the disclosure and auditing 

framework. 

AMS response: In establishing a 

governance framework, AMS sought to 

balance rigor in internal controls and 

audit systems so that growers receive 

reliable information with flexibility in 

design to accommodate compliance by 

live poultry dealers with different scales 

and types of operations. As discussed 

above, AMS took note of the approach 

of other regulatory frameworks 87 that 

mandate disclosures and sought to tailor 

approaches to compliance to the 

particular circumstances of the poultry 

markets and risks relating to these 

markets. A ‘‘reasonably designed’’ 

framework depends on the particular 

facts and circumstances of the poultry 

company and its growers, with larger, 

more complex processors adopting more 

comprehensive systems appropriate to 

the scope of their operations. AMS will 

evaluate the effectiveness of the 

governance framework in part through 

examining how accurate and 

comprehensive the disclosures are, and 

may also examine a dealer’s internal 

controls and other factors relevant to the 

facts and circumstances of the dealer, 

such as its recent track record of 

compliance with relevant laws and 

regulations. 

AMS views the governance 

framework as an essential element of 

enforceability, as it will provide a 

framework including an external audit 

that will strengthen the accuracy of 

internal processes. The governance 

framework does not in any way absolve 

the live poultry dealer of its obligations 

to provide accurate disclosures to 

comply with the rule’s requirements, 

which are designed to correct deception 

against growers. Rather, the governance 

framework is intended to strengthen 

those obligations upfront before a 

disclosure failure occurs. 

Governance frameworks, as a general 

matter, are not novel. Publicly listed 

companies—which several of the largest 

live poultry dealers are—must already 

maintain a range of internal controls 

related to their audit and disclosure 

functions.88 The reasons why publicfacing companies must maintain 

internal control regimes to ensure the 

quality of their disclosures are similar to 

why live poultry dealers that are subject 

to this rule must maintain a governance 

framework—to ensure that the 

disclosures to growers are reliable. 

AMS also intends to improve 

compliance over time through 

compliance reviews, industry training, 

and other mechanisms, including 

enforcement where necessary. Repeated 

compliance violations may necessitate 

proportionate agency enforcement and 

deterrence actions. In most 

circumstances, and as would expected 

to be the case in the enforcement of 

good faith compliance with this final 

rule, AMS initially delivers a Notice of 

Violation that provides the live poultry 

dealer with the opportunity to engage 

with AMS around the nature of the 

violation and take compliance steps 

necessary to cure the violation before 

formal remedial actions are commenced. 

AMS also has provided, in this final 

rule and the associated form, additional 

detail regarding the methods for 

calculating certain disclosure data, 

which we believe will enhance 

completeness and accuracy of data. 

AMS Collection of Disclosure Data 

Comment: In response to AMS’s 

request for comments on whether it 

should collect disclosure data and how 

it might use such data to enhance 

compliance and monitor for potential 

deceptive practices, poultry grower 

groups and farmers unions expressed 

support for data collection. The 

commenters said this data would help 

inform producers, lenders, and 

regulatory authorities, given the 

industry’s consolidation and geographic 

monopolistic environments. 

Commenters recommended AMS 

require dealers to annually disclose the 

data they are calculating and disclosing 

within the Disclosure Document, 

especially regarding grower incomes 

and grower cost. The commenters also 

suggested that USDA dedicate staff to 

analyzing this data in the context of 

industry consolidation and fair 

competition to identify patterns early on 

that may require corrective or 

enforcement action. 

AMS response: AMS agrees that datadriven approaches can be expected to 

provide valuable information for 

monitoring compliance with this rule 

and with other rules under the Act. 

AMS notes that it has the authority to 

request Disclosure Document data under 

existing requirements in the Act. AMS 

will further consider the extent to which 

some Disclosure Document data may be 

incorporated into annual report 

requirements to AMS. Thus, there is no 

need for this rule to contain a particular 

requirement for submitting the data to 

AMS. Therefore, AMS made no changes 

to the rule as proposed based on these 

comments. 

Requirement of Dealers To Certify 

Documents 

Comment: Several poultry and meat 

industry trade associations urged AMS 

to omit the requirement for certification 

by an executive officer. One commenter 

argued that expecting this officer to be 

in a position to certify the required 

information is unreasonable because the 

principal officer or officers of many 

companies have responsibilities for 

many areas in addition to live poultry 

and contract with thousands of growers, 

and because much of the information 

produced in conjunction with a 

Disclosure Document would be 

maintained at the local poultry complex 

level with multiple layers of 

management between that level and the 

‘‘principal executive.’’ Another 

commenter said a poultry grower could 

have recourse if an agreement made 

deceptive statements regardless of 

whether someone certifies the 

information and that including this 

requirement appears to be motivated by 

an effort to establish individual liability 

for what should be a commercial 

contracting issue. 

AMS response: AMS refers to the 

response provided earlier on the 

governance framework and the rationale 

for chief executive officer (CEO) 

certification. In multiple circumstances, 

Congress and regulators saw it necessary 

to enhance the accountability of senior 

officers to achieve the goal of effective 

and reliable disclosure and compliance 

by larger companies for the benefit of 

smaller, more diffuse market 

participants. CEOs set the ‘‘tone at the 

top,’’ which is critical for fostering a 

culture of compliance at companies.89

Additionally, AMS already requires 

signatures on required annual reports 

(see 9 CFR 201.97), typically by the CEO 

or another high-ranking official, creating 

a precedent for the certification as 

proposed. In addition, CEOs may rely 

on sub-certifications by relevant officers 


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Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 83251 

or senior officials, thus reducing the 

burden CEOs may face while still 

creating the appropriate level of 

executive engagement to underscore the 

importance of compliance and address 

any issues early and effectively. AMS 

agrees that recourse exists against live 

poultry dealers for deceptive practices 

under the Act and for violations of the 

final rule regardless of the certification. 

Violations may result in issuance of a 

Notice of Violation or referral to the 

Attorney General of the United States 

for prosecution pursuant to Section 404 

of the Act, 7 U.S.C. 224. Growers may 

also bring private cases in response to 

inaccurate or misleading disclosures or 

bait-and-switch tactics under the Act or 

under other laws. The purpose of the 

governance framework and certification 

requirement is to minimize the need to 

rely on legal recourse in order to obtain 

accurate, reliable disclosure, and thus to 

enhance the reliability of the 

information provided to growers at the 

outset. Therefore, AMS made no 

changes to the rule as proposed based 

on these comments. 

Requirement of Growers To Sign 

Documents 

Comment: Live poultry dealers noted 

that there may be instances in which 

obtaining a grower signature is not 

possible, such as grower unavailability 

or refusal to sign. These commenters 

indicated it is appropriate to have other 

means available for the live poultry 

dealer to verify delivery of the 

Disclosure Document to the grower in 

these instances. 

AMS response: AMS recognizes that 

some growers may not sign the form 

verifying that they received the 

Disclosure Document, for reasons 

unrelated to whether the live poultry 

dealer made reasonable efforts to obtain 

such signature. AMS intends to place 

the requirement for disclosure and 

delivery on the live poultry dealer, and 

not on the grower. If the grower refuses 

to sign the Disclosure Document, such 

decision should not affect whether the 

live poultry dealer has fulfilled its 

obligations. Accordingly, in the final 

rule, AMS revised the delivery 

verification provision in § 201.102(g)(2) 

to allow live poultry dealers engaged in 

the production of broilers to obtain 

alternative documentation to evidence 

delivery and that best efforts were used 

to obtain grower receipt. The rule does 

not limit the mode of delivery, whether 

by regular mail, certified mail, 

registered mail, overnight mail, email, 

facsimile, or personal service, provided 

that the dealer obtains and maintains 

evidence that the grower or prospective 

grower received the Disclosure 

Document in the required timeframe 

and that best efforts were made to obtain 

grower receipt. AMS expects that best 

efforts will include personal 

communications with the grower. The 

revised provision requires live poultry 

dealers engaged in the production of 

broilers to document and certify in their 

records that delivery occurred, as well 

as by what method the delivery took 

place. 

H. Contract Provisions on Variables 

Controlled by Live Poultry Dealer 

Current § 201.100(c) specifies the 

contents of live poultry dealer contracts 

with poultry growers. This subsection 

requires dealers to specify the duration 

of the contract and conditions for its 

termination by each of the parties, all 

terms relating to the poultry grower’s 

payment, and information about a 

performance improvement plan for the 

grower, if one exists. In the proposed 

rule, AMS proposed to redesignate 

§ 201.100(c) as § 201.100(i) and amend it 

to require dealers to specify the 

minimum number of placements to be 

delivered to the grower’s farm annually 

in each year of the contract, as well as 

the minimum stocking density of each 

placement. In the final rule, the existing 

requirements at § 201.100(c) are retained 

for all live poultry dealers, while the 

minimum placement and stocking 

density requirements are at § 201.102(h) 

and apply only to live poultry dealers 

engaged in the production of broilers. 

Utility of Proposed Requirements in 

Addressing Need for Transparency 

Comment: Several live poultry dealers 

and industry groups expressed 

opposition to the proposed 

requirements to specify a minimum 

number of flocks annually and a 

minimum stocking density for each 

flock. These commenters contended that 

requiring these minimum values would 

make it harder to adjust supply chains 

for factors largely outside of the parties’ 

control, take away dealer flexibility to 

adjust production plans as market 

conditions change, and lead to 

substantial costs associated with 

changing existing contracts to 

incorporate this requirement. A 

commenter suggested that the 

Disclosure Document provide tentative 

projections regarding flock placements 

rather than guaranteed minimums. 

Conversely, growers and grower groups 

expressed support for these guaranteed 

minimums, saying they would allow for 

more accurate and predictable income 

projections. 

AMS response: AMS intends for 

disclosure of these guaranteed 

minimums to improve the competitive 

environment for poultry growers by 

allowing growers to make decisions 

based on minimum flock offerings 

disclosed by different dealers. AMS 

recognizes that dealers may wish to 

adjust flock placements or density based 

on external factors, and this rule does 

not prevent such adjustments. The rule 

also does not prohibit setting guaranteed 

minimums that are lower than projected 

placements to allow for such 

adjustments. Indeed, should dealers 

wish to indicate that the guaranteed 

value is zero, this rule would not 

prohibit such a disclosure, provided 

that such disclosure is accurate and not 

misleading. The purpose of this rule is 

to provide the information that growers 

need regarding flock placements and 

density to enable them to make 

decisions regarding their farm 

operations and manage risks, and AMS 

underscores the views of growers, farm 

bureaus, and others that minimum flock 

placements and stocking density are 

valuable to growers. Minimum flock 

placements are different from tentative 

placements, in that they provide 

growers with information well in 

advance of the actual placements, which 

aligns better with longer-term 

obligations that farmers must make with 

respect to borrowing and capital 

investment, equipment investment, 

labor contracts, and other longer-term 

arrangements on the farm. Therefore, 

AMS made no changes to the rule as 

proposed based on these comments. 

Alternative Approaches 

Comment: Several non-profit 

organizations said that AMS should 

require disclosure of the maximum 

amount of money that could be added 

to or deducted from the contract’s stated 

base price within the live poultry 

dealer’s tournament ranking formula in 

addition to the guaranteed minimum 

placement number and stocking density 

of flocks, saying this information would 

be useful in allowing poultry growers to 

better predict their income based on the 

minimum flock placement and stocking 

density guarantees. 

AMS response: The poultry growing 

arrangement will dictate maximum pay 

variance to the extent it exists. Because 

additions and deductions from base pay 

are generally associated with deviations 

from average performance, the range of 

payments for individual settlements can 

fluctuate. That is, to the extent that a 

minimum and maximum exists, its 

occurrence is rarely observed. For the 

purposes of projection, the disclosure of 

payment quintiles or mean and standard 

deviation provided in § 201.102(d) 

provides substantially more data points 

useful to assess payment variance 


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compared to maximum and minimum 

pay terms, as quintiles show pay broken 

down into five bands. Live poultry 

dealers will only report a mean and 

standard deviation if there are nine or 

fewer growers. This reporting will 

provide a measure of an expected 

outcome and an expected volatility 

around that outcome. The minimum 

and maximum pay terms would not give 

an expected outcome or volatility 

measure. AMS acknowledges some 

growers have expressed concerns about 

excessive pay variability. As noted 

above, AMS is considering rulemaking 

for the purpose of more direct changes 

to the poultry grower payment systems. 

That is outside of the scope of this rule. 

Therefore, AMS made no changes to the 

rule as proposed based on these 

comments. 

Comment: A farm bureau suggested 

AMS conduct additional rulemaking in 

relation to stocking density to account 

for changes in target weights after birds 

have been placed, citing examples of 

poultry growers who were stocked at an 

appropriate density but lost significant 

income after adjustments in bird pickup timing. This commenter and other 

farm bureaus supported grower 

compensation for loss of income when 

target weights are modified after 

placement. 

AMS response: The issue raised by the 

commenters is a concern in that the 

growers relied on the contract terms 

when entering the agreement and 

subsequent revisions to target weights 

result in financial losses that 

presumably would not have occurred 

under the original terms. The remedy 

proposed by the commenters, however, 

is not within the scope of this rule, 

which is focused on increasing 

transparency in live poultry dealer 

communications with poultry growers. 

If a live poultry dealer deceives a grower 

through a ‘‘bait and switch’’ agreement 

as described, remedies may exist 

through enforcement by the USDA and 

DOJ, or in private actions by the grower 

in Federal court. AMS encourages 

growers to report specific instances of 

potential occurrences directly to AMS. 

Growers may also file a complaint at 

farmerfairness.gov or by calling 1–833– 

DIAL–PSD (1–833–342–3773) if they 

suspect a violation of the Act or any 

other Federal law governing fair and 

competitive marketing, including 

contract growing, of livestock and 

poultry. Therefore, AMS made no 

changes to the rule as proposed based 

on these comments. 

Other Comments About Contract 

Provisions 

Comment: A poultry grower group 

suggested AMS require live poultry 

dealers to provide enough flocks to 

allow poultry growers to pay their debts 

and be profitable. The commenter also 

suggested AMS require contracts with 

growers to extend to the term of the 

loan. Several farmers unions 

recommended that AMS modify the 

contract provisions to clearly state what 

recourse poultry growers have under the 

Act if live poultry dealers fail to meet 

the contract terms. A farm bureau noted 

that under the current contracting 

system, companies promise profits to 

entice growers into contracts that offer 

little or no guarantee for success or 

profit, and growers have limited clout to 

negotiate for better contract terms or 

treatment. This commenter explained 

that grower contracts are typically flock 

to flock with no commitments regarding 

future flocks, number of birds per flock, 

quality of birds placed, and feed 

delivered, and that they allow 

companies to cancel contracts at will. 

Instead, the commenter contended that 

contracts should last as long as the 

commitment the grower has with their 

financial institution. A poultry grower 

also recommended that the proposed 

rule require dealers to present contracts 

that endure for the entirety of a grower’s 

loan to give growers more security when 

deciding to invest start-up capital and to 

remedy issues that arise when a dealer 

refuses to extend a contract unless a 

grower makes certain modifications. 

AMS response: AMS acknowledges 

these concerns raised by growers. As 

noted above, AMS is considering 

rulemaking for the purpose of more 

direct changes to the poultry grower 

payment systems. AMS also welcomes 

growers and others to contact us directly 

regarding these matters. Growers may 

file a complaint at farmerfairness.gov if 

they suspect a violation of the Act or 

any other Federal law governing fair and 

competitive marketing, including 

contract growing, of livestock and 

poultry. However, these items are 

outside the scope of this disclosurebased regime, which focuses on 

increasing transparency in live poultry 

dealer communications with poultry 

growers, not on requiring contracts to 

include specific guarantees or 

establishing requirements related to 

their duration. Therefore, AMS made no 

changes to the rule as proposed based 

on these comments. 

I. Transparency Requirements for 

Poultry Grower Ranking Systems 

AMS proposed to create a new 

§ 201.214—Transparency in poultry 

grower ranking pay systems 

(§ 201.104—Disclosures for broiler 

grower ranking system payments—in 

this final rule) specifying the 

recordkeeping and disclosure 

requirements for live poultry dealers 

using a poultry grower ranking system 

to calculate grower payments. 

Recordkeeping and Maintenance 

AMS proposed in § 201.214(a) to 

require live poultry dealers who 

calculate payments under poultry 

grower ranking systems to produce and 

maintain records showing how certain 

inputs were distributed among 

participants. In proposing these 

recordkeeping and maintenance 

requirements, AMS intended to ensure 

that USDA or any other party with the 

proper legal authority can collect 

records for review during an 

investigation or legal action. In the 

proposed rule, AMS proposed to require 

dealers to retain records relating to the 

distribution of inputs to tournament 

participants for 5 years. AMS invited 

comments about whether this record 

maintenance period is appropriate. 

AMS also requested comments on the 

burdens these recordkeeping 

requirements create for dealers. 

Comment: Groups representing 

poultry growers expressed support for a 

5-year retention period for records, 

suggesting such record retention would 

allow for a higher degree of 

accountability and compliance 

enforcement in disputes over unfair 

distribution of inputs by live poultry 

dealers. These commenters contended 

burdens on dealers would be minimal, 

as records would be maintained 

electronically, and the industry already 

provides much of the required 

information to shared data collection 

services. A live poultry dealer argued 

that some information AMS proposed 

for dealers to provide is sensitive and 

proprietary, saying that, for example, 

grower payments may provide 

information about costs and live-side 

operations; breeder information might 

deal with strategic changes in breed or 

efforts to deal with chick health; and 

details about feed outages or other 

internal operations might reveal 

proprietary information that would 

adversely and unfairly impact the live 

poultry dealer’s competitive position. 

AMS response: AMS agrees with the 

poultry grower commenters and retains 

5 years as the appropriate length of time 

for record retention purposes for this 


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90See, e.g., Campaign for Contract Agriculture, 

Rural Advancement Foundation International— 

USA, ‘‘Comment on AMS–FTPP–21–0044: 

Transparency in Poultry Grower Contracting and 

Tournaments’’ (received Aug. 23, 2022), available at 

https://www.regulations.gov/comment/AMS-FTPP21-0044-0479; Institute for Agriculture & Trade 

Policy, ‘‘Comment on AMS–FTPP–21–0044: 

Transparency in Poultry Grower Contracting and 

Tournaments’’ (received Aug. 1, 2022), available at 

https://www.regulations.gov/comment/AMS-FTPP21-0044-0110; Stone Barns Center for Food & 

Agriculture, ‘‘Comment on AMS–FTPP–21–0044: 

Transparency in Poultry Grower Contracting and 

Tournaments’’ (received Aug. 4, 2022), available at 

https://www.regulations.gov/comment/AMS-FTPP21-0044-0139; Animal Welfare Institute, ‘‘Comment 

on AMS–FTPP–21–0044: Transparency in Poultry 

Grower Contracting and Tournaments’’ (received 

Aug. 1, 2022), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0109. 

91A typical practice in such circumstances is to 

pay growers based on their previous five flock 

average to ameliorate losses. One such circumstance 

is detailed in ‘‘What lessons can poultry producers 

learn from extreme weather events? ’’ 

ThePoultrySite.com, March 02, 2022, available at 

https://www.thepoultrysite.com/articles/whatlessons-can-poultry-producers-learn-from-extremeweather-events (last accessed April 2023). 

92AMS’s rule under § 201.102 (c)(3) would 

require dealers to disclose to growers its policies 

and procedures, as well as any appeal rights arising 

from four types of important events, including 

‘‘Natural disasters, weather events, or other events 

adversely affecting the physical infrastructure of the 

local complex or the grower facility.’’ 

93A 2007 survey by USDA found that 17.9% of 

broiler contracts included specific provisions for 

catastrophic payments, see James MacDonald, ‘‘The 

Economic Organization of U.S. Broiler Production,’’ 

USDA Economic Information Bulletin 38 (June 

2008). 

rule. Although most regulations under 

the Act provide for 2-year record 

retention, 9 CFR 203.4(c) allows for an 

extension of the record retention period 

when investigations or proceedings are 

underway. AMS is adopting a 5-year 

retention requirement here principally 

to enable PSD to enforce the disclosure 

requirements that provide growers with 

transparency into the past 5 years of 

revenues, which enables growers to see 

trends over time. To determine whether 

the required disclosures are accurate or 

not, PSD will need to be able to review 

at least 5 years’ worth of records. 

Regarding concerns about sensitive 

proprietary information raised by a live 

poultry dealer, proprietary information 

such as poultry genetics, poultry feed 

blends, trade secrets, or other 

proprietary information not contained 

in the grower contracts are not required 

to be disclosed and may thus remain 

restricted. Growers’ need for relevant 

information with which to make 

informed decisions weighs heavily in 

favor of the disclosures specified in this 

final rule because they relate to the 

manner in which the poultry company 

treats growers under its poultry growing 

arrangements and enable broiler growers 

to monitor some aspects of the live 

poultry dealer’s performance under the 

contracts. Moreover, the topics 

contemplated for disclosures to 

growers—such as grower compensation 

and policies and procedures on matters 

of interest to growers (sick chicks, feed 

complaints, sale of farm policies, etc.)— 

have limited proprietary value. 

Accordingly, AMS made no changes 

to the rule as proposed based on these 

comments. 

Placement Disclosure 

AMS proposed in § 201.214(b) to 

require live poultry dealers to provide 

certain information about the flock 

placed with the grower within 24 hours 

of its placement on the grower’s farm. 

This information would include the 

flock’s stocking density, expressed as 

the number of poultry per facility square 

foot; the names and ratios of breeds of 

the flocks delivered; the ratios of male 

and female birds in the flock if the sex 

of the poultry had been determined; the 

breeder facility identifier; the breeder 

flock age; information regarding any 

known health impairments of the 

breeder flock and of the poultry 

delivered to the poultry grower; and 

what, if any, adjustments live poultry 

dealers will make to grower pay to 

reflect any of these inputs. AMS 

requested comments on how well the 

proposed requirement to supply input 

information at the time of placement 

responds to grower requests for such 

information; whether the required 

information is useful to a grower’s 

operation; what burdens or challenges 

dealers might encounter in collecting 

information for placement disclosures; 

and whether the placement disclosure 

requirement would affect live poultry 

dealers’ business practices. 

Comment: Farm bureaus and groups 

representing poultry growers supported 

the requirement to supply input 

information after placement, saying the 

information is critical to poultry grower 

performance. Several groups suggested 

additional systems for complaints and 

appeals are needed, saying poultry 

growers often do not have a fair way to 

report and resolve issues and that 

transparency alone does not guard 

against circumstances in which growers 

consistently receive poor-quality inputs 

or face repeated unfair treatment.90

AMS response: Mandating particular 

systems for complaints and appeals 

would not be within the scope of this 

transparency rulemaking. However, 

AMS agrees that poultry growers should 

be aware of avenues for complaints and 

appeals where they exist. Consistent 

with AMS’s experience regulating the 

poultry industry, commenter responses 

have identified circumstances where 

live poultry dealers commonly exercise 

higher levels of discretion with respect 

to the interaction between the dealers 

and the growers. In such circumstances, 

absent disclosures of policies and 

procedures that may exist, broiler 

growers are unable to understand and 

evaluate how live poultry dealers may 

handle those circumstances, which can 

and do affect growers’ financial 

outcomes under the poultry growing 

arrangement. These circumstances—sick 

chicks and disasters, feed issues, and 

appeal procedures—were the subject of 

questions on which AMS requested 

comment in the proposed rule. 

Therefore, AMS added a new provision 

at § 201.102(c)(4) of the final rule 

requiring live poultry dealers to disclose 

policies and procedures on increased 

layout time; sick, diseased, or high 

early-mortality flocks; natural disasters; 

weather events, or other events 

adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; other events 

potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability, 

as well as any appeal rights arising out 

of these events. 

In AMS’s experience fielding and 

investigating grower complaints, some 

live poultry dealers will remove sick, 

diseased, and high early-mortality flocks 

from the tournament settlement group 

and provide payment calculated 

separately. Similarly separate treatment 

will sometimes be made for instances of 

sick chicks, depopulation events, 

natural disaster, weather events, or 

other events affecting the physical 

infrastructure of the local complex or 

grower facility, as many live poultry 

dealers provided for during the COVID– 

19 pandemic or during the ongoing 

series of avian bird flu outbreaks.91 92

However, these practices are not 

uniform and are not necessarily 

provided for in written contracts.93

How live poultry dealers respond to 

feed outages, including outage times, as 

well as to grower complaints relating to 

feed quality, formulation, or suitability, 

also vary widely, and commonly 

depend to a high degree on the 

approach that field agents for live 

poultry dealers take in their particular 

complex. AMS has received a range of 

complaints over the years relating to 

differential treatment between growers 

within complexes relating to these 

concerns. Live poultry dealers have 

indicated in the past to AMS that they 

provide growers the opportunity to 

appeal the determinations or actions of 


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local agents, but such availability has 

not been consistent and is subject to a 

high degree of opacity. 

This rule provides up-front clarity for 

growers on how the live poultry dealer 

will deal with such circumstances. If 

live poultry dealers choose not to 

maintain such policies and procedures, 

growers would benefit knowing this up 

front during the contracting process. 

However, this rule is focused on 

providing transparency regarding the 

policies and procedures that live 

poultry dealers may have, whether 

formal or in practice. Requiring 

additional systems for complaints and 

appeals was not proposed and would 

not be a logical outgrowth of the 

proposed rule. In future rulemaking, 

AMS may consider additional steps to 

address the maintenance of certain 

policies or procedures. 

Comment: Several organizations 

suggested AMS require live poultry 

dealers to disclose input quality 

variables and feed discrepancies by 

house on each poultry grower’s farm, 

preventing live poultry dealers from 

using averaging to hide variables and 

discrepancies on settlement sheets. The 

commenters said, with this addition, the 

placement and settlement disclosure 

requirements would give poultry 

growers more transparency in accessing 

information about their flocks, other 

inputs, and their performance in the 

context of their complex. 

AMS response: Per-house disclosure 

would represent a substantial increase 

in recordkeeping burden. In addition, 

this disclosure would likely provide 

only a minor benefit, as metrics relating 

to payment are required to be provided 

to poultry growers on a farm-wide basis, 

and facility-based input disclosures are 

thus likely to create confusion among 

growers. Accordingly, AMS is not 

requiring disclosure at the house level. 

Comment: Farmers unions and groups 

representing poultry growers expressed 

concern about variance in feed 

delivered to grower farms. These 

commenters urged AMS to require live 

poultry dealers to disclose information 

about the quantity and type of feed 

delivered throughout the flock’s 

growout. Commenters said live poultry 

dealer errors in the type or amount of 

feed delivered, even with no feed 

disruption, can have significant 

ramifications for flock performance. 

AMS response: As discussed above, 

AMS recognizes the need to provide 

transparency to address risks of 

deception in circumstances where 

dealer discretion, opacity, and other 

information asymmetries are present in 

the poultry growing arrangement. As 

highlighted by the comments, growers 

have repeatedly expressed concerns 

regarding feed quality and type, as well 

as delivery and disruption thereof. 

Section 201.102(c)(4)(v) and (vi) of the 

final rule requires disclosure of dealer 

policies and procedures relating to feed 

outages, including outage times, and 

grower complaints about feed quality, 

formulation, or suitability. Required 

disclosures also include policies and 

procedures around any appeals 

processes on such matters. 

AMS considered an option to require 

live poultry dealers to disclose the feed 

mix, or recipe, to growers, but 

determined this option is not 

appropriate because the feed mix varies 

at different stages of the growout and it 

is a closely protected formula, treated as 

proprietary information by live poultry 

dealers. Also, AMS determined that 

providing additional disclosures about 

feed delivered throughout a flock’s 

growout would involve overwhelming 

complexity, particularly due to the 

dynamic nature of feed contents and 

quantities within a given growout 

period. Moreover, these disclosures 

would have limited usefulness. 

AMS acknowledges these 

commenters’ concerns about 

transparency and responsiveness 

regarding feed quality and delivery 

issues and that particular instances of 

concern may arise but concludes that 

the potential benefits of the requested 

disclosures would not justify the costs. 

Ongoing disclosure of the actual feed 

mix and delivery, as noted above 

however, may be too burdensome given 

the proprietary and fluid set of practices 

that live poultry dealers use in 

providing feed. It may also be 

overbroad, as a focus on policies and 

procedures will provide information 

that growers need to better manage the 

specific risks they encounter, while 

providing greater flexibility for live 

poultry dealers to develop the systems 

that work best for their company and 

their growers. AMS will continue to 

monitor these areas and expects to use 

the additional transparency provided by 

the disclosures to develop more tailored 

educational, outreach, or regulatory 

responses. 

Comment: Several poultry industry 

representatives requested that AMS 

clarify what constitutes a health 

impairment requiring disclosure. A 

commenter said it is unclear whether 

AMS intended the provision requiring 

disclosure of health impairments to 

encompass impairments other than 

recognized and diagnosed poultry 

diseases, while another said the current 

proposal is vague enough to leave 

significant room for legal disputes over 

whether a condition affected a grower’s 

compensation. Several animal welfare 

groups said AMS should strengthen the 

disclosure requirements related to 

health issues. A commenter said 

integrators should have to disclose 

known health impairments at least 24 

hours before the flock is placed with the 

grower, rather than within 24 hours of 

placement, because earlier notice would 

give the grower more time to prepare 

and would ensure a fairer marketplace. 

This commenter also suggested 

requiring integrators to track disease 

and to inform other poultry growers 

with birds from the same facility of 

problems with birds from a particular 

breeding facility or hatchery, so the 

entire affected community of poultry 

growers will be better prepared for 

disease outbreaks. Other commenters 

suggested that AMS require additional 

health-related disclosures, including 

any known health issues present in the 

flock being delivered, such as 

infections, and any past veterinary care 

rendered to the chicks, saying these 

extra disclosures would better allow 

them to provide suitable veterinary care 

and may lead to better growth outcomes 

and fewer deaths. 

AMS response: AMS concluded that 

disclosure of known health impairments 

is the appropriate standard, and ‘‘health 

impairments’’ as generally understood 

provides an appropriate context for 

classification. AMS does not believe it 

is appropriate to limit the standard, as 

flock health impairments affect certain 

flocks, breeds, and growouts differently. 

Health impairments may affect growout 

management, performance, pay, or other 

relevant factors. Often, specific input 

deliveries may not be decided 24 hours 

in advance, as logistics, weather, 

transportation, and other factors may 

influence distribution. Therefore, AMS 

made no changes to the rule as proposed 

based on these comments. 

Comment: Multiple farmers unions 

and groups representing poultry growers 

said live poultry dealers should disclose 

a breeder flock identifier in addition to 

a breeder facility identifier. A 

commenter said growers could use this 

data to support an appeal if they are 

punished for poor growth after receiving 

a diseased or lower-quality flock and to 

obtain the breeder’s flock-breeding 

methods. 

AMS response: AMS acknowledges 

the commenters’ interest in the 

disclosure of breeder flock identifiers. 

However, it concluded that this 

additional information is not needed 

because individual breeder facilities are 

generally populated and depopulated all 

in and all out. Breeder facility 

identifiers would thus reflect the same 

information in breeder flock identifiers. 


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94See, e.g., Jennifer Rhodes, Extension Educator, 

et al, University of Maryland, ‘‘Broiler Product 

Management for Potential and Existing Grower,’’ 

Table 1 and 2, available at Poultry Budgets, 

Enterprise Budgets, Agricultural and Resource 

Economics, North Carolina State University 

Extension, https://cals.ncsu.edu/are-extension/ 

business-planning-and-operations/enterprisebudgets/poultry-budgets/ (last accessed April 2023). 

Therefore, AMS made no changes to the 

rule as proposed based on these 

comments. 

Comment: Numerous non-profit 

organizations requested that AMS 

require live poultry dealers to provide 

historical breed performance and best 

management practice recommendations 

disaggregated according to important 

factors, such as breeder flock age and 

flock pickup date, and to keep this data 

archived for 10 years. 

AMS response: Virtually all live 

poultry dealers provide manuals to 

growers outlining best management 

practices. In addition, historical 

performance is currently publicly 

available on breeder internet sites. 

Given the widespread availability of this 

information, AMS made no changes to 

the rule as proposed based on these 

comments. AMS may reevaluate in the 

event that industry practices shift away 

from voluntarily providing this 

information. 

Comment: Several non-profit 

organizations said AMS should require 

live poultry dealers to disclose data 

about the optimal pickup age for a 

flock’s breed on flock placement sheets. 

Some of these commenters also 

suggested AMS should require 

integrators to disclose the average feed 

conversion efficiency of flocks hatched 

from breeder flocks of that age in 

addition to requiring disclosure of 

breeder flock age on delivery. The 

commenters said this requirement 

would allow poultry growers to 

compare their own performance to a 

more accurate flock efficiency 

performance expectation. 

AMS response: Weight, not number of 

days, is the target for bird harvest and 

is generally included in most 

settlements. As target weight is readily 

known to poultry growers, along with 

the average number of days to achieve 

the target, it is unnecessary to require 

this readily known information in the 

Disclosure Document. Accordingly, 

AMS is not requiring live poultry 

dealers to provide information related to 

the optimal pickup age for a flock’s 

breed. While AMS is considering action 

targeting live poultry dealers who allow 

birds to stay in houses beyond their 

target weight, that falls outside the 

scope of this disclosure-based regime. 

AMS further notes the commenters’ 

views regarding the value of 

benchmarking performance but is not 

prepared at this time to adopt such a 

requirement in this rule. AMS also notes 

that USDA makes available a range of 

resources, in particular Extension 

expertise, to assist growers in better 

analyzing their performance utilizing 

different inputs, and notes the inclusion 

of contact information for USDA 

resources in the final rule.94 AMS will 

monitor implementation and may 

examine additional tools for assisting 

growers in improving their performance. 

Comment: Commenters representing 

the poultry industry said the 

information to be required on flock 

placement would burden live poultry 

dealers and is unnecessary because of a 

lack of evidence showing it would help 

poultry growers in managing their 

farms. Commenters also said providing 

stocking density information is not 

necessary because live poultry dealers 

will place flocks at the optimal density 

for the best return. 

AMS response: Broiler growers, farm 

bureaus, and many other commenters 

widely supported flock placement 

disclosures because these disclosures 

assist growers in planning and operating 

their farms, managing their financial 

risks, and negotiating with live poultry 

dealers over better contractual 

execution, among other reasons. AMS 

has concluded that, for live poultry 

dealers engaging in the production of 

broilers, the burden of providing the 

flock placement disclosures, including 

disclosures on stocking density, would 

be minimal and the benefit to broiler 

growers substantially outweighs the 

impact to dealers. Further, dealer 

decisions on stocking density may also 

be influenced by other factors beyond 

optimal returns to growers, such as 

responses to market changes, which 

mitigates in favor of providing 

additional transparency by live poultry 

dealers, the entities responsible for 

making those decisions. 

Comment: Several poultry and meat 

trade associations said live poultry 

dealers sourcing birds from a third party 

may not have access to some data the 

proposed rule would require them to 

disclose with placement, such as 

breeder flock age. Commenters also 

mentioned that third-party breeder 

operations might consider sourcing 

information to be proprietary or subject 

to a nondisclosure agreement, 

suggesting AMS address how live 

poultry dealers should make placement 

disclosures when they do not have 

required information or when law or 

contract prohibits them from providing 

it. 

AMS response: Based on AMS 

experience, under most poultry growing 

arrangement contracts, live poultry 

dealers are responsible for providing the 

birds to the growers. Live poultry 

dealers may also be expected to already 

have State contract law obligations 

relating to their performance under the 

contract. Based on AMS’s experience, 

dealers sourcing chicks from third 

parties already monitor the inputs 

provided by those parties. Growers need 

to know the information being required 

in this rule, such as the breeder flock 

age and known health impairments of 

the breeder flock, and the live poultry 

dealer, not the grower, is best 

positioned—indeed, is the only party 

positioned—to require, via contract, that 

the third-party provide the information 

necessary to comply with the rule. Nor 

are the obligations especially 

burdensome. For example, regarding 

health impairments, AMS is requiring 

only disclosure of ‘‘known health 

impairments’’ of the breeder flock or of 

the poultry delivered, and the live 

poultry dealer has a range of ways to ask 

the third-party input supplier to provide 

that information, including contractual 

guarantees, indemnifications, 

attestations, or other means all of which 

are already commonly used in livestock 

transactions to ensure animal health and 

food safety. 

Whether the live poultry dealer is 

sourcing the inputs internally or via a 

contractual arrangement with a third 

party, it is ultimately the live poultry 

dealer that is providing the inputs to the 

grower under the poultry growing 

arrangement and is responsible for not 

engaging in a deceptive practice. AMS 

has discussed in other parts of this final 

rule why the information being 

requested about the inputs is not 

confidential or proprietary. Therefore, 

AMS made no changes to the rule as 

proposed based on these comments. 

Comment: Several industry groups 

opposed the requirement proposed in 

§ 201.214(b)(7) to disclose any 

adjustments the live poultry dealer 

intends to make due to the other factors 

covered in placement disclosures. One 

commenter said live poultry dealers 

would not be able to disclose 

adjustments at the beginning of a flock 

because it is impossible to predict the 

financial impact of factors that may 

affect live birds in advance. This 

commenter said it is more appropriate 

for live poultry dealers to make pay 

adjustments after a flock settles based 

on comparisons with historical data. 

AMS response: Some live poultry 

dealers may be unable to predict the 

exact financial impact of those factors in 

any specific flock delivery to a grower, 


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95See, e.g., Transcript, United States Department 

of Justice, United States Department of Agriculture, 

Public Workshops Exploring Competition in 

Agriculture: Poultry Workshop, May 21, 2010, 

Normal, Alabama; Leonard, Christopher, The Meat 

Racket (2014). 

96E. David Peebles, et al., ‘‘Effects of Breeder Age 

and Dietary Fat on Subsequent Broiler Performance. 

1. Growth, Mortality, and Feed Conversion.’’ 

Poultry Science 78.4 (1999): 505–51; J.B. O’Neill, 

‘‘Relationship of Chick Size to Egg Size and its 

Effect Upon Growth and Mortality.’’ Poultry Science 

29 (1950):774; C.L. Wyatt, W.D. Weaver Jr, and W. 

L. Beane, ‘‘Influence of Egg Size, Eggshell Quality, 

and Posthatch Holding Time on Broiler 

Performance.’’ Poultry Science 64.11 (1985): 2049– 

2055; R.A. Guill and K.W. Washburn, ‘‘Genetic 

Changes in Efficiency of Feed Utilization of Chicks 

Maintaining Body Weight Constant.’’ Poultry 

Science 53.3 (1974): 1146–1154; R.G. Wells, and C. 

G. Belyawin, ‘‘Egg Quality-Current Problems and 

Recent Advances.’’ Poultry Science Symposium 

Series. No. 636.513 W4. 1987(citing D. Spackman, 

‘‘The Effects of Disease on Egg Quality’’); W.A. 

Dozier III, et al., ‘‘Effects of Early Skip-A-Day Feed 

Removal on Broiler Live Performance and Carcass 

Yield.’’ Journal of Applied Poultry Research 11.3 

(2002): 297–303. AMS notes additionally that 

research in this and related areas has limitations. 

It is older and results are mixed. AMS is concerned 

that publically available research has stagnated, 

despite the introduction of new breed strains in the 

intervening years. Because integrators now own the 

genetics companies, AMS has additional concerns 

that research has, in effect, been privatized, creating 

information asymmeteries. 

but these are contracted-for payments 

that should be legitimately based upon 

factors known to both parties. 

Otherwise, the live poultry dealer may 

deceptively manipulate the contract 

payments based on withheld 

information because the live poultry 

dealer controls all the tools used to 

calculate payments. Of course, live 

poultry dealers may be able to predict 

some of the financial consequences of a 

contract, or the live poultry dealer may 

want to create additional grower 

incentives specific to one flock that may 

take the form of a pay adjustment. In 

AMS’s experience reviewing contracts, 

payment formulas can be complicated. 

However, AMS included the 

requirement to disclose any adjustments 

that may be made based on the factor in 

the settlement disclosure to help 

growers to recognize and manage risks, 

and to prevent adjustments that were 

opaque or pose risks of deception to the 

grower. 

The rule does not require any 

adjustments, and only requires live 

poultry dealers to disclose adjustments 

that can be known prior to placement 

and that the live poultry dealer could 

apply, for example a particular 

adjustment formula, process, or 

approach. The specific final amount of 

adjustment need not be predicted, but if 

the live poultry dealer knows that the 

inputs will likely result in payment 

being adjusted upward or downward in 

an unknown amount, and particularly if 

it knows how or under what conditions 

that will occur, it should disclose that 

information to a grower to allow the 

grower to better manage their growout 

strategies; plan for the payment they are 

expecting to receive upon settlement; 

and avoid being confused, misled, or 

otherwise deceived about how their 

performance under the contract will be 

compensated. Live poultry dealers 

remain free to make the actual 

contractually agreed upon adjustments 

after settlement based on flock 

performance. Therefore, AMS made no 

changes to the rule as proposed based 

on these comments. 

Comment: Groups representing 

poultry growers supported the proposed 

placement disclosure requirements. 

These commenters said the 

requirements would ensure more 

transparency by integrators and help 

growers in areas such as flock 

management and financial planning. A 

live poultry dealer said much of the 

proposed placement disclosure 

information pertains to factors that do 

not vary significantly from grower to 

grower, saying any natural variation in 

inputs is expected to even out over time 

and providing the information would 

place undue emphasis on single inputs 

rather than factors such as the grower’s 

skill, dedication, and hard work. 

AMS response: Input variation has not 

been the subject of external study 

because of the proprietary nature of the 

data available, but it has been the source 

of repeated concerns raised by growers 

for many years.95 The persistence of 

these grower complaints suggests that 

making this information available to 

growers to measure, monitor, and adjust 

as they may see fit is worth the modest 

cost to live poultry dealers because it 

will reduce the opacity and risks of 

deception with respect to their 

payments. With that additional 

transparency, growers will be able to 

determine the relative emphasis to be 

placed on single inputs versus other 

factors, such as skill, dedication, or hard 

work, which may help them adjust their 

growout practices to match. To the 

extent variations do even out over time, 

growers will be in a better position to 

recognize those trends and make their 

own determinations on the importance 

of inputs versus other factors, thanks to 

this rule’s enhancement of transparency 

tools. If input factors do not in fact vary 

significantly from grower to grower, the 

burden of disclosure by the live poultry 

dealer remains relatively light. 

Comment: Industry groups contended 

the placement disclosure requirements 

would impose a significant 

administrative burden, such as requiring 

capital investments to overhaul their 

software to provide the required data. 

One commenter said the discussion of 

input distributions in the preamble to 

the proposed rule relied on anecdotal 

reports rather than actual data or 

evidence, making the proposed 

provisions arbitrary and capricious. 

AMS response: AMS has conducted 

an extensive cost-benefit analysis for 

this rule, available under the regulatory 

analyses section below, and believes 

that the burden of compliance is 

relatively modest. AMS investigations 

and reviews of information sharing 

services and consultations with experts 

from the Agricultural Research Service, 

in addition to AMS’s own subject matter 

experts, supervisors, and auditors with 

many years of experience in working 

with growers and auditing live poultry 

dealers all indicated that most live 

poultry dealers maintain this 

information already, and indeed report 

much of it to information sharing 

services. 

AMS acknowledges that external 

analyses of poultry inputs generally lack 

a ranking system context, but the 

proprietary nature of the relevant data 

makes quantitative academic and other 

external analysis nearly impossible. 

Even with the lack of context, peer 

reviewed research supports the 

supposition that input differentiation 

can affect biological outcomes.96 AMS is 

relying on the longstanding concerns of 

growers and its own experience as the 

industry’s regulator to warrant 

placement disclosure requirements. 

Accordingly, AMS made no changes to 

the proposed rule based on these 

comments. 

Settlement Document Information on 

Tournament Group 

In the proposed rule, AMS proposed 

to retain existing regulatory 

requirements in § 201.100(f) to provide 

settlement sheets but to move the 

provision to § 201.214(c). It also 

proposed to require live poultry dealers 

employing poultry grower ranking 

systems to provide every grower within 

the system with settlement documents 

that show certain information about 

each grower’s ranking within the 

system, housing specifications, and the 

inputs each poultry grower received. 

AMS invited comments on how well the 

requirement to provide input 

distribution information, along with 

settlement payment information, for all 

members of the tournament group 

responds to grower requests to improve 

transparency, address information 

asymmetry, and reduce the chance of 

deception in the tournament payment 

system. 


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97See, e.g., Animal Welfare Institute, ‘‘Comment 

on AMS–FTPP–21–0044: Transparency in Poultry 

Grower Contracting and Tournaments’’ (received 

Aug. 1, 2022), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0109; Campaign for Contract Agriculture, Rural 

Advancement Foundation International—USA, 

‘‘Comment on AMS–FTPP–21–0044: Transparency 

in Poultry Grower Contracting and Tournaments’’ 

(received Aug. 23, 2022), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0479; Institute for Agriculture & Trade Policy, 

‘‘Comment on AMS–FTPP–21–0044: Transparency 

in Poultry Grower Contracting and Tournaments’’ 

(received Aug. 1, 2022), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0110; Stone Barns Center for Food & Agriculture, 

‘‘Comment on AMS–FTPP–21–0044: Transparency 

in Poultry Grower Contracting and Tournaments’’ 

(received Aug. 4, 2022), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0139. 

98Agricultural Marketing Service, ‘‘Poultry 

Growing Tournament Systems: Fairness and 

Related Concerns,’’ Request for Comments (87 FR 

34814, June 8, 2022), available at https:// 

www.federalregister.gov/documents/2022/06/08/ 

2022-11998/poultry-growing-tournament-systemsfairness-and-related-concerns. 

Comment: Groups representing 

poultry growers, in general, expressed 

support for the proposed settlement 

disclosure requirements. Commenters 

noted these disclosures would help 

growers determine if they are being 

treated fairly compared to other growers 

in their complex and enable them to 

establish cases based on unfair 

treatment or retaliation claims. Several 

commenters advocated for further 

rulemaking to reform the tournament 

system, saying the proposed settlement 

sheet disclosures do not sufficiently 

mitigate several anticompetitive factors 

and unfair practices. Commenters said 

the current rule does not account for 

factors such as tournament group 

composition effects and recommended 

that the disclosure requirements for 

settlements apply to any poultry 

contract in which the integratorcontrolled factors may impact the 

baseline or bonus income of the contract 

grower. These commenters suggested 

AMS require live poultry dealers to 

disclose input quality variables and feed 

discrepancies by house on each grower’s 

farm to reflect circumstances in which 

flock drop-off or pick-up for a grower is 

split over a weekend, introducing 

variables in bird performance. AMS 

received few comments that specifically 

opposed making available to growers 

information about tournament grouping 

and composition. AMS has summarized 

above and below any comments that 

oppose proposed required disclosures, 

e.g.,: that the disclosures would 

unnecessarily increase the dealer’s 

costs. 

AMS response: AMS acknowledges 

the commenters’ interest in input 

quality variables and feed discrepancies, 

as well as the timing of flock drop-off or 

pick-up. In response to comments, and 

based on AMS’s experience regulating 

the poultry industry, AMS has 

identified circumstances where live 

poultry dealers commonly exercise 

higher levels of discretion. In these 

circumstances, broiler growers are 

unable to evaluate how live poultry 

dealers may handle those circumstances 

and, as such, are exposed to risks of 

deception with respect to the operation 

of their contract and payment. 

Commenters asked for specific 

disclosures regarding sick, diseased, or 

high early mortality flocks; natural 

disasters; depopulation events; feed 

outages; and feed quality, formulation, 

and suitability.97

In this final rule, AMS requires 

additional disclosure regarding policies 

and procedures relating to layout time; 

sick, diseased, and high early-mortality 

flocks; natural disasters, weather events, 

or other events adversely affecting the 

physical infrastructure of the local 

complex or grower facility; other events 

potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages, including 

outage times; and grower complaints 

relating to feed quality, formulation, or 

suitability. AMS believes that focusing 

on disclosure of the live poultry dealer’s 

policies and procedures—if any—in 

these areas will provide the appropriate 

flexibility for live poultry dealers to 

develop systems that work best for their 

company and their growers, while also 

providing growers with the additional 

information they may need to better 

manage risks relating to those matters. 

AMS determined that specific 

disclosures would not be suitable to 

addressing these risks because the 

burden on live poultry dealers would be 

great, and the benefit of these 

disclosures would be insufficient. In 

part, many of these situations occur 

from time to time and depend upon 

discretion by the live poultry dealer and 

its field agents. Because ongoing 

disclosure would likely be insufficient 

to provide growers the advance notice of 

how live poultry dealers intend to 

handle such circumstances, AMS has 

determined that disclosure of policies 

and procedures is the most suitable and 

effective way to provide growers with 

transparency regarding these situations 

and risks arising from them. Such an 

approach is consistent with the 

approach to disclosure that AMS is 

taking, and proposed to take, in other 

areas that may depend on a degree of 

circumstance-specific discretion—for 

example, sale-of-farm policies. 

AMS will continue to monitor these 

areas and expects to use the additional 

transparency provided by the 

disclosures to develop more tailored 

educational, outreach, or regulatory 

responses. AMS also notes the 

commenters’ interest in additional 

rulemaking with respect to fairness 

concerns relating to tournament systems 

and highlights that it has put forth an 

Advance Notice of Proposed 

Rulemaking focused on those issues.98

Comment: AMS requested comment 

on whether the proposed requirement in 

§ 201.214(c) (§ 201.104(c)(1) in the final 

rule) to include the housing 

specification for each poultry grower 

ranking system participant on grouping 

or ranking sheets responds to grower 

requests to improve transparency, 

address information asymmetry, and 

reduce the chance of deception in the 

tournament payment system. Groups 

representing poultry growers expressed 

support for this proposed requirement, 

saying it would improve growers’ ability 

to assess the relative performance and 

income gains that more modern 

infrastructure may provide. 

AMS response: In addition to helping 

growers assess the value of making 

housing upgrades, dealers may benefit 

from making such disclosures when 

they can demonstrate for growers a 

correlation between more advanced 

housing tiers and improved flock 

performance, inducing more grower 

advancement. Accordingly, we have 

retained the requirement in § 201.104(c) 

to provide these disclosures. 

Comment: Several commenters said 

the proposed settlement disclosures 

would help poultry growers evaluate or 

improve their performance, make 

informed business decisions, or mitigate 

risks. For example, these commenters 

said the information would help 

growers to better understand their 

placement in the tournament and could 

change industry bargaining dynamics. 

However, many commenters said the 

disclosures do not go far enough in 

giving poultry growers meaningful tools 

to address fundamental power 

imbalances, hampering poultry growers’ 

ability to meaningfully negotiate 

contracts with live poultry dealers and 

minimize dealer opportunities to 

manipulate rankings within a group. 

AMS response: AMS has designed 

this final rule to enhance transparency 

for broiler chicken growers because of 

the deception that arises from welldocumented information asymmetries 

and attendant risks in the design and 

operation of poultry grower ranking 

systems. Transparency, as provided by 

this rule, will prevent deception, 

encourage live poultry dealers to offer 


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83258 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

99 D.W. Carlton and J.M. Perloff, Modern 

Industrial Organization (1994): 624. Paula J. Dalley, 

‘‘The Use and Misuse of Disclosure as a Regulatory 

System,’’ 34 Fla. St. U.L. Rev. 1121–22 (2007). 

https://ir.law.fsu.edu/lr/vol34/iss4/2. 

100Federal Trade Commission Chair Lina M. 

Khan, ‘‘Poultry Growing Tournament Systems: 

Fairness and Related Concerns’’ (received Sept. 1, 

2022), available at https://www.regulations.gov/ 

comment/AMS-FTPP-22-0046-0143. 

101Agricultural Marketing Service, ‘‘Poultry 

Growing Tournament Systems: Fairness and 

Related Concerns,’’ Request for Comments (87 FR 

34814, June 8, 2022), available at https://

www.federalregister.gov/documents/2022/06/08/ 

2022-11998/poultry-growing-tournament-systemsfairness-and-related-concerns. 

102U.S. Department of Agriculture, Agricultural 

Marketing Service. (May 2022). Agricultural 

Competition: A Plan in Support of Fair and 

Competitive Markets: USDA’S REPORT TO THE 

WHITE HOUSE COMPETITION COUNCIL. 

Retrieved from Agricultural Competition: A Plan in 

Support of Fair and Competitive Markets 

(usda.gov). 

103Campaign for Contract Agriculture, Rural 

Advancement Foundation International—USA, 

‘‘Comment on AMS–FTPP–21–0044: Transparency 

in Poultry Grower Contracting and Tournaments’’ 

(received Aug. 4, 2022), available at https://

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0479, and Virginia Farm Bureau Federation, ‘‘VFBF 

Comments—AMS Poultry Disclosure Proposed 

Rule’’ (received Aug. 5, 2022), available at https:// 

www.regulations.gov/comment/AMS-FTPP-21-0044- 

0160. 

104E. David Peebles, et al. ‘‘Effects of Breeder Age 

and Dietary Fat on Subsequent Broiler Performance. 

1. Growth, Mortality, and Feed Conversion.’’ 

Poultry Science 78.4 (1999): 505–511. 

better contracts, and enhance growers’ 

ability to understand contracts and the 

grower-dealer relationship. 

Transparency will also prevent live 

poultry dealers from engaging in certain 

forms of deception in the operation of 

those contracts. AMS also expects 

increased transparency to function as a 

deterrent by exposing abusive conduct 

by market participants. Transparency 

also creates reputational disincentivizes 

to such actions as well. Disclosure 

regimes in other areas, such as the FTC’s 

Franchise Rule, as well as the longestablished operation of the Federal 

securities laws, show that disclosure is 

a cost-effective tool to prevent 

deception, improve trust among market 

participants, and mitigate market failure 

and the potential for market failure. 

Disclosure laws are common in 

financial, housing, and other markets 

where the products are complex, the 

financial risks are significant, and one 

party has significantly more information 

than the other.99 Additionally, AMS’s 

experience in the poultry sector and 

agriculture in general shows that 

producers value transparency as a tool 

for enhancing their ability to contract 

and manage risks. 

AMS recognizes, however, that 

transparency may not be sufficient to 

address all the risks that growers may 

face, in part because transparency does 

not inherently prohibit harmful 

practices that growers may be unable to 

avoid owing to lack of competition (i.e., 

lack of other options for poultry dealers 

with whom to do business), deception, 

or other reasons.100 Accordingly, AMS 

has proposed other rules seeking to 

prevent retaliation for joining an 

association or forming a cooperative, 

among other protections against 

discrimination, retaliation, and 

deception. AMS has also published an 

Advance Notice of Proposed 

Rulemaking regarding additional rules 

to address fairness concerns relating to 

tournament systems.101 AMS is 

committed to continuing to improve the 

integrity, fairness, and competitiveness 

of the poultry growing marketplace 

through additional rules and through 

the enforcement of existing laws and 

regulations, as well as through a range 

of other strategies, such as $1 billion in 

direct investments in expanded meat 

and poultry processing capacity that 

USDA is implementing to promote 

competition across agriculture.102

Comment: AMS requested comment 

on whether there is other information or 

another way of presenting the proposed 

settlement information that would be 

better. Several groups representing 

poultry growers said the proposed 

disclosure requirements are helpful but 

incomplete and recommended requiring 

live poultry dealers to disclose other 

factors that impact grower settlement 

performance. Commenters suggested 

AMS require dealers to document and 

disclose the quality of the feed provided 

to the growers in the settlement group 

because feed quality can significantly 

affect the ranking if a live poultry dealer 

provides lower quality feed to one 

poultry grower within a settlement 

group. Commenters urged AMS to 

require integrators to disclose the 

average feed conversion efficiency of 

flocks hatched from breeder flocks of 

that age to enable growers to compare 

their own performance to a more 

accurate flock efficiency performance 

expectation. Commenters also suggested 

that AMS require live poultry dealers to 

disclose the flock age at pickup because 

when integrators pick up flocks before 

or after the ideal pick-up time range, 

growers are penalized due to the flock’s 

less optimal weight or feed conversion 

efficiency metrics. Commenters also 

recommended disclosure of all appeals, 

summaries of their resolution, and any 

extended delay during poultry delivery 

or collection that results in the 

remaining flock members losing body 

weight, being placed back on feed, or 

being delivered or collected with a 

different payment settlement group at a 

later date.103

Industry groups expressed concerns 

regarding proposed requirements to 

report feed disruptions, suggesting AMS 

clarify what constitutes a disruption. 

These commenters noted the proposed 

rule does not address situations, such as 

outages caused by natural disasters or 

other events out of either party’s control 

that may affect all participants in the 

settlement pool. An industry group also 

said omitting the requirement to 

disclose breeder flock information 

would reduce costs and administrative 

burden on live poultry dealers and 

reduce confusion among poultry 

growers. This commenter also noted live 

poultry dealers already provide the 

information used to calculate a grower’s 

payment under the contract; therefore, 

the additional information is 

unnecessary and would be confusing to 

growers. The commenter also asked 

AMS to clarify how to address 

situations in which the live poultry 

dealer has determined the sex of the 

birds for some, but not all, growers in 

the settlement pool. 

AMS response: Paragraphs 

201.102(c)(4)(v) and (vi) of the final rule 

require disclosure of integrator policies 

and procedures relating to feed outages, 

including outage times, and grower 

complaints about feed quality, 

formulation, or suitability. AMS intends 

these provisions to be broadly construed 

to include situations caused by natural 

disasters as well as other miscellaneous 

situations. While AMS acknowledges 

the requests to omit breeder flock 

information, it recognizes that many 

growers have expressed concern about 

and need for this information. Growers 

will benefit from its inclusion in the 

required settlement disclosures because 

academic research indicates that 

different breeder flocks may perform 

differently.104 This is particularly 

important information to growers settled 

under a tournament payment system, 

where small differences in outcomes 

can have an outsized effect on grower 

payments because growers are 

compared on a relative rather than 

objective basis. Integrators are in 

possession of this information because 

they acquire and deliver the chicks to 

growers, and engage in extensive 

research and development to improve 

performance of the breeds. Absent the 

provision of this information, growers 

are subject to deception because their 

ability to perform under the tournament 

may be adversely affected by differences 

in these inputs between growers and by 

the inability to know and adjust to those 

differences at the earliest possible 


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105 K.L. Thompson, ‘‘Optimizing Feed 

Withdrawal Programs,’’ Purdue Extension (2008). 

106S.F. Bilgili and J.B. Hess. ‘‘Tensile strength of 

broiler intestines as influenced by age and feed 

withdrawal.’’ J. Appl. Poultry Res. 6 (1997): 279– 

283. 

moment, to the extent such adjustment 

is possible. Therefore, AMS is retaining 

this requirement in the final rule. 

Paragraph 201.104(b)(3) requires that 

‘‘[i]f the live poultry dealer has 

determined the sex of the birds, all 

ratios of male and female poultry 

delivered’’ must be disclosed. AMS does 

not require that the live poultry dealer 

disclose the sex of all birds delivered 

because AMS understands that industry 

practice varies on sexing, and not all 

birds are sexed before delivery. 

However, AMS maintains the 

requirement that where a live poultry 

dealer does engage in some collection of 

information regarding the sex of the 

birds, that the integrator must disclose 

that information to growers as it is 

helpful to growers. 

AMS would accept the live poultry 

dealer using ratios and percentages to 

describe bird sex in relation to a flock. 

AMS did not provide further 

clarification beyond this explication 

because of the potential variation in 

practice, and because AMS believes that 

the language ‘‘all ratios’’ provides an 

appropriately inclusive coverage of the 

information that the live poultry dealer 

may collect, and which should be 

disclosed to growers in those 

circumstances. AMS will be making 

available guidance documents during 

the implementation phase to answer 

live poultry dealer and grower 

questions, and intends to implement the 

rule in a careful, iterative manner. 

AMS acknowledges commenters’ 

concerns that flock pick-up timing (and 

hence age) may affect grower outcomes. 

Flock age is often disclosed under 

existing § 201.100(f) to the extent that 

daily averages are used in formulas to 

calculate payments. To appropriately 

balance the burdens on live poultry 

dealers, AMS is not adopting specific 

disclosures, beyond those that exist in 

§ 201.100(f) on that topic at this time. 

Comment: AMS requested 

information about obstacles to sharing 

or discussing settlement information 

with others and on whether the right to 

discuss the terms of poultry growing 

arrangement offers should apply to 

these disclosures. Groups representing 

poultry growers said they appreciate the 

proposed rule’s extension of the existing 

right to discuss the terms of growing 

arrangement offers with other growers 

from the same dealer to include the 

right to discuss the Disclosure 

Document. However, they believe 

growers should also have the right to 

discuss the settlement sheet disclosures 

proposed under § 201.214, and that 

AMS should clarify that the current 

right to discuss the poultry growing 

arrangement encompasses this right. 

AMS response: The settlement sheet 

disclosures in § 201.104 will be 

provided to the entire pool of growers 

settled during the same time period. 

Only the growers’ personal identifying 

information may be excluded from the 

settlement sheet documents, as the rule 

specifically provides that the 

disclosures need not show the names of 

other growers. AMS is not aware of 

existing restrictions on settlement 

information. New restrictions related to 

settlement information will be reviewed 

by AMS for compliance under the Act, 

but AMS has not changed the rule based 

on this comment. 

Comment: AMS invited comments on 

whether a grower being completely out 

of feed for 12 hours is an appropriate 

length of disruption to trigger reporting 

of a feed disruption or whether it should 

instead require a shorter time, such as 

6 hours. Multiple farm bureau and 

poultry group commenters indicated 

that 6 hours rather than 12 hours would 

be an appropriate length of time to 

trigger reporting. The commenters stated 

that being out of feed for 6 hours drops 

birds’ feed conversion efficiency and 

would affect the grower on the 

settlement sheet. The commenters stated 

this length would allow growers to 

establish a pattern, as growers would 

have records that let them take action to 

correct the problem if they are out of 

feed multiple times for multiple hours 

during consecutive growout periods. 

A poultry industry association 

commented that the turkey industry has 

almost no feed disruptions lasting more 

than 12 hours, except in cases of natural 

disaster. The commenter noted in the 

rare instances when a disruption might 

extend to that length of time, addressing 

it depends on timely and accurate 

reporting from the turkey grower and 

that turkey integrators have no control 

over the circumstances when growers 

do not report feed disruptions in a 

timely manner. 

AMS response: AMS notes that 

research 105 has shown that commercial 

broilers deprived of feed for more than 

12 hours develop hemorrhages in their 

intestines that curtail usual growth 

patterns and lessen the efficiency of 

conversion of feed into meat. AMS also 

noted feed withdrawal for 6 hours was 

not found to be statistically 

significant.106 Accordingly, in the final 

rule, AMS retains the 12-hour threshold 

for reporting feed disruptions. However, 

AMS will monitor implementation and 

encourages growers to report specific 

instances or patterns of concern to AMS. 

Disclosure of Grower and Breeder 

Identity Information 

Section 201.214(b)(4) of the proposed 

rule would require dealers to include 

the breeder facility identifier for the 

flock in the information they provide to 

growers within 24 hours of flock 

delivery. Under proposed 

§ 201.214(c)(1), dealers, when providing 

grouping or ranking sheets to growers at 

time of settlement, would not have to 

show the names of other growers, but 

would be required to show their 

housing specification and the actual 

figures upon which the grouping or 

ranking is based for each grower 

grouped or ranked during the specified 

period. AMS proposed in 

§ 201.214(c)(2)(iv) to require the 

grouping or ranking sheets provided to 

growers to disclose the breeder facility 

identifiers for each poultry grower 

ranking participant. However, AMS did 

not propose to require dealers to 

disclose the names of breeder farms. 

AMS invited comments on whether it 

should reevaluate this position. In 

addition, live poultry dealers currently 

are not required to disclose the names 

of all competing growers on ranking 

sheets. AMS did not propose to change 

this requirement but asked whether it 

should require dealers to disclose the 

names of all competing growers in 

settlement documents. 

Comment: Several groups 

representing poultry growers urged 

AMS to require integrators to provide 

the names of breeding facilities, saying 

extreme vertical integration means that 

many breeding facilities are owned by 

the integrator delivering chicks to a 

grower and if growers knew the actual 

names of breeders, it would be easier for 

them to independently assess relevant 

variables or issues rather than relying on 

the integrator’s representations. 

However, other groups representing 

poultry growers did not support a 

requirement for live poultry dealers to 

disclose farm names. 

AMS response: The purpose of the 

rule is to provide the grower with 

reliable information needed to make 

decisions in the management of their 

farm. Consistent designation of breeder 

facility identifiers is sufficient for the 

purposes of enabling growers to 

consistently understand and track the 

input. AMS makes no changes based on 

the comment. 

Comment: Farm bureaus and poultry 

grower groups said it is not necessary 

for AMS to require live poultry dealers 

to disclose the names of all competing 

growers in settlement documents. These 


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83260 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

commenters opposed disclosure of 

individual grower names and said such 

disclosure would be a breach of privacy. 

AMS response: AMS agrees grower 

privacy is important and should be 

appropriately protected. The names of 

competing growers does not provide 

useful information to growers to assess 

the role that differences in inputs 

played in their settlement or, from that, 

in the expected future profitability of 

their operations because the purpose of 

the disclosure is to prevent deception 

against the grower and to enable the 

grower to perform better. The 

appropriate focus then is on the 

substantive differences in the inputs, or 

the housing specifications, which 

requires disclosure of those items 

among different settlement participants 

but can be done using consistent 

identifiers other than actual grower 

names. To affirm that position, AMS 

retained the language of the proposed 

rule, which provided that the names of 

the growers need not be provided in the 

settlement document, consistent with 

current practice under existing 

disclosure requirements for settlement. 

AMS is not adopting a prohibition on 

live poultry dealers using the names of 

growers as that was not proposed. 

Further, because the goal of the rule is 

disclosure, rather than prohibitions 

against disclosure, such a prohibition is 

outside of the scope of this rule. 

J. Effective Date 

Comment: Live poultry dealers and 

industry groups noted AMS has 

publicly indicated that it is considering 

changes to multiple regulations under 

the Act and said that AMS should share 

all proposed rules specific to the 

tournament system at one time to allow 

stakeholders to comment on the 

proposed changes in their entirety. 

Commenters further urged AMS not to 

take an incremental approach to 

updating the regulations and asserted 

that such an approach would create 

challenges for poultry growers and 

dealers, such as increasing compliance 

costs, confusion, uncertainty, and 

frustration. In addition, these 

commenters recommended that AMS 

provide one effective date for all 

regulatory changes under the Act. One 

commenter recommended that the 

effective date for this rule be delayed for 

five years to give live poultry dealers 

time to build five-year records for 

disclosure and to develop the necessary 

systems for producing required 

disclosures. Another commenter 

suggested that AMS conduct outreach to 

explain to producers and food 

companies the regulatory changes and 

how they will be implemented and 

enforced. 

AMS response: Our approach has 

been to address the regulatory needs of 

the poultry industry systematically and 

as swiftly as possible. All broiler 

growers can benefit immediately from 

the greater transparency offered by this 

final rule. AMS does not want to 

postpone implementing this regulation, 

which makes available vital information 

growers need when deciding whether to 

incur capital expenses and engage in 

broiler production. Nor do we want to 

delay provision of useful input 

information to broiler growers in 

tournaments, who can use that 

information immediately to make 

production management decisions. 

Based on AMS’s experience with the 

industry, we believe live poultry dealers 

have ready access to the historical 

information they are required to provide 

in the Disclosure Documents. AMS 

agrees with commenters that the final 

rule should provide sufficient time to 

implement any changes it requires. 

Therefore, the effective date for this rule 

is 75—rather than 60—days following 

publication in the Federal Register. Live 

poultry dealers will need to amend 

contracts in some instances, create 

records processes, format the 

incorporation of new information in 

existing documents, and create 

Disclosure Documents using USDA 

instructions. Seventy-five days provides 

the length of at least one flock to 

prepare for implementation of the rule. 

USDA will have resources available to 

answer questions as appropriate. 

Additionally, based in part on the 

experience of recent settlements 

between DOJ and a large poultry 

company, AMS believes this period will 

provide sufficient time for live poultry 

dealers to update their compliance 

systems and policies and procedures 

and commence complying with the rule. 

AMS agrees that it should conduct 

outreach to producers and food 

companies regarding regulatory 

changes, implementation, and 

enforcement. Over the course of this 

rulemaking, AMS has published 

informational materials, including a fact 

sheet and a video webinar to help the 

public understand the proposed rule. 

AMS intends to conduct further 

education and outreach following the 

finalization of the rule. 

AMS rejects comments calling for a 

delay of rules until other rules are 

proposed and critiquing its incremental 

approach. To the contrary, AMS is 

deploying a nuanced approach to these 

rulemaking proposals such that 

stakeholders and the public can review 

each individual proposal on its own 

merits. This approach offers producers 

and other market participants greater 

ability to effectively evaluate the 

impacts of each proposal on the market 

and their particular interests, and 

enables commenters to more effectively 

tailor and target comments. 

K. Regulatory Notices & Analysis and 

Executive Order Determinations 

Comment: Live poultry dealers said 

the full cost of the proposed rule will 

likely be many times more than 

predicted by AMS. For example, these 

commenters asserted AMS greatly 

underestimated the costs of creating the 

recordkeeping systems needed to 

comply with the proposed rule, the 

proposal would add costs generated by 

frivolous litigation, and the proposal 

would undermine the tournament 

system and replace it with a new model 

that would likely drive up the costs of 

chicken production. Live poultry 

dealers and industry groups said AMS’s 

own estimate indicates the 10-year 

aggregate costs will be higher for poultry 

growers than for live poultry dealers. 

AMS response: In drafting and 

estimating the cost of the proposed rule, 

AMS consulted auditors and 

supervisors who are familiar with live 

poultry dealers’ records from many 

years of experience in auditing live 

poultry dealers for compliance with the 

Act. In contrast, commentors provided 

no estimated costs for AMS to review. 

AMS expects the recordkeeping systems 

most live poultry dealers already have 

in place will enable them to gather 

much of the information in the 

disclosures from records available to 

them, which limits the necessity of 

developing new recordkeeping systems. 

The higher costs estimated for broiler 

growers compared to live poultry 

dealers is due to the large number of 

broiler growers that receive the 

disclosures compared to a small number 

of live poultry dealers. The primary 

costs to the live poultry dealers are the 

one-time costs to develop the 

disclosures, while the ongoing costs to 

update, distribute, and maintain the 

disclosures are relatively small. A small 

number of live poultry dealers will 

incur relatively small costs to distribute 

the disclosures to relatively large groups 

of growers, but AMS anticipates every 

grower will read the disclosures. The 

actual cost to any individual grower is 

estimated as the value of the time 

required to read the Disclosure 

Documents, but with more than 16,000 

broiler growers with more than 19,000 

broiler growing contracts and just over 

40 live poultry dealers engaged in 

broiler production, aggregate cost 

estimates are higher for broiler growers 


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Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 83261 

107Stafford v. Wallace, 258 U.S. 495, 514–15 

(1922). 

108Packers and Stockyards Act of 1921, Public 

Law 74–272, § 501, 49 Stat. 648, 648 (1935). 

109See Spencer Livestock Com. Co. v. Department 

of Agriculture, 841 F.2d 1451 at 1455 (9th Cir. 1988) 

(The Packers and Stockyards Act is more than ‘‘a 

mere mirror of the antitrust laws’’). 

110 In the 2017 final rule, USDA withdrew the 

2016 interim final rule out of concerns about 

confusion over the conflicting court decisions on 

this subject and the absence of a good cause 

justification for foregoing notice and comment. 

However, USDA reaffirmed its longstanding 

position that harm to competition is not required, 

which we again reaffirm here. 

than for live poultry dealers, though the 

rule has a significantly lower cost 

estimate for a single grower than for a 

single dealer. 

The new requirements in the rule are 

primarily disclosures of information by 

dealers to broiler growers. AMS does 

not expect that informing growers about 

their contracts and how they are ranked 

in the tournament system will cause 

frivolous lawsuits. Increased 

transparency through this final rule 

should improve confidence in the 

tournament system rather than 

undermine it. 

Comment: Groups representing 

poultry growers said they agree with 

AMS that the benefits of the proposed 

rule outweigh the costs. They suggested 

that benefits for poultry growers include 

being able to predict their range of 

income for the coming year and having 

transparency about the quality of inputs 

provided by the live poultry dealer. 

These commenters also said that 

additional benefits to poultry-dependent 

communities could include fewer 

growers going into debt to build 

facilities and consequently fewer 

abandoned poultry houses degrading 

the value of farms and the community. 

Industry groups said they do not believe 

estimates of benefits are well-founded, 

and that the calculation of benefits 

merely attempts to quantify the revenue 

reduction poultry growers would be 

willing to accept in exchange for 

increased transparency under the 

proposal. 

AMS response: USDA estimated that 

some of the benefits of the rule would 

come from reduced revenue uncertainty 

associated with greater transparency. 

The greater transparency would include 

a tighter range around predicted income 

due to such factors as a higher 

probability of receiving a new contract 

and lower variability in compensation 

under the contracts due to greater 

transparency about input quality as it 

relates to revenue. USDA also listed a 

number of benefits in qualitative terms, 

as it does not have the information to 

estimate empirical values associated 

with them. 

AMS expects that if property values 

change due to final §§ 201.102 or 

201.104, the change would be very 

small. Broiler growers who abandoned 

housing and exited the industry will not 

benefit from the rule and will have no 

incentive to remove the abandoned 

housing. For broiler growers that remain 

in the industry, expected gains would 

be modest relative to the costs removing 

buildings. 

The concept of risk aversion is well 

founded. It is the reason that insurance 

and futures and options exchanges exist, 

for example. The risk aversion benefits 

estimated for the rule represent the 

value to growers of a decrease in the 

uncertainty of revenue due to increased 

transparency. Since growers do not have 

to pay for the increased transparency, 

the estimated benefit to growers is the 

same as their net benefit (i.e., the gross 

benefit minus the cost to growers of 

increased transparency). And at the 

industry level, even with the small 

decrease in grower revenue uncertainty 

assumed for the analysis, the benefits to 

growers are higher than the cost to 

dealers of complying with the rule. 

L. Legal Issues Relating to the Proposed 

Rule 

Comment: Industry groups argued 

AMS lacks authority to issue this rule. 

A commenter said that AMS asserts a 

broad mandate to rewrite private 

contracts and affect relationships 

between live poultry dealers and 

poultry growers, yet the Act’s legislative 

history shows Congress intended for 

AMS’s statutory authority to be much 

narrower in scope. A commenter cited 

a Supreme Court decision shortly after 

the Act’s passage noting that Congress 

enacted the Act to ensure the free flow 

of livestock and prevent packers from 

using monopoly power to set unfair 

prices,107 as well as the 1935 expansion 

of the Act to include live poultry 

dealers, in which Congress said it 

targeted unfair, deceptive, and 

fraudulent practices and devices 

because ‘‘they are an undue restraint 

and unjust burden upon interstate 

commerce.’’ 108

Commenters continued by arguing, for 

instance, AMS does not have authority 

to promulgate parts of the proposed rule 

it justifies based on the goal of achieving 

‘‘fair income’’ for poultry growers or 

that characterize growing arrangements 

as incomplete contracts so it can target 

information asymmetry between dealers 

and growers. A commenter rejected the 

concept that the Act gives AMS 

authority to prevent information 

asymmetry in contracts between dealers 

and growers, stating that it has not 

established that the Act’s prohibition on 

unfair, unjustly discriminatory, or 

deceptive practices applies to ‘‘plainly 

written poultry growing arrangements.’’ 

Commenters contended that many other 

lawful business arrangements do not 

encompass all conditions affecting 

compensation in the contract and that 

all real-world markets have some 

information asymmetry. A commenter 

also contended AMS’s citation of FTC 

regulation under sec. 5 of the FTC Act, 

which Congress drew on in enacting the 

Act to support its targeting of 

information asymmetry, undermines its 

authority in relation to the proposed 

rule. According to this commenter, this 

section was interpreted at the time of 

the Act’s enactment to ‘‘prohibit anticompetitive and monopolistic conduct, 

but not to restrict legitimate corporate 

activity’’ such as the tournament 

system. 

A meat and poultry industry 

association said AMS lacks statutory 

authority to justify disclosure of 

potentially confidential, proprietary, 

and competitively sensitive payment 

history information required in 

§ 201.102(d) of the final rule, as well as 

the requirement in § 201.102(d)(4) of the 

final rule that live poultry dealers must 

disclose contact information for State 

university extension service offices or 

county farm advisor’s offices. The 

commenter also said if, as implied 

under § 201.102(g)(1)—Grower Receipt 

of the final rule, AMS is taking the 

position that live poultry dealers can 

violate sections 202(a) and 202(b) of the 

Act even if they do not harm 

competition, it is acting without 

statutory authority, as Congress enacted 

the Act to curb monopolies and courts 

have consistently held that the statute 

only prohibits anticompetitive practices. 

AMS response: AMS disagrees that 

competition was at the time of 

enactment, or is now, the controlling 

factor for all regulations issued under 

the Act. Moreover, even where relevant, 

competition for the purposes of Section 

202 must be defined by the plain 

meaning of Section 202, which defines 

the scope of USDA’s authority. 

Therefore, the meaning of competition 

or harm to competition must be broader 

than its meaning under the antitrust 

laws.109

As USDA noted in a 2010 proposed 

rule, a 2016 interim final rule, and a 

2017 final rule,110 it has consistently 

taken the position that ‘‘in some cases, 

a violation of section 202(a) or (b) can 

be proven without proof of predatory 

intent, competitive injury, or likelihood 

of competitive injury.’’ Scope of 

Sections 202(a) and (b) of the Packers 


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83262 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

111U.S. v. Cargill Meat Solutions, Complaint, D. 

MD, July 25, 2022, available at https://

www.justice.gov/atr/case-document/file/1528331/ 

download. 

112Federal Trade Commission, Policy Statement 

on Deception, 1983. See also, e.g., FTC v. 

Minuteman Press et al., E.D. N.Y. (1998), available 

at https://www.ftc.gov/legal-library/browse/casesproceedings/minuteman-press-et-al. Morrone’s 

Water Ice, Inc.; Franchise Consultants Corporation 

d/b/a Franchise Consultants Group; et al., E.D. 

Penn. (2003), available at https://www.ftc.gov/legallibrary/browse/cases-proceedings/x020068- 

morrones-water-ice-inc-franchise-consultantscorporation-dba-franchise-consultants-group-et-al. 

113Bruhn’s Freezer Meats, Inc. v. Department of 

Agriculture, 438 F.2d 1332, at 1341 (mislabeling 

grading of meat violates section 202); USDA v. 

Excel Corp, 397 F.3d 1285 (failure to disclose 

change in grading system violates section 202). 

115 Kades, 55, also quoting the FTC. 

116 Kades at 55. 

and Stockyards Act, 81 FR 92566, 92567 

(Dec. 20, 2016); see also Scope of 

Sections 202(a) and (b) of the Packers 

and Stockyards Act, 82 FR 48594, 48595 

(Oct. 18, 2017); Implementation of 

Regulations Required Under Title XI of 

the Food, Conservation and Energy Act 

of 2008; Conduct in Violation of the Act, 

75 FR 35338, 35340 (June 22, 2010). 

USDA has previously explained that 

this consistently-held position is based 

on the language, structure, purpose, and 

legislative history of the Act. See, e.g., 

Scope of Sections 202(a) and (b) of the 

Packers and Stockyards Act, 81 FR at 

92567–92568. USDA continues to 

adhere to this longstanding position, 

despite the disagreement of some courts 

as to the proper scope of the Act. See 

Scope of Sections 202(a) and (b) of the 

Packers and Stockyards Act, 82 FR 

48596 (Oct. 18, 2017) (reaffirming that 

‘‘USDA has adhered to this 

interpretation of the P&S Act for 

decades’’ and rejecting comments that 

this interpretation is not the USDA’s 

longstanding position). 

Even where courts have disagreed 

with USDA’s longstanding position that 

competitive harm is not required under 

these sections, some have not held that 

such a requirement would apply to a 

claim of deception under § 202(a), as 

opposed to other claims such as 

unfairness claims. See, e.g., Been v. O.K. 

Industries, 495 F.3d 1217, 1227 (10th 

Cir. 2007) (‘‘We are concerned here only 

with whether unfairness requires a 

showing of a likely injury to 

competition, not whether deceptive 

practices require such a showing.’’) 

Such AMS authority to regulate 

deception is well-established. This 

includes forming the basis of a proposed 

consent decree between DOJ and two of 

the nation’s largest poultry companies 

relating to the failure to provide the 

transparency that would be mandated 

under this rule. As DOJ set forth in its 

complaint: ‘‘Poultry processors have 

also engaged in deceptive practices 

associated with the ‘tournament 

system.’ Under this system, growers are 

penalized if they underperform other 

growers, but poultry processors control 

the key inputs . . . that often determine 

a grower’s success. Poultry processors 

often fail to disclose the information 

that growers would need to evaluate and 

manage their financial risk or compare 

offers from competing processors.’’ 111

The regulatory mechanism of 

disclosure, as set forth in this rule, is 

also well-established as a cure for 

deceptive practices that arise from 

information gaps in the marketplace, 

including AMS’s disclosures already in 

place under the Act for settlement in the 

poultry sector, FTC’s mandated 

disclosures by franchise companies to 

franchisees, and a range of other 

mandated disclosures by Federal and 

State regulators. Rather than 

undermining AMS’s authority, a 

reference to FTC’s sec. 5 authority on 

deceptive practices is entirely 

appropriate, as courts have long 

recognized the similar design and 

application of the two provisions. 

Violations under FTC’s sec. 5 deceptive 

practices authority do not require a 

showing of harm to competition.112

Regardless, even if a showing of harm 

to competition were required for a 

deception claim, the deceptive practices 

prohibited in this rule would meet such 

a requirement. AMS rejects the idea that 

a prohibition on certain widespread 

deceptive practices is inconsistent with 

addressing anticompetitive conduct, 

including information asymmetries and 

the holdup and other anticompetitive 

risks that may arise from them and 

distort competition in the market for 

grower services. 

AMS affirms the longstanding view 

that fraud and deception have no value 

or place in a competitive market.113

Indeed, the academic literature has long 

understood that Section 202 covers two 

broad categories of conduct, (1) 

anticompetitive conduct and (2) 

conduct described as ‘‘market 

abuses.’’ 114 AMS seeks to enable 

growers to better protect themselves 

from hidden risks in contracting and the 

operation of those contracts. Preventing 

deception enhances competition among 

dealers by enabling growers to compare 

offers and reasonably assess entry into 

the business. Preventing deception 

improves how markets function by 

forcing dealers to compete for growers 

service based on the merits of 

commercial offer the producer is 

making. Preventing deception enables 

growers to better assess their 

performance vis-a`-vis other growers. 

Ultimately, the conduct at issue is 

squarely within the purposes of the Act. 

Where conduct ‘‘prevents an honest give 

and take in the market,’’ it ‘‘deprives 

market participants of the benefits of 

competition’’ and ‘‘impedes . . . a wellfunctioning market.’’ 115 In its report on 

the 1958 amendments to the Packers 

and Stockyards Act, the U.S. House of 

Representatives explained that the 

statute promotes both ‘‘fair competition 

and fair trade’’ and is designed to guard 

‘‘against [producers] receiving less than 

the true market value of their 

livestock.’’ 116 Deception subverts 

normal market forces, undermines 

market integrity, and deprives 

producers and growers of the true value 

of their products and services. 

Comment: Poultry grower groups 

argued that AMS has both authority and 

obligation to implement the rule. These 

commenters said the Act authorizes the 

Secretary of Agriculture to make rules 

necessary to carry out its provisions, 

and one of its cornerstones is ensuring 

that business arrangements between live 

poultry dealers and growers are not 

unfair, unjustly discriminatory, 

deceptive, or facilitating undue 

preferences. They contended that, 

because the proposed rule aims to 

improve the information asymmetry 

between dealers and growers so that 

violations of the Act no longer persist 

unchecked, its requirements clearly fall 

within AMS’s rulemaking authority. 

The commenters also cited evidence 

that Congress intended the Act to go 

beyond previous antitrust laws to target 

an expansive range of anticompetitive 

conduct by meat companies. 

AMS response: AMS affirms the view 

that the conduct that may be prohibited 

under the Act is more expansive than 

that which is covered under the 

Sherman Act, 15 U.S.C. 1 et seq., the 

Clayton Act, 15 U.S.C. 12 et seq. or the 

FTC Act, 15 U.S.C. 41 et seq., and in 

particular, that deceptive practices 

sought to be prohibited by the rule fall 

within the authority of the Act. 

Comment: Live poultry dealers and 

industry groups argued that the 

proposed rule is beyond the scope of 

congressional direction. They said that 

there was a lack of further congressional 

action since the Food, Conservation, 

and Energy Act of 2008 (2008 Farm Bill; 

Pub. L. 110–234; June 18, 2008) and that 

AMS has completed its rulemaking 

under the 2008 Farm Bill. This, the 

commenters assert, indicates that 

Congress views the current framework 

as adequate. 


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117 142 S. Ct. 2587 (2022). 

118 16 CFR parts 436 and 437. 119Plea Agreement: U.S. v. Pilgrim’s Pride Corp., 

Feb. 23, 2021, 20–cr–00330–RM, available at 

https://www.justice.gov/atr/case-document/file/ 

1373956/download. Consent Decree: U.S. v. Cargill 

Meat Solutions. Corp., et al. (Sanderson Farms, Inc., 

Wayne Farms, LLC), July 25, 2022, 1:22–cv–01821– 

ELH, available at https://www.justice.gov/opa/pr/ 

justice-department-files-lawsuit-and-proposedconsent-decrees-end-long-running-conspiracy. 

120U.S. v. Cargill Meat Solutions. Corp., et al. 

(Sanderson Farms, Inc., Wayne Farms, LLC), July 

25, 2022, 1:22–cv–01821–ELH, available at https:// 

www.justice.gov/opa/pr/justice-department-fileslawsuit-and-proposed-consent-decrees-end-longrunning-conspiracy. 

121Agricultural Marketing Service, ‘‘Undue and 

Unreasonable Preferences and Advantages Under 

the Packers and Stockyards Act, Final Rule, Dec. 11, 

2020, 85 FR 79779, available at https://

www.federalregister.gov/documents/2020/12/11/ 

2020-27117/undue-and-unreasonable-preferencesContinued 

These commenters also cited the 

major questions doctrine put forth by 

the recent Supreme Court decision in 

West Virginia v. Environmental 

Protection Agency 117 as a limiting factor 

for AMS’s authority to promulgate this 

rule. According to these commenters, 

the issue of whether the Federal 

Government should further regulate 

poultry growing contracting has 

political and economic significance, and 

AMS has not demonstrated clear 

congressional authorization to exercise 

its powers on this issue, meaning the 

agency lacks the authority for this rule. 

Poultry grower groups argue that the 

proposed rule does not trigger the major 

questions doctrine because, rather than 

making a radical change based on vague 

authority, it is based on clear 

congressional mandates and represents 

only incremental improvements to the 

preexisting regulatory regime. These 

commenters further contended that sec. 

202 of the Act, which enumerates the 

practices Congress has deemed 

unlawful, provides a clear and forceful 

statement of AMS responsibility to 

regulate such practices. 

AMS response: AMS exercises its 

statutory authority under the Act, which 

includes authority to address deceptive 

practices. The lack of congressional 

action since the 2008 Farm Bill does not 

impact the scope of AMS’s authority 

under the Act. 

With respect to the major questions 

doctrine, there is no indication that this 

regulation is of such economic and 

political significance that the Congress 

did not give the Secretary authority to 

write a regulation of this kind. In West 

Virginia, 142 S. Ct. at 2604, the Court 

noted that EPA’s modeling ‘‘would 

entail billions of dollars of compliance 

costs[.]’’ In comparison, this rule will 

cost less than 10 million dollars over the 

course of the next decade. Sec. 407 of 

the Act gives AMS the authority to 

‘‘make such rules, regulations, and 

orders as may be necessary to carry out 

the provisions of’’ the Act. 7 U.S.C. 228. 

Moreover, at least one court has 

concluded that Congress intended for 

the USDA to have broad regulatory 

power under the Packers and 

Stockyards Act. As the Court of Appeals 

for the Eighth Circuit observed in 

Bruhn’s Freezer Meats of Chicago, Inc. 

v. U.S. Dep’t of Agric., 438 F.2d 1332, 

1339 (8th Cir. 1971), ‘‘[t]he Act was 

framed in language designed to permit 

the fullest control of packers and 

stockyards which the Constitution 

permits, and its coverage was to 

encompass the complete chain of 

commerce and give the Secretary of 

Agriculture complete regulatory power 

over packers and all activities connected 

therewith. H.R. Rep. No. 324, 67th 

Cong., 1st Sess. (1921); H.R. Rep. No. 77, 

67th Cong., 1st Sess. (1921).’’ 

As noted above, AMS has long 

maintained disclosure requirements 

under the Act with respect to poultry 

contracting and the operation thereof, 

including settlement payment 

disclosures. Further, regulation of the 

communication to producers under 

related regulations is not at all unusual: 

buyers in grade and yield transactions 

must provide accurate accounting and 

provide the basis of the grade. Similarly, 

FTC has long required disclosures under 

its Franchise Rule 118 to address similar 

deception risks for business owners 

seeking to enter into a franchise 

relationship with a franchisor. In this 

rule, AMS updates its disclosure rules 

to reflect the realities of modern poultry 

growing, which are comparable to a 

franchisor-franchisee contractual 

relationship, including with respect to 

taking out debt, taking into account the 

range of other risks relating to doing 

business in this sector such as trust and 

compliance issues as exemplified by a 

recent DOJ poultry industry price fixing 

prosecution and Packers and Stockyards 

Act deceptive practices investigation 

resulting in a number of guilty pleas and 

consent decrees.119

Comment: Live poultry dealers and 

industry groups argued that AMS relied 

on anecdotes and did not cite actual 

violations of the Act that would justify 

the proposed rule. These commenters 

indicated that the administrative record 

thus does not support a rulemaking on 

poultry grower contracting at this time, 

especially one likely to have significant 

costs affecting supply chains. State 

attorneys general and groups 

representing poultry growers noted a 

proposed settlement agreement between 

DOJ and poultry processors 120

stemming from the recent wage 

suppressing conspiracy and Packers and 

Stockyards Act deceptive practices 

investigation that includes disclosure 

requirements similar to those in the 

proposed rule. Groups representing 

poultry growers suggested this consent 

decree indicates that these companies 

are capable of running their businesses 

under fairer and more transparent 

conditions. 

AMS response: AMS chose to take a 

regulatory approach, as opposed to caseby-case enforcement, to enable it to 

better tailor its approach to addressing 

the concerns under the Act that AMS 

has identified in the poultry sector, 

especially relating to broiler chickens. 

Such an approach permits AMS to 

transparently engage the public, 

industry, Congress, and others, and 

obtain the benefit of accepting public 

comments during the regulatory 

process. Yet, as indicated by the State 

attorney general commenters, AMS has 

also determined it appropriate to refer 

cases regarding deception in the failure 

to disclose important information 

regarding financial risks in poultry 

growing arrangements and the operation 

of those arrangements to DOJ for 

handling as circumstances warrant, as 

exemplified by the recent consent 

decree whereby the nation’s third 

largest poultry processor agreed to 

provide the disclosures as set forth in 

the proposed rule and updated by this 

final rule. This case and settlement 

indicate both the seriousness of the 

ongoing deceptive practices violation, as 

well as the appropriateness and 

workability of the remedy defined by 

this rule. 

Comment: Several farm bureaus 

suggested the rule should have been an 

interim final rule, rather than a final 

rule, to give AMS the regulatory 

flexibility to immediately address any 

effectiveness issues with the 

disclosures. Groups representing 

poultry growers said the proposal’s 

required disclosure of material 

information to protect parties to 

asymmetrical business relationships is a 

longstanding policy tool for promoting 

healthier markets and does not violate 

any ‘‘cognizable right,’’ including 

dealers’ First Amendment rights. 

Groups representing poultry growers 

also urged AMS to affirm its 

interpretation of secs. 202(a) and (b) of 

the Act to not require a harm-tocompetition standard, as it is highly 

difficult for farmers to meet this 

standard, and argued that USDA’s 

December 2020 ‘‘undue preferences’’ 

rule 121 creates a substantial loophole for 


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and-advantages-under-the-packers-and-stockyardsact. 

122 5 U.S.C. 553(b)(B). 

dealers by allowing them to justify 

actions they claim are a ‘‘reasonable 

business decision.’’ An industry group 

said the heightened disclosure 

requirements between dealers and 

growers in the proposed rule may raise 

competitive concerns by creating an 

information exchange of specific and 

competitively sensitive information 

between a wide range of actual and 

potential competitors. The commenter 

also said marketing agreements may 

experience a chilling effect, as increased 

transparency may lead dealers to offer 

growers uniform contract terms that 

diminish competition as well as 

individual growers’ marketing power. 

AMS response: AMS notes the 

commenters’ interest in an interim final 

rule. An interim final rule is generally 

reserved for situations where the 

agency, for good cause, finds that prior 

notice is ‘‘impracticable,’’ 

‘‘unnecessary,’’ or ‘‘contrary to the 

public interest,’’ in which case the 

agency may issue a final rule without 

providing the usual notice and comment 

required by the Administrative 

Procedure Act (APA).122 However, 

because AMS has already solicited 

comments on the proposed rule, it is 

unnecessary to issue an interim rule and 

make a good cause finding to justify 

non-compliance with the APA’s notice 

and comment requirements. 

AMS further affirms that no further 

showing is required to prove a violation 

of the Act beyond a violation of the 

provisions set forth in this rule. 

AMS believes that the provision of 

additional information to growers will 

improve the competitive market 

conditions by allowing growers to better 

understand, evaluate, and compare 

contracts among dealers, enhancing 

their ability to bargain efficiently by 

reducing deceptive practices. Deception 

has no competitive value or place in the 

market and can create inefficiencies. 

AMS is skeptical that contract terms 

will necessarily become more uniform 

and further finds that the new 

transparency will allow live poultry 

dealers to compete for growers on the 

merits of their contracts and aid in 

marketplace innovation as live poultry 

dealers and growers remain free to 

develop new and innovative methods 

for conducting their business. Previous 

AMS rulemakings related to disclosures 

in poultry growing have not been shown 

to negatively affect innovation. 

With respect to information 

exchanges, AMS notes that statistical 

sharing services today routinely collect 

and make available a wide range of 

information only to live poultry dealer 

subscribers. AMS has tailored the 

disclosures to provide information 

useful to growers in their particular 

circumstances and has reduced 

requirements such as the disclosure of 

information across all complexes in part 

to reduce risks of inappropriate 

information sharing. 

M. Other Comments About the Proposed

Rule

Comment: A farm bureau 

recommended adding several 

requirements for grower contracts, such 

as: performance verification provisions 

to protect growers from arbitrary 

company sanctions on bird placements; 

clear statements of layout times (i.e., 

time between flock placements) and 

company compensation for extended 

periods of reduced or no bird 

placements; a requirement that contracts 

should not be subject to change by the 

company without prior agreement from 

the grower; starting pay rates that allow 

amortization of debt load in 10 years, 

cover normal expenses, and provide the 

grower a livable income; additional 

compensation for above-average feed 

conversion; and company responsibility 

for low performance based on companyprovided inputs. In addition, the 

commenter recommended that contracts 

clearly disclose risks and provide 

grower protections against early 

termination, and that live poultry 

dealers provide growers with ample 

time to review contracts. This 

commenter said contracts that require 

arbitration for grower disputes should 

also require arbitration for dealer 

disputes, while another farm bureau 

said AMS should ban mandatory 

arbitration clauses in contracts. 

AMS response: AMS shares many of 

the concerns expressed in the above 

comment summary. Improved 

transparency including contract 

requirements requiring minimum flock 

placements and minimum density will 

reduce asymmetric information 

problems and address many of the 

issues related to flock placements and 

out time. Additionally, this regime will 

deter dealers from constant contract 

modifications that would trigger a new 

Disclosure Document. Further, AMS 

views the financial disclosures required 

in this rule as appropriate to inform 

growers of revenues, potential 

profitability, and debt management. 

Growers maintain the statutorily 

protected right to opt out of arbitration. 

Therefore, no changes were made to the 

proposed rule. 

Comment: A poultry grower group 

indicated the rule does not address the 

lack of transparency associated with 

farm research and development. The 

commenter explained that poultry 

companies do not own their own farms; 

therefore, research and development for 

farm-level changes cannot take place 

within the company’s business 

infrastructure. According to the 

commenter, the result is that major 

dealers benefit from expensive research 

and development efforts, and the 

unknowing poultry growers routinely 

shoulder the burden of live poultry 

dealer ‘‘experiments’’ with neither 

consent from nor compensation for the 

grower. 

To stay ahead of the field and make 

advancements, according to the 

commenter, companies use a few 

common strategies, such as merging 

with and acquiring smaller companies 

that are pioneers in new fields, 

leveraging financial and political 

influence over research at universities, 

and experimenting through mandatory 

trial-and-error efforts on contract farms, 

such as studying the effect of windows 

in chicken houses and introduction of 

slow-growth chickens as a research 

program with associated adjustments in 

flock schedules for growers. 

The commenter provided an example 

of growers being required to change 

growing practices due to the increased 

value of chicken paws (feet) without 

seeing a benefit. Multiple farmers 

contracting with three different 

integrators have come to the commenter 

expressing concerns about having to 

change growing practices to promote the 

health of chicken paws. No farmer was 

compensated for these changes 

according to the commenter; however, 

the companies have experienced a 

financial windfall because of growing 

demand in China for chicken paws. 

According to the commenter, farmers 

spent their own time and energy to 

increase company profits and that effort 

was not reflected in their tournament 

ranking. 

AMS response: AMS shares some of 

the concerns cited above, particularly 

with regard to practices resembling 

‘‘trial and error’’ experimentation at the 

expense of contract growers. To the 

extent that programs of this type are a 

change in housing specification, new 

disclosures would be required for 

growers to evaluate the benefit. Where 

adjustments to management practices 

cause growers to incur additional costs 

and are not covered in the contract, a 

new contract may be required, again 

triggering a new Disclosure Document. 

Separately, AMS has proposed rules to 

better protect growers’ rights to organize 

associations and cooperatives, which 

may enable them to more effectively 


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123Agricultural Marketing Service, ‘‘Inclusive 

Competition and Market Integrity,’’ Proposed Rule, 

Oct. 3, 2022, 87 FR 60010, available at https://

www.federalregister.gov/documents/2022/10/03/ 

2022-21114/inclusive-competition-and-marketintegrity-under-the-packers-and-stockyards-act. 

work together and bargain under 

existing laws.123 Therefore, no changes 

to the proposal are warranted. 

Comment: A group representing 

poultry growers noted that, under the 

proposed rule, live poultry dealers will 

still control most of the production 

inputs, which fails to close the extreme 

disparity in bargaining power between 

growers and dealers. Based on the 

experience of growers in its network, 

the commenter described several 

problems it anticipated will remain 

even if the proposed rule is 

implemented. 

The commenter stated debt 

accumulation is a problem that will 

remain even if the rule is implemented. 

The commenter stated that growers lack 

leverage to negotiate favorable contract 

terms, often incurring substantial debt 

loads as they invest significant amounts 

of money in poultry houses and in 

modifications and upgrades that dealers 

require as a condition of contract 

renewal. According to the commenter, 

growers are then stuck paying back the 

loans to the same companies that 

required them to make the investments 

in the first place, leading to ‘‘crippling 

accumulations of debt’’ resulting in 

numerous bankruptcies, and the amount 

of this debt is expected to increase. 

Finally, the commenter said there are 

limited legal resources available to 

farmers to fight against poultry 

companies, with time and legal costs 

deterring farmers from seeking justice in 

court. According to the commenter, 

while the proposed rule provides some 

legal recourse for controversies related 

to the Disclosure Document and poultry 

growing arrangements, the exchange of 

information between growers and 

dealers is not sufficient and the costs of 

litigation are still often prohibitive. 

AMS response: AMS is concerned 

about poultry grower debt 

accumulation. AMS is confident the 

disclosure regime outlined in this 

proposal will provide baseline 

information relating to revenue and 

profitability of their operations, 

improving grower debt management. As 

housing specifications evolve and new 

investments are mandated, under this 

rule, growers will receive additional 

required disclosures that will better 

enable growers to assess additional 

capital investments. AMS will continue 

to review capital improvement programs 

and evaluate those programs under 

existing § 201.216. AMS encourages 

growers with specific concerns to 

submit complaints and tips through 

farmerfairness.gov or to contact AMS 

directly at 1–833–DIAL–PSD (1–833– 

342–3773). 

Comment: Commenters recommended 

AMS require dealers proposing or 

requiring modifications to existing 

grower infrastructure housing 

specifications to disclose their own costbenefit analysis to growers. Further 

those commenters said that any finding 

that any such cost/benefit disclosures 

are broadly fallacious, i.e., that where 

the dealer’s cost-benefit claims did not 

match the actual costs and benefits, 

should constitute a violation of the Act 

as a deceptive practice. 

AMS response: While this rule does 

require some financial disclosures 

related to additional capital 

improvements and other deviations 

from the prior five-year grower 

payments, AMS is not requiring the 

production and disclosure of a dealer’s 

cost-benefit analyses because AMS is 

not prepared, at this time, to assess all 

potential cost-benefit factors, as well as 

the necessary formatting and 

recordkeeping requirements that would 

be implicated. In the interim, AMS will 

also continue to review grower 

solicitation practices and inducement 

materials. Practices and materials that 

are deceptive have and will continue to 

be violations of the Act. AMS is not 

adopting such a requirement at this time 

but may consider the value of such a 

disclosure as part of future steps. In 

particular, AMS is reviewing this issue 

in light of comments received on the 

June 2022 ‘‘Advance Notice of Proposed 

Rulemaking on Poultry Tournaments: 

Fairness and Related Concerns’’ and 

may elect to address issues related to 

additional capital investments in future 

rulemakings. 

Comment: Commenters also wanted 

AMS to require live poultry dealers to 

give poultry growers a minimum of 6 

months to begin any upgrades they 

might demand. 

AMS response: AMS is also not at this 

time adopting any requirements relating 

to the timing for when housing upgrades 

could be required. The request by 

commenters is not within the scope of 

this rule, and AMS needs additional 

time to consider the matter. AMS will 

consider the matter as part of comments 

received to the June 2022 ‘‘Advance 

Notice of Proposed Rulemaking on 

Poultry Tournaments: Fairness and 

Related Concerns.’’ 

VIII. Regulatory Analyses 

A. Executive Orders 12866, 13563, and 

14094 

AMS is providing a regulatory 

analysis in conformance with the 

requirements of Executive Orders 

12866—Regulatory Planning and 

Review, 13563—Improving Regulation 

and Regulatory Review, and 14094— 

Modernizing Regulatory Review, which 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits, 

including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and equity. 

Executive Order 13563 emphasizes the 

importance of quantifying both costs 

and benefits, reducing costs, 

harmonizing rules, and promoting 

flexibility. Executive Order 14094 

reaffirms, supplements, and updates 

Executive Order 12866 and further 

directs agencies to solicit and consider 

input from a wide range of affected and 

interested parties through a variety of 

means. 

In the development of this rule, AMS 

considered several alternatives, which 

are described in the Regulatory Impact 

Analysis, below. 

The final rule is not expected to 

provide, and AMS did not estimate, any 

environmental, public health, or safety 

benefits or impacts associated with the 

proposed rule. 

This final rule has been determined to 

be significant for the purposes of 

Executive Order 12866 and therefore 

has been reviewed by the Office of 

Management and Budget (OMB). Details 

on the estimated costs of this final rule 

can be found in the rule’s economic 

analysis. 

AMS is amending 9 CFR part 201 by 

adding new definitions to § 201.2, 

adding new § 201.102 regarding contract 

and disclosure requirements for live 

poultry dealers engaged in broiler 

production, and adding new § 201.104 

regarding live poultry dealer 

responsibilities when they use poultry 

grower ranking systems to settle 

payments for broiler growers. Based on 

its familiarity with the industry, AMS’s 

Packers and Stockyards Division (PSD) 

prepared an economic analysis of the 

final rule as part of the regulatory 

process. The economic analysis 

includes a cost-benefit analysis of the 

rule. PSD then discusses the impact on 

small businesses. 

B. Regulatory Impact Analysis 

As a required part of the regulatory 

process, AMS prepared an economic 


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124USDA, NASS. 2017 Census of Agriculture: 

United States Summary and State Data, (April 

2019): 7, 56. 

125For a discussion of the difficulty in adapting 

of broiler grow houses for other purposes, see 

Vukina and Leegomonchai 2006, Op. Cit. 

126C.R. Knoeber and W.N. Thurman, ‘‘Don’t 

Count Your Chicken . . . : Risk and Risk Shifting 

in the Broiler Industry.’’ American Journal of 

Agricultural Economics 77 (1995): 486–496. 

127This research is regularly cited and reaffirmed 

in the current economics literature including 

Tsoulouhas and Vukina (2001) and McDonald 

(2014) that we cite elsewhere. 

128See, e.g., Theofanis Tsoulouhas and Tomislav 

Vukina. ‘‘Regulating Broiler Contracts: 

Tournaments Versus Fixed Performance 

Standards,’’ American Journal of Agricultural 

Economics 83 (2001): 1062–1073. 

analysis of the costs and benefits of final 

§§ 201.102 and 201.104. 

The poultry industry is highly 

vertically integrated. That is, a single 

entity owns or controls nearly all the 

steps of poultry production and 

distribution. Poultry production 

contracts reduce the costs for live 

poultry dealers of negotiation with 

individual growers over the purchase of 

individual flocks of poultry and relieve 

live poultry dealers from the burden and 

risks of owning and maintaining poultry 

houses. The growout portion of 

production is largely accomplished 

through contract growers, who bear 

these burdens and risks. Most poultry, 

and particularly broilers, are grown 

under production contracts. 

The USDA National Agricultural 

Statistics Service’s (NASS) Census of 

Agriculture (Agricultural Census) 

reported that 96.3 percent of broilers 

were raised and delivered under 

production contracts in 2017.124 Live 

poultry dealers place chicks in poultry 

houses owned by contract growers. 

Typically, live poultry dealers provide 

young poultry, feed, medication, and 

harvest and transportation services to 

these poultry growers, who house, feed, 

and tend the growing birds. 

In order to grow poultry on a 

commercial scale, a poultry grower must 

invest in poultry housing. The 

investment is often substantial. Most 

farms have multiple houses, and the 

total investment required can easily 

exceed $1 million. Also, the housing is 

built and equipped specifically for the 

purpose of growing poultry. The costs of 

adapting the housing for any other 

purpose can be prohibitive.125 Because 

the live poultry dealers control most 

aspects of a grower’s production, 

growers are dependent upon the actions 

of the live poultry dealers to recoup the 

grower’s substantial and specific 

investment. This puts growers in a 

particularly precarious position in 

which contract growers have only a 

small number of live poultry dealers 

with whom to do business in almost all 

geographic markets within the United 

States. 

Broiler industry vertical integration 

leads to many risks being borne by 

contract poultry growers. Due to the 

large investment required of poultry 

growers, the financial risk of protecting 

that investment is substantial. Because 

live poultry dealers maintain such 

heavy influence over many key aspects 

of growers’ production, growers have 

significant exposure to liquidity risks, 

should flock placements and revenues 

fall. 

Thus, contract poultry growers are 

subject to numerous risks associated 

with live poultry dealers’ control over 

key aspects of their operations, such as 

the frequency and density of flock 

placements, and the related risks of not 

having control over the genetic quality 

or health of the chicks placed by the live 

poultry dealers. Live poultry dealers 

control the scheduling of feed 

deliveries, which also can impact feed 

conversion and thus grower pay. Also, 

production variables such as bird target 

weights and growout periods are 

determined by the live poultry dealer, 

further adding to the risks borne by 

contract poultry growers. 

Live poultry dealers benefit from 

poultry growing contracts by having 

control over the quality and supply of 

inputs (birds) into the processing plant 

while remaining free from many of the 

risks related to capital investments in 

growing capacity, where those costs and 

associated risks are borne by the 

growers. On the other hand, contracts 

shift other risks from the grower to the 

live poultry dealer. With live poultry 

dealers responsible for chick genetics, 

feed quality, and other inputs (with the 

possible exception of fuel), changes in 

input prices do not directly affect 

growers. Growers also do not bear the 

risks (or enjoy the benefits) of price 

changes in the value of live poultry or 

poultry meat, as they do not own the 

poultry or poultry meat and thus do not 

sell it. Research on poultry growing 

contracts in the broiler market has 

shown live poultry dealers to shift that 

variation in input costs and output 

prices, which comprises up to 84 

percent of the variation in returns to 

broiler production.126 127

The most common form of poultry 

growing contract is a relative 

performance contract, also known as a 

‘‘tournament’’ contract in the industry. 

Tournament systems are a type of 

poultry contract under which the live 

poultry dealer assigns each grower to a 

settlement pool, which consists of all 

the growers’ given flocks that the live 

poultry dealer processed in a given 

week. The live poultry dealer provides 

the grower with the production inputs 

of an initial supply of chicks and feed 

and veterinary support throughout the 

growing period; the grower provides the 

inputs of housing, water, electricity, 

labor, and management. At the time of 

processing, the live poultry dealer 

collects the finished broilers and 

calculates an average performance 

metric for the settlement pool, typically 

the feed-conversion ratio or similar 

metric. The grower’s compensation 

under the tournament contract, is the 

sum of a base payment, which typically 

depends on the total liveweight of the 

finished birds and a payment or 

deduction based on the average 

performance metric for the settlement 

pool. For most tournaments, the 

payment or deduction formula is the 

difference between the grower’s 

performance metric and the settlement’s 

average, subject to a scaling multiplier. 

Production periods for poultry are 

sufficiently short that a grower will 

typically be in several tournaments in a 

year. 

Agricultural production is an 

inherently risky endeavor, and returns 

have some level of risk no matter the 

marketing channel or structural 

arrangement. For example, common 

production risks are systematic risks 

common to all growers in a given 

geography (which may coincide with a 

given tournament) such as weather or 

widespread disease, feed quality, or 

genetic strains. Academic research finds 

that where risks are likely to affect all 

growers in a region, compensation is 

less likely to be adversely affected under 

a tournament contract than it would be 

on a simple price per unit of weight 

contract.128 For example, if an unusual 

heat wave caused all growers in a 

tournament to experience poorer feed 

conversion, all tournament growers may 

require more feed and a longer grow 

period for their flocks to reach the target 

weight. They would receive the same 

pay for the weight produced, while not 

being penalized for the higher feed costs 

incurred to produce that weight. Some 

aspects of the tournament system are 

not necessary to account for these risks, 

however, and other contractual 

arrangements may account for the same 

risks without the concerns associated 

with the tournament system. 

As noted, no contract type will 

protect growers from all market risks, 

and tournament contracts still leave 

growers exposed to some common risks. 

For example, when plants had to reduce 

processing capacity due to the COVID– 

19 pandemic, growers experienced 


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129MacDonald. (June 2014) Op. Cit. 

130MacDonald. (June 2014) Op. Cit. (Percentages 

were determined from the USDA Agricultural 

Resource Management Survey (ARMS), 2011. 

‘‘Respondents were asked the number of integrators 

in their area, which was subjectively defined by 

each grower. They were also asked if they could 

change to another integrator if they stopped raising 

broilers for their current integrator.’’ The 7 percent 

of those facing a single integrator assert that they 

could change, presumably through longer distance 

transportation to an integrator outside the area. Ibid. 

p. 29 and 30.) 

reduced compensation to the extent that 

they received fewer or less dense 

placements from the live poultry 

dealers. 

Tournament systems do not insulate 

growers from the other risks of contracts 

discussed above such as financial risk, 

liquidity risk, the risk from incomplete 

contracts, and the lack of control over 

inputs and production variables. 

Tournaments also introduce new 

categories of risks to growers, such as 

group composition risk and added risks 

of settlement-related deception or fraud. 

The risks of deception or fraud as 

discussed above include the inability of 

growers to verify the accuracy of 

payments, and to detect discrimination 

or retaliation. 

Group composition risk is the risk 

associated with the composition and 

performance of other growers in their 

settlement groups. A particular grower’s 

pay is impacted by the performance of 

others in the tournament. Growers have 

no control over the other tournament 

members’ effort and performance, nor 

over with which other growers they are 

grouped. An individual grower’s effort 

and performance can be static, and yet 

that grower’s payments could fluctuate 

based on the grower’s relative position 

in the settlement group. Further, 

changes in payment may not be 

commensurate with the changes in 

grower’s effort and performance. These 

characteristics of the tournament system 

can add to the variability of pay and 

affect the ability of growers to plan and 

measure their own effort and 

performance. On the other hand, the 

system is designed to incentivize 

participants to do their best in the hopes 

of gaining higher rewards. 

The integrators also determine which 

growers are in each settlement group. 

While growers in a group must have 

similar flock finishing times, a live 

poultry dealer could move a grower into 

a different grouping by altering layout 

times to change the week that a grower’s 

broilers are processed. An individual 

grower may perform consistently in an 

average performing pool, but if the live 

poultry dealer places that grower in a 

pool with more outstanding growers, 

those outstanding growers raise the 

group average and reduce the fees paid 

to the individual. At its discretion or per 

the poultry growing arrangement, a live 

poultry dealer may remove certain 

growers it considers to be outliers from 

a settlement pool. This would likely 

affect the average performance standard 

for the settlement and affect the 

remaining growers’ pay. Group 

composition risk can be more relevant 

to some growers when a tournament’s 

settlement group contains growers with 

different quality or ages of grow houses. 

In addition, the current 

documentation of tournament terms 

provides little to no information on the 

expected variation between individual 

payments over time. Providing the 

settlement formula alone does not give 

growers a means by which they can 

predict total income over a meaningful 

period. More generally, an individual 

grower cannot estimate the variance in 

pay across periods with the same 

accuracy as the live poultry dealer with 

which he or she contracts. Information 

provided pursuant to this rule addresses 

this issue. Also, growers do not 

currently receive information that 

allows them to understand the impact of 

many live poultry dealer decisions 

made during the growout period that 

may affect grower incomes. For 

example, live poultry dealers may 

switch the genetics of chicks supplied to 

growers or change a feed ration or 

supplier. Increased information required 

in settlement disclosure regarding 

inputs and other factors will make it 

easier for growers to assess the impacts 

of these decisions and improve their 

ability to protect themselves against any 

systematic issues related to those 

decisions. 

Live poultry dealers benefit from 

tournaments systems, because they 

provide live poultry dealers more 

control and certainty of the total pay to 

all the growers in a settlement group. 

They also benefit from the system if it 

disincentivizes shirking with respect to 

production efficiency. However, the 

incentive to avoid shirking can be 

imparted in a fixed performance 

standard contract as well. 

There is asymmetry in the 

information available to live poultry 

dealers and the growers with whom 

they contract. Some of the information 

held by live poultry dealers would be 

valuable to growers because it 

influences grower compensation in 

tournament contracts and might help 

growers in negotiating contract terms 

and making decisions about capital 

investments and flock management. 

The contracts themselves are often 

incomplete and exhibit asymmetry in 

the information available to live poultry 

dealers and contract growers. Because 

live poultry dealers supply most of the 

inputs, much of the production 

information is available to the grower 

only from the live poultry dealer. For 

example, the contract grower may not 

know precisely how much feed it used, 

or how much weight the flock gained 

under his or her care, unless the live 

poultry dealer provides the information. 

Growers often lack negotiating 

leverage with live poultry dealers to 

demand transparency and completeness 

in contracts. Most growers have few live 

poultry dealers in their area with whom 

they can potentially contract. The table 

below shows the number of live poultry 

dealers that broiler growers have in their 

local areas by percent of total farms 

(number of growers), total birds 

produced (number of birds), and total 

production (pounds of birds produced). 

TABLE 1—LIVE POULTRY DEALERS IN BROILER GROWERS’ AREA 129

Integrators in grower’s area 130 Farms Broilers Production Have additional 

integrator in area 

Number .................................................................................... Percent of total Percent of farms 

1 ............................................................................................... 21.7 23.4 24.5 7 

2 ............................................................................................... 30.2 31.9 31.7 52 

3 ............................................................................................... 20.4 20.4 19.7 62 

4 ............................................................................................... 16.1 14.9 14.8 71 

>4 ............................................................................................. 7.8 6.7 6.6 77 

No Response ........................................................................... 3.8 2.7 2.7 Na 


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131All live poultry dealers are required to 

annually file PSD form 3002 ‘‘Annual Report of 

Live Poultry Dealers,’’ OMB control number 0581– 

0308. The annual report form is available to public 

on the internet at https://www.ams.usda.gov/sites/ 

default/files/media/PSP3002.pdf. 

132Steven Y. Wu and James MacDonald, 

‘‘Economics of Agricultural Contract Grower 

Protection Legislation,’’ Choices, Third Quarter, 

2015, pp 1–6. 

133MacDonald (June 2014) Op. Cit. 

The data in the table show that 52 

percent of broiler growers (farms), 

accounting for 55 percent of broilers 

produced and 56 percent of total 

production and, report having only one 

or two integrators in their local areas. 

This limited integrator competition may 

accentuate the contract risks. Even 

where multiple integrators are present, 

there can be significant costs to 

switching, including owing to the 

differences in technical specifications 

that integrators may require. To switch, 

the growers likely may need to invest in 

new equipment and learn to apply 

different operational techniques due to 

different breeds, target weights and 

growout cycles. 

Live poultry dealers hold information 

on how individual poultry growers 

perform under a variety of contracts. 

The mean number of contracts for the 

live poultry dealers filing annual 

reports 131 with AMS in 2021 was 472. 

The largest live poultry dealers 

contracted with several thousand 

growers. Because live poultry dealers 

provide most of the inputs to all the 

growers in each tournament, the live 

poultry dealers have information about 

the quality of the inputs, while each 

grower can know only what he or she 

can observe. A grower almost certainly 

will not know about the inputs received 

by other growers. Live poultry dealers 

also have historical information 

concerning growers’ production and 

income under many different 

circumstances for all the growers with 

which they contract, while an 

individual grower, like most other 

producers, has information concerning 

only its own production and income. 

New growers entering the industry 

may have little or no experience from 

which to draw information for forming 

expectations for future input and 

maintenance costs or for evaluating the 

value of initial capital expenditures. 

Experienced growers entering into new 

contracts are limited to their own past 

experience to draw upon. Live poultry 

dealers have information from all their 

contractors about performance, costs, 

and expenditures. 

Compensation based on relative 

performance when growers are not in 

control of many of the inputs of 

production may create opportunities for 

live poultry dealer deception. It is also 

difficult, especially for new growers, to 

understand how compensation is likely 

to vary over time as a result of 

tournaments and other terms that may 

not currently be present in all contracts 

such as placement frequency and flock 

density. This problem of incomplete 

contracts is of particular concern due to 

the cost and lifespan of the capital 

required to be a poultry grower. 

With incomplete contracts, at least 

one party will have discretionary 

latitude to deviate from expectations.132

For example, poultry production 

contracts often do not guarantee the 

number of flocks a grower will receive 

even with long-term contracts, even 

though this is critical information for 

understanding the value of the contract 

to the grower.133 The type and 

frequency of required upgrades to 

existing equipment and housing are 

often left to the discretion of the live 

poultry dealer. 

Hold-up is a problem that occurs in 

poultry production contracts because 

the poultry grower’s outlay of the 

significant capital requirements of 

growing chickens results in specialized 

equipment and facilities with little 

value outside of growing chickens. As a 

result, growers entering the market are 

tied to growing chickens to pay off the 

financing of the capital investment. 

Growers might fear that they will be 

forced to accept unfavorable contract 

terms because they must continue 

production to pay off lenders and have 

few, if any, alternative live poultry 

dealers with which they can contract. 

This can lead to underinvestment in the 

capital necessary to grow broilers. 

Comments From the Proposed Rule and 

Changes to the Final Rule 

After consideration of public 

comments, AMS determined to adopt 

the proposed rule as a final rule with 

several modifications. In order to make 

compliance with the final rule as easy 

as possible for regulated entities, AMS 

reorganized the final rule by moving the 

new disclosures required into revised 

§ 201.102 and new § 201.104. In the 

final rule, AMS removed the proposed 

revisions to § 201.100 requiring all live 

poultry dealers to provide certain 

additional disclosures to prospective or 

current growers and placed the 

requirements in new § 201.102. AMS 

also moved the requirements from 

proposed new § 201.214 to new 

§ 201.104. This reorganization of the 

rule does not impact the recordkeeping 

requirements or costs of the final rule. 

A commenter representing the turkey 

industry noted the proposed rule was 

largely based on research into the 

broiler industry. The commenter 

asserted it would be extremely difficult 

for turkey companies to implement the 

rule due to differences between turkey 

and chicken production. Based on 

comments received to the proposed rule 

and AMS further study, AMS has 

limited the applicability of final 

§§ 201.102 and 201.104 to live poultry 

dealers engaged in the production of 

broilers. The final rule does not apply 

to live poultry dealers engaged in the 

production of turkeys, ducks, geese, and 

other domestic fowl. The proposed rule 

considered the costs and benefits to all 

live poultry dealers. This change 

reduced the number of live poultry 

dealers to whom the final rule applies 

from 89 respondents made up of live 

poultry dealers engaged in the 

production of broilers, turkeys, ducks, 

geese, and other domestic fowl under 

the proposed rule to 42 live poultry 

dealers engaged in the production of 

broilers in the final rule. Accordingly, 

this change reduced the costs and 

benefits from the proposed rule to the 

final §§ 201.102 and 201.104. Existing 

provisions of § 201.100 continue to 

apply to live poultry dealers engaged in 

the production of broilers, turkeys, 

ducks, geese, and other domestic fowl. 

The new provisions of § 201.102 and the 

new § 201.104 apply only to live poultry 

dealers engaged in the production of 

broilers. AMS made several other 

changes to the proposed rule that are 

reflected in the final rule. 

Live poultry dealers commented that 

the full cost of the proposed rule would 

likely be many times greater than 

predicted by AMS. The commenters 

asserted AMS greatly underestimated 

the costs of creating the recordkeeping 

systems needed to comply with the 

proposed rule. 

Commenters suggested that AMS 

underestimated the amount of time 

required to create and maintain 

recordkeeping systems. They also 

suggested that AMS did not adequately 

consider the IT and legal costs or the 

cost of hiring compliance officers. Some 

live poultry dealers indicated that the 

rule would promote frivolous lawsuits, 

and suggested the requirement to list 

ongoing litigation would discourage 

settlement. Some commenters also 

indicated that disclosures would 

undermine the tournament payment 

system, forcing live poultry dealers to 

adopt less efficient methods of 

compensation, which would increase 

the price of chicken and ultimately 

increase inflation. 

AMS consulted auditors and 

supervisors who are familiar with live 

poultry dealers’ records from many 


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years of experience with AMS in 

auditing live poultry dealers for 

compliance with the Act. AMS expects 

that recordkeeping systems that most 

live poultry dealers already have in 

place will enable them to gather much 

of the information in the disclosures 

from records they already have available 

to them and limit the necessity of 

developing new recordkeeping systems. 

AMS made no changes to the 

information collection requirements of 

the proposed rule based on this 

comment. 

AMS proposed to require live poultry 

dealers to make various financial 

disclosures to broiler growers, including 

a table showing ‘‘average annual gross 

payments’’ made to growers at all 

complexes owned or operated by the 

live poultry dealer for the previous 

calendar year, as well as to growers at 

the local complex. Poultry and meat 

trade associations suggested AMS 

require dealers to disclose average 

annual gross payments only for the 

grower’s local complex. These 

commenters noted that complexes in 

different geographic areas face different 

economic conditions, arguing that 

information about payments at other 

complexes would not be useful and 

would potentially confuse growers. 

Therefore, AMS removed the proposed 

requirement disclose payment 

information for all complexes owned or 

operated by the dealer. AMS maintains 

the requirement for live poultry dealers 

engaged in the production of broilers to 

disclose payment information only 

relating to the broiler grower’s local 

complex. Accordingly, this change 

reduced the information collection 

burden on live poultry dealers from the 

proposed to the final rule. 

Growers and live poultry dealers also 

requested in comments that AMS 

provide more specificity on how to 

calculate average annual gross 

payments. While the proposed rule 

provided detail on calculations, the 

commenters felt the instructions were 

not sufficiently specific to assure that 

live poultry dealers could comply and 

that broiler growers received adequate 

data on which to base business 

decisions. Therefore, AMS developed 

more detailed instructions on how to 

calculate them. The instructions are 

included in Form PSD 6100 (Live 

Poultry Dealer Disclosure Document). 

AMS added a modest amount of time to 

its cost estimates for live poultry dealers 

to review the instructions. 

Several commenters recommended 

that AMS require the disclosure of 

grower turnover data. Grower turnover 

rates relate to the general risk of 

termination and non-renewal of 

contracts with a live poultry dealer. 

This information would allow growers 

to compare the turnover rates of 

multiple live poultry dealers as a risk 

factor when making contracting 

decisions. Therefore, AMS added a 

provision of the final rule requiring live 

poultry dealers engaged in the 

production of broilers to disclose 

average annual broiler grower turnover 

rates for the previous calendar year and 

the average of the 5 previous calendar 

years at both the company level and the 

local complex level. AMS developed 

instructions for how to calculate average 

annual broiler grower turnover rates. 

The instructions are included in Form 

PSD 6100. AMS added a modest amount 

of time to its cost estimates for live 

poultry dealers to review the 

instructions and calculate grower 

turnover rates. 

Numerous commenters from the 

grower and live poultry dealer sectors 

expressed that these provisions should 

be in plain and unambiguous language 

to avoid discrepancies in interpretation 

among the various parties, regulators, 

and courts. Some commenters also 

indicated a need to ensure growers who 

are not native speakers of English can 

understand the disclosures. 

Considering the comments, AMS 

added a provision at § 201.102(g)(4) of 

the final rule to require live poultry 

dealers engaged in the production of 

broilers to make reasonable efforts 

ensure that growers are aware of their 

right to request translation assistance, 

and to assist the grower in translating 

the Disclosure Document at least 14 

calendar days before the live poultry 

dealer executes the broiler growing 

arrangement, but the grower has the 

option to waive up to 7 calendar days 

of that time period. Reasonable efforts 

include but are not limited to providing 

current contact information for 

professional translation service 

providers, trade associations with 

translator resources, relevant 

community groups, or any other person 

or organization that provides translation 

services in the broiler grower’s 

geographic area. The rule would also 

prevent a live poultry dealer from 

restricting a broiler grower or 

prospective broiler grower from 

discussing or sharing the Disclosure 

Document for purposes of translation 

with a person or organization that 

provides language translation services. 

AMS also added a provision to 

§ 201.100 preventing live poultry 

dealers from restricting growers from 

sharing the Disclosure Documents with 

legal counsel, accountants, family, 

business associates, and financial 

advisors or lenders. 

The proposed rule would have 

required live poultry dealers to provide 

growers with copies of the Disclosure 

Document and a true written copy of the 

contract 7 calendar days prior to 

executing the contract. The final rule 

changes the 7-day requirement to a 14- 

day requirement, but the broiler grower 

has the option to waive 7 calendar days 

of that time period. These changes did 

not affect the estimation of costs or 

benefits in the rule because growers 

retain the flexibility to determine the 

length of time they need to review the 

documentation. 

The proposed rule also would have 

required live poultry dealers to obtain 

the broiler grower’s or prospective 

broiler grower’s dated signature as 

evidence of receipt of the Disclosure 

Document or obtain alternative 

documentation acceptable to the 

Administrator as evidence of receipt. 

The final rule will require live poultry 

dealers to obtain the broiler grower’s or 

prospective broiler grower’s dated 

signature as evidence of receipt or 

obtain alternative documentation to 

evidence delivery and that best efforts 

were used to obtain grower receipt. 

AMS expects in either case live poultry 

dealers to engage in personal 

communications with the grower and 

the delivery of the Disclosure 

Document, resulting in comparable 

levels of effort by the live poultry 

dealer. Accordingly, these changes did 

not affect the estimation of costs or 

benefits in the rule. 

In the proposed rule, AMS did not 

specifically propose to require live 

poultry dealers to disclose their policies 

on grower payments with respect to 

increased lay-out time, diseased flocks, 

natural disasters and other depopulation 

events, feed issues or outages, or 

policies on grower appeal rights and 

processes. Multiple commenters 

suggested AMS include these 

disclosures. In the final rule, AMS 

added a provision at § 201.102(c)(4) 

requiring live poultry dealers engaged in 

the production of broilers to disclose 

policies and procedures on increased 

lay-out time; sick, diseased, or high 

early mortality flocks; natural disasters, 

weather events, or other events 

adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; other events 

potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability, 

as well as any appeal rights arising out 

of these events. AMS added a modest 

amount of time to its cost estimates for 


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live poultry dealers to comply with this 

new requirement. 

AMS proposed in § 201.100(f)(1)(i) to 

require live poultry dealers to establish, 

maintain, and enforce a governance 

framework reasonably designed to audit 

the accuracy and completeness of the 

disclosures in the Disclosure Document, 

which must include audits and testing, 

as well as reviews of an appropriate 

sampling of Disclosure Documents by 

the principal executive officer or 

officers. 

AMS determined that the requirement 

in § 201.102(f)(2) for the principal 

executive officer or officers to certify the 

governance framework and the accuracy 

of the Disclosure Document adequately 

covers the intended requirement for 

officers of this level to be focused on the 

effectiveness of the governance 

framework. AMS concluded that this 

level of detail about the audit process 

for the Disclosure Document was not 

necessary, particularly as AMS seeks to 

balance the need to ensure reliability of 

these statements with the burden on the 

principal executive officers regarding 

details of the governance process. 

Therefore, AMS removed the proposed 

requirement for audit, testing, and 

reviews of an appropriate sampling of 

Disclosure Documents by the principal 

executive officer or officers, which 

reduces the burden on regulated 

entities. 

AMS expects §§ 201.102 and 201.104 

to mitigate costs associated with 

asymmetric information by requiring 

live poultry dealers to disclose more 

and potentially valuable information to 

growers. Section 201.102 requires live 

poultry dealers engaged in the 

production of broilers to make 

disclosures before entering into new 

contracts, renewing existing contracts, 

or requiring growers to make additional 

capital investments. Section 201.104 

requires live poultry dealers engaged in 

the production of broilers to disclose 

additional information at the placement 

and settlement of each flock. 

AMS considered three alternatives to 

the final §§ 201.102 and 201.104. The 

first is ‘‘do nothing’’ or the status quo. 

All regulations under the Act would 

remain unchanged. It forms the baseline 

against which the second alternative, 

§§ 201.102 and 201.104 will be 

compared. The rule removes portions of 

the current § 201.100, which already 

requires disclosure from live poultry 

dealers, and replaces them with a more 

extensive set of disclosure requirements 

in § 201.102 that only apply to live 

poultry dealers engaged in broiler 

production. Since the cost and benefit 

analysis are compared to the cost and 

benefits status quo, costs and benefits 

estimated here reflect only cost and 

benefits associated with the new 

requirements in §§ 201.102 and 201.104. 

AMS considered a third alternative 

similar to §§ 201.102 and 201.104. The 

alternative would leave all of the 

requirements in §§ 201.102 and 201.104 

the same, but entirely exempt live 

poultry dealers engaged in broiler 

production that process less than 2 

million pounds per week. This third 

alternative would exempt smaller live 

poultry dealers, some of which might 

not have sophisticated records. 

However, since larger growers do most 

of the contracting (as quantified later in 

this analysis), most broiler growers 

would still receive the disclosures. AMS 

then estimated and compared the costs 

and benefits of the alternatives and 

selected §§ 201.102 and 201.104 as the 

preferred alternative to finalize. 

Discussion of the Benefits of the 

Regulations 

The primary purpose of the final rule 

is to make information available to 

broiler growers when that information 

would be most important in decisionmaking. Currently, most broiler 

production contracts are incomplete, 

and providing more information would 

likely lower the uncertainty the grower 

faces over their revenue and profit 

estimates. In addition, growers lack 

negotiating leverage with live poultry 

dealers to demand, among other things, 

transparency, and completeness in 

contracts. A benefit of this regulation is 

that by providing prospective growers 

and those contemplating additional 

capital investments better information 

on expected returns, growers should be 

able to make more informed business 

decisions and can more readily avoid 

entering into contracts that are not 

financially sustainable. The regulation 

still retains the rights of broiler growers 

to discuss the terms of the broiler 

growing arrangement and the Disclosure 

Document with other growers for the 

same live poultry dealer, advisors, and 

governmental agencies even if the 

broiler growing arrangement contains a 

confidentiality provision. This 

facilitates better information sharing, 

decision making, and risk management. 

By alleviating market failures, 

disclosures may help the market for 

grower services function better and help 

growers benefit from competition in the 

market for their services. 

Better information on live poultry 

dealer commitments should reduce 

hold-up concerns that may stifle 

investment by growers. Better 

information and transparency on 

placements and settlements could 

reduce grower concerns over live 

poultry dealer manipulation of inputs 

and reduces the potential for deception 

or fraud, and the high degree of control 

and influence that the live poultry 

dealer has over many, if not most, of the 

critical inputs that will determine the 

business success of the grower’s 

operation. 

Alternatively, the placement and 

settlement information could provide 

broiler growers with concrete 

information they can use to support, 

individually or collectively, any 

grievances they might have with a 

particular live poultry dealer. At the 

same time, this regulation provides 

growers a measure of protection against 

risks of retaliation or discrimination that 

may arise from disputes with live 

poultry dealers during the course of the 

broiler growing arrangement. 

Section 201.102 lays out the 

information that a live poultry dealer is 

required to provide to broiler growers 

contemplating a relationship with that 

live poultry dealer. The disclosure of 

information is required whenever a live 

poultry dealer seeks to renew, revise, or 

replace an existing broiler growing 

arrangement. In addition, such 

disclosure is required for any new 

contract as well as whenever a live 

poultry dealer is requiring an original 

capital investment or a change to 

existing housing specifications that 

require an additional capital 

investment. These are the times when 

the information will be most useful in 

informing broiler growers of the 

potential implications of entering into a 

contract with the live poultry dealer or 

contemplating additional investment in 

capital stock. This information allows 

potential growers to make more 

informed and financially sustainable 

business decisions. Inaccurate 

information provided in disclosure to 

growers, and other bait-and-switch 

tactics, such as making a material policy 

change but not through a new or revised 

contract, would be a deceptive practice 

and would constitute a violation of this 

section and § 202(a). 

When a live poultry dealer requires a 

broiler grower to make a capital 

investment, the dealer is required to 

provide the grower with the capital 

specifications they are required to meet 

and with a letter of intent sufficient to 

seek financing, as well as a full 

disclosure of the terms of the agreement. 

This information allows more informed 

investment decisions and help potential 

lenders accurately assess risk. 

The Disclosure Document provides 

information on the length of the 

contract, number of guaranteed 

placements, stocking density, and 

notification of certain risks inherent in 


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134For instance, the analysis of MacDonald 

(2014), MacDonald and Key (2014), and Vukina and 

Leegomanchai (2006) (Op. Cit.) relies on data from 

grower surveys. Knoeber and Thurman (1995) relies 

on contract settlement data from a single integrator. 

135A risk averse grower prefers revenue streams 

with low uncertainty to revenue streams with high 

uncertainty when both have the same mean return. 

136 In the context of this analysis, ‘‘nonquantified’’ is defined to include measures which 

are quantitative in principle but whose value 

cannot be estimated at present. 

the agreement. All this information 

helps to evaluate the longer-term 

viability of the investment and reduce 

hold-up fears. 

Grower awareness of minimum flock 

placements and minimum stocking 

densities enables growers to more 

accurately estimate the risks and returns 

associated with their operations 

including debt management, cash flow, 

and other risks. It may enable growers, 

as well as financial institutions, to better 

estimate and manage risk, potentially 

including the acquisition of external 

insurance and risk management 

products. 

In addition to information about the 

specific terms of the contract, 

information is provided to inform 

growers about the live poultry dealer’s 

financial history and history of 

grievances with growers with whom 

they have contracted. This information 

also improves growers’ ability to 

evaluate their decisions and the 

potential for hold-up related concerns. 

The Disclosure Document includes 

information on the level and 

distribution of payments made to broiler 

growers under contract to the live 

poultry dealer. It describes past and 

expected future annual returns for 

similarly situated growers based on the 

complex and the live poultry dealer’s 

other complexes with the same housing 

specifications. It presents returns at 

various levels of performance, as not all 

growers perform equally relative to the 

fixed cost of entry, making it easier for 

potential growers to estimate their 

revenues from the contract. The 

Disclosure Document also provides 

insights into the variability of cash flow 

within any given year to enable the 

grower to improve business decisionmaking and manage risk. The increased 

information in the Disclosure Document 

on the expected levels and distributions 

of payments has the added benefit of 

lowering the uncertainty of revenue 

streams for contract broiler growers. 

The reliability of these disclosures 

would be reinforced by a governance 

framework and anti-fraud protections. 

In presenting this information to 

growers, the Disclosure Document 

reduces information asymmetry and the 

risk of fraud and deception. As a result, 

prospective growers and those 

contemplating additional capital 

investments have more confidence in 

the integrity of the information and 

consequently in their ability to make 

sound decisions. 

A live poultry dealer is required to 

provide the Disclosure Document to 

growers prior to their entering into an 

agreement to allow time to discuss the 

terms of the agreement with advisors, 

lawyers, business associates, bankers, 

USDA, or other extension organizations 

to obtain assistance in evaluating the 

agreement. 

Section 201.104 requires additional 

ongoing disclosure of information 

related to broiler grower ranking pay 

systems (‘‘tournaments’’). This 

information is focused on the actual 

distribution of inputs to growers at the 

time of placements and the outcomes of 

the ranking system. Some of this 

information improves growers’ ability to 

manage the flocks under their care, 

while other information helps growers 

to evaluate the factors affecting the 

outcome of the ranking system. 

Lack of transparency in the 

tournament calculations has led to risks 

by growers relating to the potential for 

fraud and deception. These include 

grower inability to verify the accuracy of 

payments, to measure and manage risks, 

and to detect possible discrimination or 

retaliation for disputes arising under the 

broiler growing arrangement. The 

provision of additional transparency 

around tournament systems in this 

regulation is designed to address those 

risks. Provision of information regarding 

consistency of inputs (both at the time 

of placement and at the time of 

settlement), and any adjustments to 

methods or formulas, will foster more 

transparent, accurate, reliable, and 

widely accepted tournaments, and 

greater ability to monitor and hold live 

poultry dealers accountable for 

divergences from high standards of 

market integrity. 

Broiler growers who participate in 

numerous tournaments over time will 

benefit from the added information they 

receive at the time of placement and 

settlement, as they will gain experience 

and knowledge useful in maximizing 

their growout performance. Because live 

poultry dealer-provided inputs may 

vary from flock-to-flock, growers may 

enhance their knowledge and improve 

management practices and skills with 

access to input distribution information, 

particularly at the stage when the input 

is provided. The increased information 

in the settlement and placement 

disclosures will allow growers to assess 

the impacts of input variability on 

revenues over time, which will also 

serve to lower the uncertainty of 

revenue streams. Growers armed with 

this information may be better able to 

efficiently allocate resources, reduce 

uncertainty of revenue streams, and 

maximize their individual profitability. 

Confidentiality restrictions have 

historically prevented broiler growers 

from releasing details of contract pay 

and performance, thus limiting the 

availability of comprehensive data with 

which to consider the effects of 

alternative regulatory and institutional 

structures on market performance.134

Subsequently, the literature on these 

topics is insufficient to allow AMS to 

fully estimate the magnitude of the 

inefficiencies corrected by the rule, nor 

the degree to which the disclosure 

requirements and additional grower 

protections will address them. Though 

AMS is unable to completely quantify 

the benefits of the regulations, this 

analysis explains numerous benefits 

derived from increased information, 

reduced information asymmetries, and 

reduction in risk of deception by live 

poultry dealers. Each of the disclosures 

required under §§ 201.102 and 201.104 

of the rule provides information that 

will be useful to growers in making 

more informed decisions and reducing 

concerns resulting from lack of access to 

information. 

AMS estimated the industry benefits 

in two parts, one quantifiable and the 

other non-quantifiable. For the 

quantifiable part, AMS will provide a 

minimum value of the benefit to broiler 

growers from the additional information 

in the disclosures required under 

§§ 201.102 and 201.104 and will refer to 

this minimum benefit as Gmin. 

The quantifiable minimum benefit of 

the financial, placement, and settlement 

disclosures, Gmin, arises from the 

additional information available to 

growers that serves to lower the 

uncertainty in revenue streams of 

contract growers. Lower uncertainty in 

revenue streams results in a reduction 

in revenue risks to growers. According 

to economic principles, a risk averse 

grower will benefit economically from a 

reduction in revenue risk.135 AMS 

quantifies the benefit to growers from 

the reduction in revenue risk by 

estimating the Risk Premium (RP) to 

contract broiler growers from reducing 

variability of their net revenues from the 

disclosures. AMS will then use RP as 

Gmin, the quantifiable minimum benefit 

of the disclosures. 

However, §§ 201.102 and 201.104 

have additional, other non-quantified 

benefits to growers and live poultry 

dealers, referred to as BO.136 These other 

benefits arise from a reduction in risk of 

retaliation by allowing growers to share 


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137All live poultry dealers are required to 

annually file PSD form 3002 ‘‘Annual Report of 

Live Poultry Dealers,’’ OMB control number 0581– 

0308. The annual report form is available to public 

on the internet at https://www.ams.usda.gov/sites/ 

default/files/media/PSP3002.pdf. 

138Section 401 of the Act and 9 CFR 201.94, 

201.95, and 203.4. 

information even if the growing 

arrangement contains a confidentiality 

provision and reducing the potential for 

fraud and deception by live poultry 

dealers by providing better, more 

accurate, and verifiable information to 

growers. These other benefits may lead 

to an improved allocation of capital and 

labor resources (such as increased 

capital investment through the 

reduction in perceived hold-up risk, and 

more informed decisions on whether 

and with whom to enter into a growing 

arrangement), leading to improved 

efficiencies and an improved allocation 

of resources for broiler growers and live 

poultry dealers. 

AMS refers to the total benefits to the 

industry as BT, which is the sum of the 

quantified Gmin, and the non-quantified 

BO, benefits or, BT = Gmin + BO. AMS is 

not able to fully quantify the total 

benefits, BT, from improved grower 

information, more informed decisionmaking, reduced revenue uncertainty, 

grower risk reductions, and an 

improved allocation of resources. The 

benefits AMS was able to quantify 

exceed the costs AMS was able to 

quantify. 

AMS expects that the effects on the 

industry from the final rules will be 

very small in relation to the total value 

of industry production. In other words, 

AMS expects the impacts on total 

industry supply to be immeasurably 

small, leading to immeasurably small 

indirect effects on industry supply and 

demand, including price and quantity 

effects. 

Estimation of Costs and Benefits of the 

Regulations 

AMS estimated costs and benefits for 

two alternatives. The first is the 

§§ 201.102 and 201.104, which is the 

preferred alternative. The second 

alternative is the same as § 201.102 and 

201.104 with a complete exemption for 

live poultry dealers engaged in broiler 

production that process fewer than 2 

million pounds per week. Both are 

compared against a baseline of status 

quo, which has no costs or benefits. 

The quantified costs of §§ 201.102 and 

201.104 primarily consist of the time 

required to gather the information and 

distribute it among the broiler growers. 

These costs of the rule will fall on live 

poultry dealers as they collect and 

disseminate the required information, 

and on broiler growers based on the 

value of the time they put into 

reviewing the disclosures. Though 

broiler growers are expected to incur 

costs in reviewing the information, they 

would be the primary beneficiaries of 

the information, which would be 

reflected in their ability to make more 

informed decisions. The broiler growers 

must review the information in order to 

realize the benefits. This may result in 

a more efficient allocation of capital to 

the broiler growing industry. 

There were 42 live poultry dealers to 

which the rule would apply that filed 

annual reports 137 with AMS, and their 

reports indicate that they had 19,808 

contracts with 16,524 broiler growers 

during their fiscal year 2021. 

AMS expects the total costs and 

benefits would be very small relative to 

the size of the market. Chicken sales in 

the U.S. for 2019 were approximately 

$58.6 billion. The total quantified costs 

of §§ 201.102 and 201.104 are estimated 

to be greatest in the first year at $3.4 

million, or 0.006 percent (six 

thousandths of one percent) of revenues. 

Although an increase in cost of sixthousandths of a percent of sales could 

reduce supply, the reduction would be 

extremely small and would not 

measurably alter broiler supply. 

Provisions of final § 201.202 and 

201.204 require only disclosures to 

growers. Neither requires any changes 

in the way live poultry dealers or broiler 

growers produce or process broilers. 

Given the nature of the rule, AMS 

expects that neither live poultry dealers 

nor broiler growers would measurably 

change any production practices that 

would impact the overall supply of 

broilers. 

Expected quantified costs are 

estimated as the value of the time 

required to produce and distribute the 

disclosures required by §§ 201.102 and 

201.104 as well as the time required to 

create and maintain any necessary 

additional records. AMS’s experience in 

reviewing live poultry dealers’ records 

indicates that most live poultry dealers 

already keep nearly all of the required 

records. 

Final § 201.102 requires live poultry 

dealers disclose information to broiler 

growers concerning the growout 

contract, capital investments, grower 

earnings, recent litigation, recent 

bankruptcies, and live poultry dealers’ 

policies concerning events such as 

disasters or feed outages that might 

occur during the growout period. The 

disclosures will require live poultry 

dealers to retain records, but AMS 

experience in reviewing live poultry 

dealers’ records indicates that most live 

poultry dealers already keep nearly all 

of the necessary records. 

Paragraph (a) of final § 201.102 

requires live poultry dealers to provide 

a true copy of a new contract as well as 

a Disclosure Document that is defined 

in the remaining paragraphs. When the 

new contract is associated with new 

housing or changes in the housing live 

poultry dealers are also required to 

provide a letter of intent that growers 

can present to lenders. Paragraph (b) of 

the final § 201.102 requires live poultry 

dealers to disclose certain terms of the 

contract including the live poultry 

dealer’s contact information, length of 

the term of the agreement offered, 

annual minimum number of 

placements, and minimum stocking 

density. AMS is aware that live poultry 

dealers already keep copies of contracts 

because AMS commonly reviews 

growout contracts on letters of intent 

during live poultry dealer compliance 

reviews. 

Paragraph (c) of final § 201.102 

requires live poultry dealers to disclose 

a summary of litigation and 

bankruptcies in the last 5 years. 

Although AMS does not commonly 

review records of past bankruptcies or 

litigation in live poultry dealer 

compliance reviews, courts keep records 

of litigation and bankruptcies that 

would enable live poultry dealers to 

disclose the required summaries. 

Paragraph (c) also requires live poultry 

dealers to disclose their policies 

concerning a number of events that 

could occur during the term of the 

contract, including increased layout 

times; high mortality birds, natural 

disasters, weather events, or other 

events adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; depopulation of 

birds; feed outages; grower complaints 

concerning feed. In the event that the 

live poultry has no policy, paragraph (c) 

requires the live poultry dealer to 

disclose that it has no policy. AMS 

commonly reviews the types of policies 

in paragraph (c) of final § 201.102, and 

AMS expects that live poultry dealers 

that have the relevant policies will have 

records of them. 

Paragraph (d) of final § 201.102 

requires records of annual turnover rates 

for the last 5 years and annual gross 

payments per square foot by complex 

and housing type. Current regulations 

under the Act generally require live 

poultry dealers to retain payment 

records for at least 2 years,138 and as 

noted below the final rule requires 

payment records under final 

§ 201.104(a) be retained for 5 years. 

Some disclosures required under final 


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139AMS routinely conducts reviews of live 

poultry dealers for compliance with the Packers and 

Stockyards Act and regulations. Some of the 

applicable regulations in live poultry compliance 

reviews include § 201.43 Payment and accounting 

for livestock and live poultry; § 201.49 

Requirements regarding scale tickets evidencing 

weighing of livestock, live poultry, and feed; 

§ 201.71 Scales and or Electronic Evaluation 

Devices or Systems; accurate weights and measures, 

repairs, adjustments or replacements after 

inspection; § 201.73 Scale operators to be qualified; 

§ 201.82 Care and promptness in weighing and 

handling livestock and live poultry; § 201.95 

Inspection of business records and facilities; 

§ 201.100 Records to be furnished poultry growers 

and sellers; § 201.108–1 Instructions for weighing 

live poultry or feed; § 201.211 Undue or 

unreasonable preferences or advantages; § 201.215 

Suspension of delivery of birds; § 201.216 

Additional capital investments criteria; and 

§ 201.217 Reasonable period of time to remedy a 

breach of contract among others. 

140See U.S. Bureau of Labor Statistics, May 2021 

National Occupational Employment and Wage 

Estimates, May 2021. https://www.bls.gov/oes/ 

current/oes_nat.htm#00-0000. 

§ 201.102 will inherently necessitate 

that the companies keep records 

sufficient to produce and substantiate 

the disclosure. For example, the dealer 

would need to keep the last 5 years of 

litigation records to support a disclosure 

about its litigation history. As a result, 

some live poultry growers may need to 

keep payment records for a longer 

period of time than they do today, but 

AMS experience indicates that most live 

poultry dealers already keep the records 

for a longer period. Live poultry dealers 

keep lists of the growers under contract, 

and AMS reviews indicate that most 

keep list of growers for at least 5 years. 

Paragraph (f) of § 201.102 requires live 

poultry dealers to create a governance 

framework to ensure the accuracy of the 

disclosure documents and paragraph (g) 

requires live poultry dealers to keep a 

receipt from growers indicating that the 

grower received the disclosure 

document. The records required in 

paragraphs (f) and (g) would be records 

that live poultry dealers currently do 

not keep. Live poultry dealers will need 

to develop new recordkeeping systems 

to retain them. 

Paragraph (a) of final § 201.104 

requires live poultry dealers to retain 

payment records for 5 years. Current 

regulations require live poultry dealers 

to retain records for 2 years. Some live 

poultry growers may need to keep 

payment records for a longer period of 

time as result of the rule, but AMS 

experience indicates that most live 

poultry dealers already keep the records 

for a longer period. The remainder of 

final § 201.104 requires live poultry 

dealers to disclose information to 

poultry growers about flocks placed 

with each grower, including when the 

flocks are placed and when the live 

poultry dealers make payment for 

raising the flocks. 

Paragraph (b) requires live poultry 

dealers to make disclosures when flocks 

are placed with the broiler grower. 

Paragraph (c) requires live poultry 

dealers to make disclosures when the 

live poultry dealer makes payment to 

the broiler grower. Paragraph (b) and (c) 

requires the live poultry dealer to retain 

records for each flock of the stocking 

density, ratios of the breeds delivered in 

the flock, ratios of each sex in the lot if 

the live poultry dealers has determined 

it, age of the breeder flock, known 

health impairments in the breeder flock, 

and adjustments that live poultry 

dealers make to a grower’s payment 

based on any of the disclosed 

information. Paragraph (c) also requires 

live poultry dealers to disclose the 

number feed outages that lasted more 

than twelve hours at each grower’s 

facility. 

Paragraphs (b) and (c) require live 

poultry dealers to maintain the same 

type of records that AMS commonly 

requests from live poultry dealers 

during compliance reviews,139 and are 

records that most live poultry dealers 

already retain. An exception would be 

live poultry dealers that purchase chicks 

from outside hatcheries, as they may not 

already be retaining records concerning 

the breeder flock. The records would be 

available from the hatchery, but some 

live poultry dealers may have to keep 

records that they do not otherwise keep. 

Although live poultry dealers will 

need to keep considerable amounts of 

records to comply with the disclosures 

required in final §§ 201.102 and 

201.104, live poultry dealers already 

retain most of the records necessary. 

Live poultry dealers will need to create 

relatively few new records beyond those 

that they already retain, and AMS 

expects that additional costs to live 

poultry dealers associated with creating 

and maintaining records will be 

relatively small. 

AMS also estimates the amount of 

time that broiler growers would take to 

review the information provided to 

them by live poultry dealers. Estimates 

of the amount of time required by live 

poultry dealers to create and distribute 

the disclosures and for growers to 

review the information were provided 

by AMS subject matter experts. These 

experts were supervisors and auditors 

with many years of experience in 

working with growers and with auditing 

live poultry dealers for compliance with 

the Act. Estimates for the value of the 

time are U.S. Department of Labor 

(DOL) Bureau of Labor Statistics (BLS) 

Occupational Employment and Wage 

Statistics (OEWS) released May 2022.140

Occupations used in the estimation 

were Executive Secretaries and 

Executive Administrative Assistants 

(occupation code 43–6011) for live 

poultry dealers’ administrative 

assistants, General and Operations 

Managers (Occupation code 11–1021) 

for live poultry dealers’ managers, 

Lawyers (occupation code 23–1011) for 

attorneys for live poultry dealers and for 

growers, Agricultural Workers 

(occupation code 45–2090), Computer 

and Information Systems Managers 

(occupation code 11–3021), Software 

and Web Developers, Programmers, and 

Testers (occupation code 15–1250) for 

information technology managers, 

Accountants and Auditors (occupation 

code 13–2011) for accountants for live 

poultry dealers, Bookkeeping, 

Accounting, and Auditing Clerks 

(occupation code 43–3031) for 

bookkeepers for live poultry dealers, 

and Management Occupations 

(occupation code 11–0000) for poultry 

growers. 

AMS marked up the wages 41.82 

percent to account for benefits. This 

results in a cost per hour of $41.71 

($29.41 × 1.4182) for live poultry 

dealers’ administrative assistants, 

$84.27 ($59.42 × 1.4182) for live poultry 

dealers’ managers, $131.38 ($92.64 × 

1.4182) for attorneys for live poultry 

dealers and for growers, $92.91 ($65.51 

× 1.4182) for information technology 

managers, $56.27 ($39.68 × 1.4182) for 

information technology staff, $49.98 

($35.24 × 1.4182) for accountants for 

live poultry dealers, $27.44 ($19.35 × 

1.4182) for bookkeepers for live poultry 

dealers, and $60.70 ($42.80 × 1.4182) for 

poultry growers. 

Costs of § 201.102 

Section 201.102 lists several new 

disclosure and recordkeeping 

requirements for live poultry dealers 

engaged in the production of broilers. 

These new and extended requirements 

are in additional to those already 

included in current § 201.100 that 

would create additional costs above the 

status quo. 

The new provisions in § 201.102 

require large live poultry dealers to 

disclose a true written copy of the 

growing agreement and a new 

Disclosure Document any time a live 

poultry dealer seeks to renew, revise, or 

replace an existing broiler growing 

arrangement that does not contemplate 

modifications to the existing housing 

specifications. Small live poultry 

dealers that process less than 2 million 

pounds of broilers per week are 

excluded from this disclosure 

requirement. Before a live poultry dealer 

enters a broiler growing arrangement 

that would require an original capital 


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141Average hourly wage rates used to estimate 

dealer costs include a 41.82% markup for benefits 

and are as follows: Management—$93.20, Legal— 

$113.80, Administrative—$39.69, and Information 

Technology—$82.50. 

142The one-time set-up costs are not equal to the 

first-year costs of § 201.102 because the first-year 

costs include the one-time set-up costs and the 

ongoing costs that would be incurred in the first 

year as contracts are renewed, revised, or 

originated. 

143Live poultry dealers processing an average of 

more than 2,000,000 pounds of broiler per week, 

reported a combined 19,417 broiler contracts in 

their fiscal year 2021 annual reports to AMS. All 

live poultry dealers are required to annually file 

PSD form 3002 ‘‘Annual Report of Live Poultry 

Dealers,’’ OMB control number 0581–0308. The 

annual report form is available to public on the 

internet at https://www.ams.usda.gov/sites/default/ 

files/media/PSP3002.pdf. 

144 1 hour to review each disclosure × $60.70 per 

hour × 19,417 contracts × 74.71 percent of the 

contracts renewed in the first year = $880,541. 

145 1/12 hour to review each disclosure × $60.70 

per hour × 19,417 contracts × 74.71 percent of the 

contracts renewed in the first year = $73,378. 

146 1 hour to review each disclosure × $60.70 per 

hour × 19,417 contracts × 5 percent of the contracts 

renewed per year = $58,931 per year. 

147Live poultry dealers reported a combined total 

of 19,808 contracts for their fiscal year 2021. 

Smaller live poultry dealers would not be exempt 

from reporting requirements in § 201.102(a)(2) or 

(3). 

148 1 hour to review each disclosure × $60.70 per 

hour × 19,808 contracts × 5 percent of growers that 

are new entrants = $60,117. 

investment or requires modifications to 

existing housing, both large and small 

live poultry dealers must provide a copy 

of the broiler growing agreement, the 

housing specifications, a letter of intent, 

and the new Disclosure Document. 

The Disclosure Document requires 

live poultry dealers to disclose 

summaries of litigation over the prior 

five years with any broiler growers, 

bankruptcy filings, and the live poultry 

dealer’s policy regarding a grower’s sale 

of the farm or assignment of the 

contract. 

Live poultry dealers are required to 

disclose growers’ variable costs if it 

collects the information. Live poultry 

dealers are required to establish, 

maintain, and enforce a governance 

framework that is reasonably designed 

to audit the information to ensure 

accuracy, ensure compliance with the 

Act, and obtain and file signed receipts 

certifying that the live poultry dealer 

provided the required Disclosure 

Document. 

Section 201.102 requires live poultry 

dealers to include a statement in the 

disclosure document describing existing 

policies and procedures, as well as any 

appeal rights arising from increased layout time; sick, diseased, and high early 

mortality flocks; natural disasters, 

weather events, or other events 

adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; other events 

potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability. 

If no policy and procedures exist, the 

live poultry dealer will acknowledge 

‘‘no policy exists’’. 

The Disclosure Document requires 

specific financial disclosures to broiler 

growers. The first required disclosure is 

a set of tables showing average annual 

gross payments in U.S. dollars per farm 

facility square foot in each quintile or 

mean and standard deviation to broiler 

growers for each of the 5 previous years, 

organized by housing specification at 

each complex. Based on comments 

received to the proposed rule, AMS has 

provided instructions in the final rule 

for calculating average annual gross 

payments in each quintile or mean and 

standard deviation. The second required 

disclosure is a table showing the average 

annual broiler grower turnover rates for 

the previous calendar year and the 

average of the 5 previous calendar years 

at a company level and at a local 

complex level. 

AMS estimates the aggregate one-time 

costs of setting up the Disclosure 

Document will require 4,128 

management hours, 1,512 legal hours, 

1,016 administrative hours, and 1,079 

information technology hours costing 

$689,000 in the first year for live poultry 

dealers to initially review the regulation 

and set up the Disclosure 

Document.141 142 A more detailed 

explanation of the one-time first-year 

costs associated with § 201.102 is in 

Table 1 in Appendix 1. 

AMS expects the ongoing costs of 

updating and distributing the Disclosure 

Document to growers renewing or 

revising existing contracts, new growers 

entering into contracts, existing growers 

required to make additional capital 

investments to require in aggregate 

2,061 management hours, 273 legal 

hours, 836 administrative hours, and 

805 information technology hours to 

produce and distribute to growers the 

gross payment disclosure information 

annually for an aggregate annual cost of 

$319,000 to live poultry dealers. AMS 

expects the total cost of producing the 

annual gross payment disclosure 

information to consist of $689,000 in the 

first year to set up the systems and 

controls, plus $319,000 in costs the first 

year and annually thereafter to compile, 

distribute, and maintain the disclosure 

data and documents. Thus, the first-year 

aggregate total costs of § 201.102 to live 

poultry dealers are expected to be $1.0 

million and then $319,000 annually on 

an ongoing basis. A more detailed 

explanation of the ongoing costs 

associated with § 201.102 is in Table 2 

in Appendix 1. 

With the exception of signing a 

receipt—itself not mandatory—the rule 

does not impose any requirement on 

broiler growers to review the 

information provided by live poultry 

dealers. However, to benefit from the 

Disclosure Document, growers will need 

to review the information provided. 

According to AMS subject matter 

experts, broiler growers will spend the 

most time on their first review of the 

Disclosure Document in order to 

understand the information and then 

spend less time reviewing subsequent 

disclosures. For § 201.102 (a)(1), AMS 

expects that growers will take about one 

hour to review the documents each time 

documents are disclosed to them in the 

first year. Live poultry dealers 

processing fewer than an average of 2 

million pounds of broilers weekly will 

be exempt from the reporting 

requirements, but large live poultry 

dealers are required to provide 

disclosures to growers for each of 

19,417 143 contracts that come up for 

renewal in the first year. AMS expects 

that 74.71 percent of the contracts will 

require renewal in the first year. This 

includes all flock-to-flock contract, oneyear contracts, and the portion of the 

longer-term contracts that will expire in 

the first year. At an hourly wage of 

$60.70 AMS expects the requirements 

associated with § 201.102 (a)(1) will cost 

about $881,000 144 in the aggregate in 

the first year. After the first year, as 

broiler growers get familiar with the 

disclosures, AMS expects growers to 

spend less time reviewing the 

documents. AMS expects growers to 

take about five minutes reviewing each 

Disclosure Document for an aggregate 

cost of $73,000 145 per year. 

For the remaining contracts that will 

not be renewed in the first year, AMS 

expects that 5 percent of the contracts 

will be renewed in each of the next five 

years for a yearly cost of $59,000.146

Section 201.102 (a)(2) and (3) will 

only apply to broiler growers that are 

new entrants requiring an original 

capital investment and to broiler 

growers making significant capital 

improvements. AMS expects that each 

of these groups of growers will account 

for 5 percent of the 20,000 147 contracts 

live poultry dealers reported in their 

annual reports to AMS. If growers 

require one hour at $60.70 per hour, 

growers’ aggregate costs will be 

$60,000 148 for reviewing documents 

required in § 201.102(a)(2) and an 


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149 1 hour to review each disclosure × $60.70 per 

hour × 19,808 contracts × 5 percent of growers that 

require significant housing upgrades = $60,117. 

150The average hourly wage rate used to estimate 

broiler grower costs includes a 41.56% markup for 

benefits and is as follows: Management—$70.94. 

151USDA, NASS. 2017 Census of Agriculture: 

United States Summary and State Data, (April 

2019). 

152 IT staff will be required to modify integrator 

information systems to compile information from 

past settlements to calculate the information 

required to be disclosed to growers. 

153 1/6 hours × $60.70 per hour × 16,524 broiler 

growers × 80 percent of broilers raised in 

tournament systems = $133,731. 

154 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 3.5 additional flocks in the first year × 

80 percent of broilers raised in tournament systems 

= $234,029. 

155 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 4.5 flocks per year × 80 percent of broilers 

raised in tournament systems = $300,894 per year. 

156 1/6 hours × $60.70 per hour × 16,524 broiler 

growers × 80 percent of broilers raised in 

tournament systems = $133,731. 

157 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 3.5 additional flocks in the first year × 

80 percent of broilers raised in tournament systems 

= $234,029. 

158 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 4.5 flocks per year × 80 percent of broilers 

raised in tournament systems = $300,894 per year. 

additional $60,000 149 for reviewing 

documents required in § 201.102(a)(3) in 

the first year and in each successive 

year. 

AMS estimates growers’ aggregate 

costs for reviewing and acknowledging 

receipt of disclosures associated with 

§ 201.102 to be $1.2 million in the 

initial year, $253,000 through year five, 

and then $194,000 in each succeeding 

year.150 The costs will decline after year 

five because AMS expects that all 

contracts will have been renewed by the 

end of year five and that all growers 

would have reviewed the Disclosure 

Document at least one time by year six. 

The Agricultural Census reports that 

there were 16,524 contract broiler 

growers in the United States in 2017.151

The ten-year total costs of § 201.102 to 

all 42 of the affected live poultry dealers 

are estimated to be $3.9 million and the 

present value (PV) of the ten-year total 

costs to be $3.4 million discounted at a 

3 percent rate and $2.9 million at a 7 

percent rate. The aggregate annualized 

costs of the PV of ten-year costs to live 

poultry dealers discounted at a 3 

percent rate are expected to be $398,000 

and $411,000 discounted at a 7 percent 

rate. 

The ten-year aggregate total costs of 

§ 201.102 to broiler growers are 

estimated to be $3.2 million and the 

present value of the ten-year total costs 

to be $2.8 million discounted at a 3 

percent rate and $2.5 million at a 7 

percent rate. The annualized costs of the 

PV of ten-year costs to broiler growers 

discounted at a 3 percent rate are 

expected to be $331,000 and $351,000 

discounted at a 7 percent rate. 

The ten-year aggregate total costs of 

§ 201.102 to live poultry dealers and 

broiler growers are estimated to be $7 

million. The present value of the tenyear total costs are estimated to be $6.2 

million discounted at a 3 percent rate 

and $5.4 million at a 7 percent rate. The 

annualized costs of the PV of ten-year 

costs to live poultry dealers and broiler 

growers discounted at a 3 percent rate 

are expected to be $728,000 and 

$762,000 discounted at a 7 percent rate. 

Costs of § 201.104 

Disclosures that are required in 

§ 201.104 are associated with poultry 

grower ranking systems. At the time of 

broiler placement, § 201.104 requires 

live poultry dealers to disclose 

information about inputs, such as 

stocking density, breed and breeder 

flock information for each flock placed 

with a grower within 24 hours of flock 

placement. At the time of settlement, it 

requires the live poultry dealer to 

disclose information about the housing 

specifications for each grower grouped 

or ranked during the specified period 

and the distribution of inputs to each 

grower in each tournament for each 

flock settled in the tournament system. 

AMS estimates that the live poultry 

dealers’ one-time aggregate costs of 

reviewing the regulation and developing 

the placement and settlement disclosure 

documents will require 630 

management hours, 462 administrative 

hours, and 1,764 information 

technology hours costing $236,000 in 

the first year to initially set up the 

disclosure documents required by 

§ 201.104.152 A more detailed 

explanation of the one-time first-year 

costs associated with § 201.104 is in 

Table 3 in Appendix 1. 

AMS expects the § 201.104 disclosure 

documents will require an additional 

2,640 hours divided evenly among 

management, administrative, and 

information technology staff to produce, 

distribute, and maintain the disclosure 

documents each year on an ongoing 

basis for an aggregate annual cost of 

$193,000. A more detailed explanation 

of the ongoing costs associated with 

§ 201.104 is in Table 4 in Appendix 1. 

AMS expects the aggregate cost of 

producing the § 201.104 pre-flock 

placement and settlement disclosure 

documents to consist of $236,000, in the 

first year to review the regulation and to 

set up the systems and controls, plus 

$193,000 in costs the first year and 

annually thereafter to compile, 

distribute, and maintain the placement 

and settlement disclosure documents. 

Thus, the aggregate first-year total costs 

to live poultry dealers of § 201.104 are 

expected to be $429,000 and then 

$193,000 annually on an ongoing basis. 

Section § 201.104(b) concerns 

disclosures of inputs placed with broiler 

growers in tournament settlement 

systems. Live poultry dealers will be 

required to disclose information about 

inputs, such as feed, medication, chicks, 

etc. for each flock placed with a grower. 

AMS expects that, the first time a 

grower receives the disclosure, he or she 

will require about 10 minutes to review 

each of the disclosure’s documents. At 

$60.70 per hour, the first disclosure 

document will cost growers 

$134,000.153 After reviewing the 

documents the first time, AMS expects 

that growers will need only 5 minutes 

to review successive disclosures. 

Because growers average 4.5 flocks per 

year, AMS expects that reviewing the 

disclosure documents concerning inputs 

will cost in the aggregate an additional 

$234,000 154 for the remaining 3.5 flocks 

in the first year and $301,000 155 for the 

4.5 flocks in each successive year. 

Section 201.104(c) concerns 

disclosures about the group of growers 

in settlement groups in tournament 

settlement systems. Live poultry dealers 

are required to disclose information 

about growers in each tournament for 

each flock settled in tournament system. 

AMS expects that the cost to growers 

associated with § 201.104(c) will be 

identical to the costs of reviewing the 

disclosures required in § 201.104(b). 

Aggregate costs would be $134,000 156

for the disclosures reviewed. AMS 

expects that reviewing the disclosure 

documents will cost an additional 

$234,000 157 for the remaining 3.5 flocks 

in the first year and $301,000 158 for the 

4.5 flocks in each successive year. 

AMS estimates growers’ aggregate 

costs for reviewing disclosures 

associated with § 201.104 to be $736,000 

in the first year and $602,000 in each 

subsequent year. AMS expects that 

broiler growers will spend the most time 

on their first review of the placement 

and settlement disclosures in order to 

understand the information, with less 

time for each subsequent review. 

The ten-year aggregate total costs of 

§ 201.104 to live poultry dealers are 

estimated to be $2.2 million and the 

present value of the ten-year total costs 

to be $1.9 million discounted at a 3 

percent rate and $1.6 million at a 7 

percent rate. The annualized costs of the 

PV of ten-year costs to live poultry 

dealers discounted at a 3 percent rate 

are expected to be $219,000 and 

$224,000 discounted at a 7 percent rate. 


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159Allen, B. 1990. ‘‘Information as an Economic 

Commodity,’’ American Economic Review, Vol. 

80:2, pages 268–273. 160Acemoglu, D. and J Piskchke. 1998. ‘‘Why do 

Firms Train? Theory and Evidence,’’ Quarterly 

Journal of Economics Vol 113(1):79–119. 161See Perloff, J., and G. Rausser. 1983. ‘‘The 

Effect of Asymmetrically Held Information and 

Market Power in Agricultural Markets’’, American 

Journal of Agricultural Economics Vol 65(2): 366– 

372. 

The ten-year aggregated total costs of 

§ 201.104 to broiler growers are 

estimated to be $6.2 million and the 

present value of the ten-year total costs 

to be $5.3 million discounted at a 3 

percent rate and $4.4 million at a 7 

percent rate. The annualized costs of the 

PV of ten-year costs to broiler growers 

discounted at a 3 percent rate are 

expected to be $617,000 and $620,000 

discounted at a 7 percent rate. 

The costs from § 201.104 are higher 

for broiler growers than for live poultry 

dealers. There are two reasons for this. 

First, the rule only affects 42 live 

poultry dealers while it affects 16,524 

broiler growers. Secondly, the primary 

costs to the live poultry dealers are the 

development of the placement and 

settlement disclosures, while the 

ongoing costs to distribute and maintain 

them are relatively small. Each broiler 

grower would receive and review both 

a placement and settlement disclosure 

for each flock placed and then settled in 

each tournament. Thus, there are many 

broiler growers who would receive and 

review the placement and settlement 

disclosures with each flock every year, 

which explains the higher cost relative 

to live poultry dealers. The relative 

higher cost to the broiler growers would 

be more than offset by the benefits of the 

extra information they can use to make 

financial business decisions. The 

benefits will be discussed in a later 

section. 

The ten-year aggregate total costs of 

§ 201.104 to live poultry dealers and 

broiler growers are estimated to be $8.3 

million and the present value of the tenyear total costs to be $7.1 million 

discounted at a 3 percent rate and $5.9 

million at a 7 percent rate. The 

annualized aggregate costs of the PV of 

ten-year costs to live poultry dealers and 

broiler growers discounted at a 3 

percent rate are expected to be $836,000 

and $844,000 discounted at a 7 percent 

rate. 

Combined Costs of §§ 201.102 and 

201.104 

Combined costs to live poultry dealers 

for §§ 201.102 and 201.104 are expected 

to be $1.4 million in the first year, and 

$512,000 in subsequent years. These 

combined costs are also reported above 

the Paperwork Reduction Act section as 

the combined costs to live poultry 

dealers for compliance with the 

reporting and recordkeeping 

requirements of §§ 201.102 and 201.104. 

The combined costs for broiler growers 

are expected to be $1.9 million in the 

first year, $854,000 in years two through 

five, and $795,000 after year five on an 

ongoing basis. 

The ten-year aggregate combined costs 

of §§ 201.102 and 201.104 to live 

poultry dealers are estimated to be $6.0 

million and the present value of the tenyear total costs to be $5.3 million 

discounted at a 3 percent rate and $4.5 

million at a 7 percent rate. The 

annualized aggregate combined costs of 

the PV of ten-year costs to live poultry 

dealers discounted at a 3 percent rate 

are expected to be $617,000 and 

$635,000 discounted at a 7 percent rate. 

The ten-year aggregate combined costs 

of §§ 201.102 and 201.104 to broiler 

growers are estimated to be $9.3 million 

and the present value of the ten-year 

total costs to be $8.1 million discounted 

at a 3 percent rate and $6.8 million at 

a 7 percent rate. The annualized 

aggregate combined costs of the PV of 

ten-year costs to broiler growers 

discounted at a 3 percent rate are 

expected to be $948,000 and $971,000 

discounted at a 7 percent rate. The costs 

to broiler growers from §§ 201.102 and 

201.104 are higher for broiler growers 

than live poultry dealers for the reasons 

discussed above. 

The ten-year aggregate combined costs 

of §§ 201.102 and 201.104 to live 

poultry dealers and broiler growers are 

estimated to be $15.4 million and the 

present value of the ten-year aggregate 

combined costs to be $13.3 million 

discounted at a 3 percent rate and $11.3 

million at a 7 percent rate. The 

annualized aggregate costs of the PV of 

ten-year costs to live poultry dealers and 

broiler growers discounted at a 3 

percent rate are expected to be $1.6 

million and $1.6 million discounted at 

a 7 percent rate. 

Benefits of §§ 201.102 and 201.104 

As discussed above, AMS will 

estimate the industry benefits from 

§§ 201.102 and 201.104 in two parts, 

one quantifiable and the other nonquantifiable. For the quantifiable part, 

AMS will provide a minimum value of 

the combined benefit to broiler growers 

from the additional information in the 

disclosures required under §§ 201.102 

and 201.104 and will refer to this 

minimum benefit as Gmin. AMS first 

estimates Gmin and discusses the nonquantifiable benefits of the final rules 

immediately below and after the 

discussion of the benefit estimates. 

Poultry growers are expected to 

benefit from the information in two 

ways. First, growers will benefit as live 

poultry dealers lose some potential 

market power. Second, the Disclosure 

Documents will provide growers more 

information on their anticipated 

revenue variability than they currently 

have, which will assist in supporting 

future income projections. This 

additional information can give growers 

greater economic and financial 

certainty. While the economic literature 

does not address the relationship 

between asymmetric information and 

market power in the relationship among 

broiler growers and live poultry dealers, 

or in any directly analogous 

relationships, firms with information 

that other market participants do not 

have can command considerable 

monopoly and monopsony power.159 As 

an example of the monopsony power of 

information, imperfect information in 

the market about an employee’s training 

level limits the wages that a trained 

worker can obtain in the outside market, 

and it gives monopsony power to the 

employer that supported the training.160

This concept extends to the grower-live 

poultry dealer relationship, substituting 

for training the marketing and 

production information about the 

contract grower that one live poultry 

dealer possesses but which is not 

available to other live poultry dealers, 

thus lowering the open market value of 

the grower’s services. Further, in this 

example the grower has limited 

information on returns to other growers 

in their market due to the live poultry 

dealer’s ability to shield this 

information. Thus, it is more difficult 

for the grower to make business 

decisions such as choosing whether to 

deal with the current live poultry dealer 

or sign a contract with another live 

poultry dealer, should one be available 

in the region. 

In an example of large grain traders 

that have oligopsony and oligopoly 

market power, one analysis finds that 

large grain traders manipulate prices 

and market information.161 The analysis 

contends that these major firms move 

prices to their benefit by taking 

advantage of information they alone 

possess, e.g., information on foreign 

subsidiaries, contract positions, the 

price-reporting system, export data, and 

commodity exchanges. Likewise, live 

poultry dealers have information they 

alone possess and can use to their 

advantage. 

In a third example specific to broiler 

contracting, but with information 

exchange not being explicitly addressed, 

live poultry dealers will have 

monopsony-oligopsony power in a 


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Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 83277 

162 Vukina, Tom, and Porametr Leegomonchai. 

‘‘Oligopsony Power, Asset Specificity, and HoldUp: Evidence from the Broiler Industry.’’ American 

Journal of Agricultural Economics 88 (2006). 

163 Garcia, P., B. Adam, and R. Hauser. 1994. The 

Use of Mean-Variance for Commodity Futures and 

Options Hedging Decisions’’, Journal of Agricultural 

and Resource Economics, 19(1): 32–45. 

164A utility function is an economic concept that 

measures an individual’s preferences over a set of 

goods and services. 

165AMS prepared a technical appendix 

(Appendix 2) that provides an explanation of the 

empirical approach used to estimate the Risk 

Premium and is included at the end of this 

document. 

given geographical area to the extent 

that growers have limited opportunity to 

contract with other live poultry dealers. 

Grower capital investments (poultry 

housing and specialized equipment) 

have little use outside of raising 

broilers. Being aware of the possibility 

that they may be held-up by live poultry 

dealers, growers will sub-optimally 

invest in specific assets.162 Implicitly 

then, knowledge of the possibility that 

they will be held-up will affect the 

growers’ capital investment decisions. 

If the market were less oligopsonistic, 

with live poultry dealers facing more 

competition between themselves for 

growers, individual live poultry dealers 

would have to make a case for why 

growers should grow for them rather 

than for competing live poultry dealers. 

In the extreme case of perfect 

competition, all price and other market 

information is known by all 

participants. While the nature of the 

broiler market means full competition 

and hence full market information 

cannot be achieved, the Disclosure 

Document does include the grower 

turnover rates and quintiles of average 

annual gross payment per square foot 

for the calendar year for the complex. 

Absent the Disclosure Document from 

the live poultry dealer, the typical 

grower is unlikely to have this market 

information. With this information, the 

grower can make more informed 

business decisions, including whether 

to move to another live poultry dealer 

upon contract completion, thus 

lowering the current live poultry 

dealer’s market power, at least when 

alternative live poultry dealers are 

available. The information on grower 

turnover rates from the Disclosure 

Document should give the grower a 

better idea of their probability of being 

held-up, thus better informing their 

capital investment decisions. While 

lowering information asymmetry 

increases benefits to growers, live 

poultry dealers will suffer losses by 

losing market power. 

AMS does not have the data necessary 

for estimating the economic impacts of 

a loss of market power on the part of 

live poultry dealers due to information 

transfer nor the benefits to growers. 

However, according to basic economic 

principles, increasing competition—i.e., 

reducing the market power advantage of 

a buyer or seller—leads to increases in 

economic efficiency in the market. 

Based on these principles, we expect 

that a reduction in dealer market power 

would, if it occurs, result in net 

economic benefits. AMS also expects 

the grower to benefit simply from 

having more information on the 

potential variability of returns, even if 

average returns do not change. 

According to economic principles of 

expected utility, a risk averse producer 

will benefit economically from a 

reduction in revenue variability.163

Purely addressing information 

exchange, the live poultry dealer is not 

losing the information it supplies the 

grower via the Disclosure Document. 

The live poultry dealer’s quantified 

costs are associated with creating the 

Disclosure Document. 

The act of supplying past revenue 

information in the disclosures may alter 

the statistical distribution of revenue the 

grower thinks they will face (including 

statistics that describe the distribution, 

such as mean and variance), mostly 

likely increasing expected mean 

revenues. By simply having more 

market information (e.g., the revenue 

quintiles from the Disclosure 

Document), presumably the grower will 

be able to place a smaller variability on 

their projected revenue than they would 

with less information. If they are risk 

averse, by the principle of expected 

utility, they will receive an economic 

benefit from being able to place a lower 

variability on his projected revenue. 

AMS estimates Gmin as the combined 

benefits to growers of §§ 201.102 and 

201.104 from the reduction in profit 

uncertainty due to obtaining the 

revenue information from the Disclosure 

Document. AMS expects the majority of 

the benefits of reduced profit 

uncertainty will result from additional 

information in the financial disclosures 

under § 201.102 as these disclosures 

provide revenue projections at different 

performance percentiles over different 

housing types. AMS expects that the 

additional information received in 

placement and settlement disclosures 

under § 201.104 regarding the effects of 

input variability on revenue variability 

will also result in reduced profit 

uncertainty, though to a lesser extent 

than the financial disclosures. AMS was 

not able to allocate the benefits between 

§§ 201.102 and 201.104 and presents 

just the total combined minimum 

quantifiable benefits of both rules. 

Given assumptions about the level of 

risk aversion of the producer, the 

distribution of a contract grower’s 

revenue, and the grower’s utility 

function,164 it is possible to calculate a 

grower’s benefits of decreased revenue 

uncertainty associated with greater 

transparency. AMS relied on an 

empirical approach to estimate the 

minimum benefits, defined as a Risk 

Premium (RP), to contract broiler 

growers of a range of reductions in the 

variability of their net revenue.165

The following table presents the Gmin

benefit estimates based on RP estimates 

for the first year for several scenarios of 

reduction in the variability of net 

revenue and two assumptions for a risk 

aversion premium (RAP) and two 

assumptions for how risk aversion 

changes with wealth. For the latter, 

constant absolute risk aversion (CARA) 

assumes that the grower’s risk aversion 

does not change as wealth increases. 

Decreasing absolute risk aversion 

(DARA) assumes the grower’s risk 

aversion increases as wealth decreases. 

Another possibility is that the grower’s 

risk aversion is increasing with wealth 

(IARA). While no evidence exists one 

way or another for how the risk 

preference of broiler contract growers 

changes with wealth, the agricultural 

economics literature generally assumes 

DARA over IARA. 


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83278 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

166All benefits estimates assume a moderate (20 

percent) RAP and a 2 percent reduction in 

coefficient of variation of net revenue. 

TABLE 2—MINIMUM QUANTIFIABLE BENEFITS, Gmin, (RISK PREMIUM) TO CONTRACT GROWERS OF REDUCTIONS IN NET

REVENUE VARIABILITY

Grower risk aversion 

(risk aversion premium) 

Reduction in coefficient of variation of 

net revenue b

1% 2% 5% 10% 

One year value 

Moderate (20%) ............................................................................................... $1,350,000 $2,690,000 $6,610,000 $12,840,000 

High (40%) ....................................................................................................... 3,210,000 6,380,000 15,700,000 30,540,000 

DARA, High/Moderate ..................................................................................... 1,839,000 3,655,000 8,966,000 17,365,000 

PV over 10 years discounted at 3% 

Moderate (20%) ............................................................................................... 11,515,774 22,946,246 56,384,641 109,527,804 

High (40%) ....................................................................................................... 27,381,951 54,422,694 133,924,185 260,512,395 

PV over 10 years discounted at 7% 

Moderate (20%) ............................................................................................... 9,481,835 18,893,434 46,425,874 90,182,787 

High (40%) ....................................................................................................... 22,545,697 44,810,450 110,270,230 214,500,180 

aThe risk aversion premium (RAP) varies between 0 and 100 percent of the potential lost revenue, with higher values reflecting higher risk 

aversion. A value of 20 percent is considered a reasonable reflection of moderate aversion to risk and 40 percent being reflection of high-risk 

aversion. bThe coefficient of variation of net revenue is a standardized measure of variability, and is defined as the standard deviation of net revenue divided by its mean. 

The RAP varies between 0 and 100 

percent of the potential lost revenue, 

with higher values reflecting higher risk 

aversion. The RP estimates assume that 

mean net returns are unchanged, i.e., 

this exercise is solely valuing the 

reduction in grower revenue 

uncertainty. AMS estimates benefits 

under two CARA scenarios, one where 

the growers have moderate risk 

aversion, with one with a RAP of 20 

percent and a high RAP of 40 percent, 

using contract producer revenue data for 

2020. The parameters used for the 

DARA scenario are chosen such that the 

grower has a RAP of 40 percent when 

wealth is zero, and a RAP of 20 percent 

at mean wealth. 

As the above table shows, one-year 

benefits range from $1.4 million with a 

1 percent reduction in the variability of 

net revenue when moderate risk 

aversion is assumed to $31 million with 

a 10 percent reduction in the variability 

of net revenue when high risk aversion 

is assumed. AMS assumes growers will 

receive the same benefit of reduced 

variability of net revenue every year in 

which they contract. Discounting these 

annual values over ten years leads to a 

range in benefit estimates from $9.5 

million to $261 million depending on 

the combination of risk aversion 

assumption, reduction in variability in 

net returns, and the discount rate. 

With assumptions of moderate risk 

aversion and that the rule would lead to 

a two percent reduction in the 

coefficient of variation in net revenue, 

the benefit estimate is $19 million with 

a discount rate of seven percent PV. The 

analysis summarized in Table 2 assumes 

that the grower maximizes an absolute 

risk aversion (ARA) utility function, 

whether CARA or DARA. The 

alternative to an ARA function is a 

relative risk aversion function (RRA) 

(see Appendix 2 for a discussion of ARA 

and RRA). 

As discussed above, §§ 201.102 and 

201.104 have additional, other nonquantified benefits to the industry, 

referred to as BO. First, if broiler growers 

did not expect to receive at least as 

much in benefits as it takes in time to 

review the disclosures, they would not 

review them. Some of these benefits are 

captured in the quantitative estimates of 

the value of reduction in revenue 

uncertainty, but there are others benefits 

the growers would likely expect from 

these disclosures. The other benefits 

would arise from a reduction in risk of 

retaliation and the potential for fraud 

and deception by live poultry dealers. 

The additional information to growers 

may lead to a more optimal allocation 

of capital and labor resources (such as 

increased capital investment through 

the reduction in perceived hold-up risk, 

and more informed decisions on 

whether and with whom to enter into a 

growing arrangement), leading to 

improved efficiencies across the entire 

industry. 

The combined minimum benefits for 

broiler growers, Gmin, from reduced 

revenue uncertainty are expected to be 

$2.7 million in the first year and on an 

ongoing basis.166 The ten-year total 

minimum benefits of §§ 201.102 and 

201.104 to broiler growers are estimated 

to be $26.9 million and the present 

value of the ten-year total minimum 

benefits to be $22.9 million discounted 

at a 3 percent rate and $18.9 million at 

a 7 percent rate. The annualized PV of 

ten-year minimum benefits to broiler 

growers discounted at 3 and 7 percent 

rates are expected to be $2.7 million. 

The total benefits to the industry, BT, 

from §§ 201.102 and 201.104 would be 

the sum of the minimum benefits to all 

growers, Gmin, and the other nonquantified benefits to the industry from 

growers’ risk reductions and a more 

efficient allocation of labor and capital, 

BO. The values appear in Table 3 in the 

next section. AMS expects the total 

benefits to the industry from the rule— 

as is the case for total costs, noted 

above—will be very small in relation to 

the total value of industry production. 

Chicken sales in the U.S. for 2019 

were approximately $58.6 billion. Total 

quantified cost of §§ 201.102 and 

201.104 is estimated to be greatest in the 

first year at $3.4 million, or 0.0006 

percent of revenues. A relatively small 

improvement in efficiency from 

improved allocation of capital and labor 

resources in the industry would more 

than outweigh the cost of this rule. 


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167 Ibid. 

168All live poultry dealers are required to 

annually file PSD form 3002 ‘‘Annual Report of 

Live Poultry Dealers,’’ OMB control number 0581– 

0308. The annual report form is available to public 

on the internet at https://www.ams.usda.gov/sites/ 

default/files/media/PSP3002.pdf. 

169As discussed previously, the one-time set-up 

costs are not equal to the first-year costs of 

§ 201.102 because the first-year costs include the 

one-time set-up costs and the ongoing costs that 

would be incurred in the first year as contracts are 

renewed, revised, or originated. 

Total Quantified Combined Costs and 

Benefits of §§ 201.102 and 201.104 

The cost and benefit estimates of 

§§ 201.102 and 201.104 presented above 

appear in the following table. 

TABLE 3—QUANTIFIABLE COSTS AND BENEFITS 167 OF §§ 201.102 AND 201.104 

Preferred alternative 

Cost Benefits 

Live poultry 

dealers 

Broiler 

growers 

Industry 

total 

Individual 

grower 

(Gmin) a

Total 

industry 

(BT) 

§ 201.102: 

First-Year ...................................................................... $1,008,000 $1,180,000 $2,188,000 Gmin Gmin + BO

Ten-Year Total .............................................................. 3,881,000 3,158,000 7,039,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 3,392,000 2,822,000 6,214,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 2,886,000 2,468,000 5,354,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 3 Percent ..................... 398,000 331,000 728,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 7 Percent ..................... 411,000 351,000 762,000 Gmin Gmin + BO

§ 201.104: 

First-Year ...................................................................... 429,000 736,000 1,164,000 Gmin Gmin + BO

Ten-Year Total .............................................................. 2,162,000 6,152,000 8,314,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 1,872,000 5,263,000 7,135,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 1,573,000 4,352,000 5,925,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 3 Percent ..................... 219,000 617,000 836,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 7 Percent ..................... 224,000 620,000 844,000 Gmin Gmin + BO

§§ 201.102 and 201.104: 

First-Year ...................................................................... 1,437,000 1,916,000 3,353,000 2,690,000 Gmin + BO

Ten-Year Total .............................................................. 6,043,000 9,310,100 15,353,000 26,900,000 Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 5,264,000 8,085,000 13,349,000 22,946,000 Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 4,459,000 6,820,000 11,279,000 18,893,000 Gmin + BO

PV of Ten-Year Annualized at 3 Percent ..................... 617,000 948,000 1,565,000 2,690,000 Gmin + BO

PV of Ten-Year Annualized at 7 Percent ..................... 635,000 971,000 1,606,000 2,690,000 Gmin + BO

aAMS estimates Gmin as the combined benefits to growers of §§ 201.102 and 201.104. bEstimates do not include unquantified costs of risk increases. 

The quantified costs and minimum 

quantifiable benefits to the industry in 

the first year are $3.4 million and $2.7 

million, respectively. The quantified 

costs exceed the minimum quantifiable 

benefits in the first year only. The 

minimum quantifiable benefits exceed 

the quantified costs in the ten-year total, 

the PVs on the ten totals, the annualized 

PV of ten-year totals. This is a function 

of quantified costs being higher at the 

beginning of the program and falling off 

over time while the quantified benefits 

remain constant over the entire 

estimation period. 

AMS expects that the net benefits to 

the industry from §§ 201.102 and 

201.104 will be very small in relation to 

the total value of industry production. 

Thus, AMS expects the impacts of the 

net benefits on total industry supply to 

be immeasurably small, leading to 

immeasurably small indirect effects on 

industry supply and demand, including 

price and quantity effects. 

Costs and Benefits of the Small Business 

Exemption Alternative 

AMS estimated costs and benefits for 

an alternative to the preferred option for 

the rule. It would be the same as 

§§ 201.102 and 201.104, with the 

exception that the alternative would 

exempt live poultry dealers that process 

less than 2 million pounds of broilers 

per week from all provisions of the two 

final rules. In the preferred alternative, 

small businesses would be exempt from 

the disclosure requirements in 

§ 201.102(a)(1) only. The rest of the 

provisions of §§ 201.102 and 201.104 

would still apply. 

The costs associated with this 

alternative are similar, but smaller than 

the preferred option. According to 

annual reports that live poultry dealers 

file with AMS,168 small live poultry 

dealers processing broilers make up 35.7 

percent of all live poultry dealers but 

have only 2 percent of broiler growing 

contracts. The estimation of the costs 

and benefits of the small business 

exemption alternative will follow the 

same format as the preferred alternative. 

Costs of § 201.102—Small Business 

Exemption Alternative 

AMS estimates the one-time costs for 

live poultry dealers of setting up the 

Disclosure Document for the small 

business exemption alternative would 

require 2,914 management hours, 972 

attorney hours, 722 administrative 

hours, and 884 information technology 

hours costing $486,000 in the first year 

for live poultry dealers to set up the 

Disclosure Document.169 A more 

detailed explanation of the one-time 

first-year costs associated with the 

alternative § 201.102 is in Table 1 in 

Appendix 3. 

AMS expects the ongoing costs for 

live poultry dealers for the small 

business exemption alternative of 

updating and distributing the Disclosure 

Document to broiler growers renewing 

or revising existing contracts, new 

growers entering into contracts, existing 

growers required to make additional 

capital investments to require 1,617 

management hours, 176 legal hours, 726 


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170Live poultry dealers processing an average of 

more than 2,000,000 pounds of broilers per week, 

reported a combined 19,417 broiler contracts in 

their fiscal year 2021 annual reports to AMS. All 

live poultry dealers are required to annually file 

PSD form 3002 ‘‘Annual Report of Live Poultry 

Dealers,’’ OMB control number 0581–0308. The 

annual report form is available to public on the 

internet at https://www.ams.usda.gov/sites/default/ 

files/media/PSP3002.pdf. 

171 1 hour to review each disclosure × $60.70 per 

hour × 19,417 contracts × 74.71 percent of the 

contracts renewed in the first year = $880,541. 

172 1/12 hour to review each disclosure × $60.70 

per hour × 19,417 contracts × 74.71 percent of the 

contracts renewed in the first year = $73,386. 

173 1 hour to review each disclosure × $60.70 per 

hour × 19,417 contracts × 5 percent of the contracts 

renewed per year = $58,929 per year. 

174All live poultry dealers are required to 

annually file PSD form 3002 ‘‘Annual Report of 

Live Poultry Dealers,’’ OMB control number 0581– 

0308. The annual report form is available to public 

on the internet at https://www.ams.usda.gov/sites/ 

default/files/media/PSP3002.pdf. 

175 1 hour to review each disclosure × $60.70 per 

hour × 19,417 contracts × 5 percent of growers that 

are new entrants = $58,929. 

176 1 hour to review each disclosure × $60.70 per 

hour × 19,417 contracts × 5 percent of growers that 

require significant housing upgrades = $58,929. 

administrative hours, and 733 

information technology hours to 

produce, distribute to growers, and 

maintain the Disclosure Document 

annually for an annual cost of $258,000. 

A more detailed explanation of the 

ongoing costs associated with the 

alternative § 201.102 is in Table 2 in 

Appendix 3. 

AMS expects the total cost of 

producing the disclosure information to 

be $486,000 in the first year to set up 

the systems and controls, plus $258,000 

in costs the first year and annually 

thereafter to compile and distribute the 

disclosure data and documents. Thus, 

the first-year total costs of § 201.102 for 

live poultry dealers are expected to be 

$743,000 for the small business 

exemption alternative and then 

$258,000 annually on an ongoing basis. 

For alternative § 201.102(a)(1), AMS 

expects that broiler growers would take 

about 1 hour to review the documents 

each time documents are disclosed to 

them in the first year. The alternative 

would exempt live poultry dealers 

processing fewer than an average of 2 

million pounds of broilers weekly from 

the reporting requirements, but large 

live poultry dealers would be required 

to provide disclosures to broiler growers 

for each of 19,417 170 contracts that 

come up for renewal in the first year. 

AMS expects that 74.71 percent of the 

contracts will require renewal in the 

first year. This includes all flock-toflock contracts, one-year contracts, and 

the portion of the longer-term contracts 

that will expire in the first year. At a 

wage of $60.70, AMS expects the 

requirements associated with § 201.102 

(a)(1) will cost broiler growers about 

$881,000 171 in the first year in the 

aggregate. After the first year, as broiler 

growers get familiar with the 

disclosures, AMS expects growers to 

spend less time reviewing the 

documents. AMS expects broiler 

growers to take about five minutes 

reviewing each Disclosure Document for 

an aggregate cost of $73,000 172 per year. 

For the remaining contracts that will 

not be renewed in the first year, AMS 

expects that 5 percent of the contracts 

will be renewed in each of the next 5 

years for a yearly cost of $59,000.173

Paragraphs 201.102(a)(2) and (3) 

would only apply to broiler growers that 

are new entrants with original capital 

investments and to growers making 

significant upgrades with additional 

capital investments to broiler houses. 

AMS expects that each of these groups 

of broiler growers will account for 5 

percent of the 19,417 broiler growing 

contracts live poultry dealers reported 

in their annual reports 174 to AMS. If 

growers require one hour at $60.70 per 

hour, growers’ aggregate costs would be 

$59,000 175 for reviewing documents 

required in § 201.102 (a)(2) and an 

additional $59,000 176 for reviewing 

documents required in § 201.102 (a)(3) 

in the first year and in each successive 

year. 

AMS estimates broiler growers’ 

aggregate costs for reviewing the 

Disclosure Document associated with 

§ 201.102 for the small business 

exemption alternative to be $1.2 million 

in the initial year, $250,000 through 

year five, and then $191,000 in each 

succeeding year. 

The ten-year aggregate total costs for 

the live poultry dealers of § 201.102 for 

the small business exemption 

alternative are estimated to be $3.1 

million. The present value of the tenyear aggregate total costs of § 201.102 to 

live poultry dealers are estimated to be 

$2.7 million discounted at a 3 percent 

rate and $2.3 million at a 7 percent rate. 

The annualized aggregate costs of the 

PV of ten-year costs to live poultry 

dealers discounted at a 3 percent rate 

are expected to be $313,000 and 

$322,000 discounted at a 7 percent rate. 

The ten-year aggregate total costs to 

broiler growers of § 201.102 for the 

small business exemption alternative 

are estimated to be $3.1 million. The 

present value of the ten-year total costs 

of § 201.102 to broiler growers are 

estimated to be $2.8 million discounted 

at a 3 percent rate and $2.4 million at 

a 7 percent rate. The annualized 

aggregate costs of the PV of ten-year 

costs to broiler growers discounted at a 

3 percent rate are expected to be 

$328,000 and $349,000 discounted at a 

7 percent rate. 

The first-year aggregate total costs to 

broiler growers and live poultry dealers 

of § 201.102 for the small business 

exemption alternative are estimated to 

be $1.9 million and the ten-year 

aggregate total costs of § 201.102 for the 

small business exemption alternative for 

live poultry dealers and broiler growers 

are estimated to be $6.2 million. The 

present value of the ten-year aggregate 

total costs of § 201.102 to live poultry 

dealers and broiler growers are 

estimated to be $5.5 million discounted 

at a 3 percent rate and $4.7 million at 

a 7 percent rate. The annualized costs of 

the PV of ten-year aggregate costs to live 

poultry dealers and broiler growers 

discounted at a 3 percent rate are 

expected to be $641,000 and $671,000 

discounted at a 7 percent rate. 

Costs of § 201.104—Small Business 

Exemption Alternative 

AMS estimates that the aggregate onetime costs of developing the placement 

and settlement disclosure documents for 

live poultry dealers under the small 

business exemption alternative would 

require 405 management hours, 297 

administrative hours, and 1,134 

information technology hours costing 

$152,000 in the first year to initially set 

up the placement and settlement 

disclosure documents. A more detailed 

explanation of the one-time first-year 

costs associated with the alternative 

§ 201.104 is in Table 3 in Appendix 3. 

AMS expects the disclosure 

documents to require an additional 

1,697 hours divided evenly among 

management, administrative, and 

information technology staff to produce, 

distribute, and maintain the disclosure 

documents each year on an ongoing 

basis for an annual cost of $124,000. 

Thus, the aggregate first-year costs are 

estimated to be $276,000, including the 

one-time set up costs and the costs of 

producing and distributing the 

placement and settlement disclosures. A 

more detailed explanation of the 

ongoing costs associated with the 

alternative § 201.104 is in Table 4 in 

Appendix 3. 

For the alternative § 201.104(b), live 

poultry dealers would be required to 

disclose information about inputs, such 

as stocking density, breed and breeder 

flock information for each flock placed 

with a grower. AMS expects that, the 

first time a broiler grower receives the 

disclosure, he or she would require 

about 10 minutes to review each of the 

disclosure’s documents. At $60.70 per 

hour, the first disclosure document 

would cost growers $86,000 in the 


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177 1/6 hours × $60.70 per hour × 16,524 broiler 

growers × 80 percent of broilers raised in 

tournament systems × 64.3 percent of live poultry 

dealers that process more than 2,000,000 head per 

week = $85,970. 

178 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 3.5 additional flocks in the first-year × 80 

percent of broilers raised in tournament systems × 

64.3 percent of live poultry dealers that process 

more than 2,000,000 head per week = $150,447. 

179 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 4.5 flocks per year × 80 percent of broilers 

raised in tournament systems × 64.3 percent of live 

poultry dealers that process more than 2,000,000 

head per week = $193,432 per year. 

180 1/6 hours × $60.70 per hour × 16,524 broiler 

growers × 80 percent of broilers raised in 

tournament systems × 64.3 percent of live poultry 

dealers that process more than 2,000,000 head per 

week = $85,970. 

181 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 3.5 additional flocks in the first-year × 80 

percent of broilers raised in tournament systems × 

64.3 percent of live poultry dealers that process 

more than 2,000,000 head per week = $150,447. 

182 1/12 hours × $60.70 per hour × 16,524 broiler 

growers × 4.5 flocks per year × 80 percent of broilers 

raised in tournament systems × 64.3 percent of live 

poultry dealers that process more than 2,000,000 

head per week = $193,432 per year. 

aggregate.177 After the reviewing the 

documents the first time, AMS expects 

that broiler growers would only need 5 

minutes to review successive 

disclosures. Since growers average 4.5 

flocks per year, AMS expects that 

reviewing the disclosure documents 

concerning inputs would cost an 

additional $150,000 178 for the 

remaining 3.5 flocks in the first year and 

$193,000 179 for the 4.5 flocks in each 

successive year. 

Alternative § 201.104(c) concerns 

disclosures about the group of broiler 

growers in settlement groups in broiler 

tournament settlement systems. Live 

poultry dealers would be required to 

disclose information about the housing 

specifications for each grower grouped 

or ranked during the specified period 

and the distribution of inputs to each 

grower in each tournament for each 

flock settled in tournament system. 

AMS expects that the cost to broiler 

growers associated with § 201.104(c) 

will be identical to the costs of 

reviewing the disclosures required in 

§ 201.104(b). Aggregate costs would be 

$86,000.180 for the disclosures reviewed. 

AMS expects that reviewing the 

disclosure documents would cost, in the 

aggregate, an additional $150,000 181 for 

the remaining 3.5 flocks in the first year 

and $193,000 182 for the 4.5 flocks in 

each successive year. 

AMS estimates growers’ aggregate 

costs for reviewing the placement and 

settlement disclosures associated with 

§ 201.104 under the small business 

exemption alternative to be $473,000 in 

the first year and $387,000 in each 

subsequent year. As discussed 

previously, AMS expects that broiler 

growers would spend the most time on 

their first review of the placement and 

settlement disclosures in order to 

understand the information, with less 

time for each subsequent review. 

The ten-year aggregate total costs to 

live poultry dealers of § 201.104 under 

the small business exemption 

alternative are estimated to be $1.4 

million. The present value of the 

aggregate ten-year total costs of 

§ 201.104 to live poultry dealers are 

estimated to be $1.2 million discounted 

at a 3 percent rate and $1.0 million at 

a 7 percent rate. The annualized costs of 

the PV of aggregate ten-year costs to live 

poultry dealers discounted at a 3 

percent rate are expected to be $141,000 

and $144,000 discounted at a 7 percent 

rate. 

The ten-year aggregate total costs to 

broiler growers of § 201.104 for the 

small business exemption alternative 

are estimated to be $4.0 million. The 

present value of the aggregate ten-year 

total costs of § 201.104 to broiler 

growers are estimated to be $3.4 million 

discounted at a 3 percent rate and $2.8 

million at a 7 percent rate. The 

annualized aggregate costs of the PV of 

ten-year costs to broiler growers 

discounted at a 3 percent rate are 

expected to be $397,000, and $398,000 

discounted at a 7 percent rate. 

The first-year aggregate total costs to 

live poultry dealers and broiler growers 

of § 201.104 under the small business 

exemption alternative are estimated to 

be $749,000 and the ten-year aggregate 

total costs are estimated to be $5.3 

million. The present value of the tenyear aggregate total costs of § 201.104 to 

live poultry dealers and broiler growers 

are estimated to be $4.6 million 

discounted at a 3 percent rate and $3.8 

million at a 7 percent rate. The aggregate 

annualized costs of the PV of ten-year 

costs to live poultry dealers and broiler 

growers discounted at a 3 percent rate 

are expected to be $538,000 and 

$542,000 discounted at a 7 percent rate. 

Combined Costs of §§ 201.102 and 

201.104—Small Business Exemption 

Alternative 

Aggregate combined costs to live 

poultry dealers for §§ 201.102 and 

201.104 for the small business 

exemption alternative are expected to be 

$1.0 million in the first year, and 

$381,000 in subsequent years. The 

combined costs for broiler growers are 

expected to be $1.6 million in the first 

year, $637,000 in years two through 

five, and $578,000 after year five on an 

ongoing basis. 

The aggregate ten-year combined 

quantified costs to live poultry dealers 

of §§ 201.102 and 201.104 for the small 

business exemption alternative are 

estimated to be $4.5 million and the 

present value of the ten-year combined 

costs are $3.9 million discounted at a 3 

percent rate and $3.3 million at a 7 

percent rate. The aggregate annualized 

costs of the PV of ten-year costs to live 

poultry dealers discounted at a 3 

percent rate are expected to be $454,000 

and $466,000 discounted at a 7 percent 

rate. 

The aggregate ten-year combined costs 

to broiler growers of §§ 201.102 and 

201.104 for the small business 

exemption alternative are estimated to 

be $7.1 million and the present value of 

the ten-year combined costs are 

estimated to be $6.2 million discounted 

at a 3 percent rate and $5.2 million at 

a 7 percent rate. The aggregate 

annualized costs of the PV of ten-year 

costs to broiler growers discounted at a 

3 percent rate are expected to be 

$725,000 and $747,000 discounted at a 

7 percent rate. As under the preferred 

alternative, the costs to broiler growers 

from §§ 201.102 and 201.104 under the 

small business exemption alternative 

would be higher for broiler growers than 

live poultry dealers for the reasons 

discussed above. 

The aggregate combined costs to live 

poultry dealers and broiler growers of 

§§ 201.102 and 201.104 under the small 

business exemption alternative are 

estimated to be $2.7 million in the first 

year, $1.0 million in years two through 

five, and $960,000 in years six and 

beyond. The aggregate ten-year 

combined costs of §§ 201.102 and 

201.104 for the small business 

exemption alternative for live poultry 

dealers and broiler growers are 

estimated to be $11.5 million and the 

present value of the ten-year combined 

costs are estimated to be $10.1 million 

discounted at a 3 percent rate and $8.5 

million at a 7 percent rate. The aggregate 

annualized costs of the PV of ten-year 

costs to live poultry dealers and broiler 

growers discounted at a 3 percent rate 

are expected to be $1.2 million and $1.2 

million discounted at a 7 percent rate. 

Additionally, there may be costs of 

bearing increased risk that AMS has not 

estimated of increasing transparency in 

broiler grower contracting and 

tournaments, which would have 

different effects on more or less 

diversified live poultry dealers. 

Combined Benefits of §§ 201.102 and 

201.104—Small Business Exemption 

Alternative 

According to PSD records, only 2 

percent of broiler growing contracts are 

between small live poultry dealers and 

broiler growers. Thus, 98 percent of all 

broiler growers will receive the benefits 


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183All benefits estimates assume a moderate (20 

percent) RAP and a 2 percent reduction in 

coefficient of variation of net revenue. 

of §§ 201.102 and 201.104 under the 

small business exemption alternative. 

To estimate the minimum quantified 

benefits to broiler growers, Gmin, under 

the small business exemption 

alternative, AMS multiplied the 

minimum quantified benefits under the 

preferred alternative in Table 3 by 98 

percent. 

AMS estimates the aggregate 

minimum benefits to growers, Gmin, 

from §§ 201.102 and 201.104 under the 

small business exemption alternative 

from reduced profit uncertainty to be 

$2.6 million in the first year and on an 

ongoing basis.183 The ten-year total 

minimum benefits of §§ 201.102 and 

201.104 to broiler growers are estimated 

to be $26.4 million and the present 

value of the ten-year total minimum 

benefits to be $22.5 million discounted 

at a 3 percent rate and $18.5 million at 

a 7 percent rate. The annualized PV of 

ten-year minimum benefits to broiler 

growers discounted at 3 and 7 percent 

rates are expected to be $2.6 million. 

The total benefits to the industry, BT, 

from §§ 201.102 and 201.104, under the 

small business exemption alternative, 

would be the sum of the minimum 

benefits to all broiler growers, Gmin, and 

the other benefits to the industry from 

extra information and a more efficient 

allocation of labor and capital, BO. The 

values of the estimated benefits appear 

in Table 4 in the next section. AMS 

expects the quantified minimum 

benefits to growers from §§ 201.102 and 

201.104, combined with the other nonquantified benefits to growers, to exceed 

the costs of §§ 201.102 and 201.104 

under the small business exemption 

alternative. 

Combined Costs and Benefits of 

§§ 201.102 and 201.104 

The aggregate cost and benefit 

estimates of §§ 201.102 and 201.104 

under the small business exemption 

alternative presented above appear in 

the following table. The quantified costs 

and minimum quantifiable benefits to 

the industry in the first year under the 

small business exemption alternative 

are $2.7 million and $2.6 million, 

respectively. The minimum quantifiable 

benefits exceed the quantified costs on 

a ten-year and ten-year annualized 

basis. 

As with the preferred option, AMS 

expects that the net benefits to the 

industry from §§ 201.102 and 201.104 

under the small business exemption 

alternative will be very small in relation 

to the total value of industry 

production. Thus, AMS expects the 

impacts of the net benefits on total 

industry supply under the small 

business exemption alternative to be 

immeasurably small, leading to 

immeasurably small indirect effects on 

industry supply and demand, including 

price and quantity effects. 

TABLE 4—QUANTIFIABLE COSTS AND BENEFITS OF §§ 201.102 AND 201.104—SMALL BUSINESS EXEMPTION

Small business exemption alternative 

Cost Benefits 

Live poultry 

dealers 

Broiler 

rowers 

Industry 

total 

Individual 

grower 

(Gmin) a

Total 

industry 

(BT) 

§ 201.102: 

First-Year ...................................................................... $743,000 $1,175,000 $1,918,000 Gmin Gmin + BO

Ten-Year Total .............................................................. 3,062,000 3,132,000 6,194,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 2,669,000 2,799,000 5,469,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 2,264,000 2,449,000 4,713,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 3 Percent ..................... 313,000 328,000 641,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 7 Percent ..................... 322,000 349,000 671,000 Gmin Gmin + BO

§ 201.104: 

First-Year ...................................................................... 276,000 473,000 749,000 Gmin Gmin + BO

Ten-Year Total .............................................................. 1,390,000 3,955,000 5,345,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 1,204,000 3,383,000 4,587,000 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 1,011,000 2,798,000 3,809,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 3 Percent ..................... 141,000 397,000 538,000 Gmin Gmin + BO

PV of Ten-Year Annualized at 7 Percent ..................... 144,000 398,000 542,000 Gmin Gmin + BO

§§ 201.102 and 201.104: ........................

First-Year ...................................................................... 1,019,000 1,648,000 2,667,000 2,637,000 Gmin + BO

Ten-Year Total .............................................................. 4,452,000 7,087,000 11,539,000 26,369,000 Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 3,873,000 6,183,000 10,056,000 22,493,000 Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 3,275,000 5,247,000 8,522,000 18,520,000 Gmin + BO

PV of Ten-Year Annualized at 3 Percent ..................... 454,000 725,000 1,179,000 2,637,000 Gmin + BO

PV of Ten-Year Annualized at 7 Percent ..................... 466,000 747,000 1,213,000 2,637,000 Gmin + BO

aAMS estimates Gmin as the combined benefits to growers of §§ 201.102 and 201.104. bEstimates do not include unquantified cost of risk increases. 

AMS considered the small business 

exemption alternative in part because of 

concerns that, due to scale economies, 

smaller live poultry dealers would not 

be able to absorb the cost of the required 

information disclosures as well as the 

large live poultry dealers. If the costs are 

disproportionately large for smaller live 

poultry dealers, large dealers might have 

an advantage possibly driving further 

consolidation chicken production. AMS 

subject matter experts do not expect that 

the costs of the rule will result in any 

additional consolidation by large live 

poultry dealers acquiring small live 

poultry dealers. The reasons are a lack 

of additional economies of scale from a 

large firm acquiring a small firm and the 

increase in costs to the large firm from 

no longer having the exemptions to 

small live poultry dealers offered in the 

preferred alternative. 

AMS also had to consider the rights 

of the growers who contracted with the 

smaller live poultry dealers. Those 

growers would be denied the benefits of 

the rule under the small business 

exemption. Also, AMS estimates that 

costs associated with the required 

information disclosures will be small 

relative to the size of the industry. 

Given these considerations, AMS chose 

final §§ 201.102 and 201.104, which 

exempts small live poultry dealers from 

some, not all, of the disclosures required 


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of the large firms over the alternative 

rule that would exempt all live poultry 

dealers producing less than 2 million 

pounds of chicken per week. 

C. Regulatory Flexibility Analysis 

AMS is adding §§ 201.102 and 

201.104 to the regulations under the 

Act. Section 201.102 will require live 

poultry dealers that deal in broilers to 

make disclosures before entering into 

new contracts or renewing existing 

contracts. Section 201.104 will require 

live poultry dealers that deal in broilers 

to disclose information at the settlement 

of each flock. Sections 201.102 and 

201.104 will not apply to live poultry 

dealers that deal in turkeys, ducks, 

geese, or other fowl if the live poultry 

dealer does not deal in broilers. 

The provisions in § 201.102 will 

require large live poultry dealers to 

disclose a true written copy of the 

growing agreement and a new 

Disclosure Document any time a live 

poultry dealer seeks to renew, revise, or 

replace an existing poultry growing 

arrangement that does not contemplate 

modifications to the existing housing 

specifications. Small live poultry 

dealers that process less than 2 million 

pounds of poultry per week will be 

excluded from this disclosure 

requirement. Before a live poultry dealer 

enters a poultry growing arrangement 

that would require an original capital 

investment or requires modifications to 

existing housing, both large and small 

live poultry dealers must provide a copy 

of the growing agreement, the housing 

specifications, a letter of intent, and the 

new Disclosure Document. 

The Disclosure Document will require 

live poultry dealers to disclose 

summaries of litigation with any broiler 

grower, bankruptcy filings, and the live 

poultry dealer’s policy regarding a 

grower’s sale of the farm or assignment 

of the contract. 

Live poultry dealers will be required 

to disclose growers’ variable costs if it 

collects the information. Live poultry 

dealers will be required to audit the 

information to ensure accuracy and 

obtain and file signed receipts certifying 

that the live poultry dealer provided the 

required Disclosure Document. Live 

poultry dealers will be required to 

describe policies and procedures, as 

well as any appeal rights arising from 

increased lay-out time; sick, diseased, 

and high early mortality flocks; other 

events potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability. 

Live poultry dealers will be required to 

disclose annual grower turnover rates as 

well. 

The Disclosure Document will require 

two separate financial disclosures to 

growers. The first disclosure will be a 

table indicating average annual gross 

payments to broiler growers for the 

previous calendar year. The table will 

be organized by housing specification at 

each complex located in the United 

States that is owned or operated by the 

live poultry dealer and should express 

average payments on the basis of U.S. 

dollars per farm facility square foot. The 

second disclosure will be a set of tables 

with the average annual gross payments 

per farm facility square foot in each 

quintile to broiler growers for each of 

the five previous years, organized by 

housing specification at each complex. 

Live poultry dealers will also be 

required to make reasonable efforts to 

assist growers in translating the 

Disclosure Document. The rule will also 

prevent live poultry dealers from 

restricting growers or potential growers 

from sharing the Disclosure Document 

with a translator. Disclosures required 

in § 201.104 are associated with poultry 

grower ranking systems. At the time of 

placement, § 201.104 requires live 

poultry dealers to provide specific 

information concerning the inputs, 

including feed, chicks, medication, etc., 

that the live poultry dealer provided to 

the grower. At the time of settlement, it 

will require the live poultry to provide 

specific information about inputs 

provided to every other grower in the 

tournament or ranking pool within 24 

hours of flock delivery. Similar 

information on inputs will also be 

disclosed at settlement. 

AMS expects the disclosure 

requirements in §§ 201.102 and 201.104 

will mitigate effects associated with 

asymmetric information between broiler 

growers and live poultry dealers. Some 

of the information held by live poultry 

dealers will be valuable to growers 

because it influences grower 

compensation in tournament contracts 

and might help growers in negotiating 

contract terms and making decisions 

about capital investments. 

The contracts themselves are often 

incomplete and exhibit asymmetry in 

the information available to live poultry 

dealers and contract growers. Because 

live poultry dealers supply most of the 

inputs, much of the production 

information is available only to the 

grower from the live poultry dealer. For 

example, the contract grower may not 

know precisely how much feed it used, 

or how much weight the flock gained 

under his or her care, unless the live 

poultry dealer provides the information. 

The proposed rule would have 

amended § 201.100 and added new 

§ 201.214 to the regulations under the 

Act. The final rule will leave the current 

§ 201.100 unchanged, and it will add 

two new regulations, §§ 201.102 and 

201.204. 

The proposed rule would have 

required live poultry dealers to provide 

growers with copies of the disclosure 

document and a true written copy of the 

contract 7 calendar days prior to 

executing the contract. The final rule 

changes the 7-day requirement to a 14- 

day requirement, but the broiler grower 

has the option to waive 7 calendar days 

of that time period. 

The proposed rule also would have 

required live poultry dealers to obtain 

the broiler grower’s or prospective 

broiler grower’s dated signature as 

evidence of receipt of the Disclosure 

Document. The final rule will require 

live poultry dealers to obtain the broiler 

grower’s or prospective broiler grower’s 

dated signature as evidence of receipt 

but will also permit a live poultry dealer 

to obtain alternative documentation to 

evidence delivery and that best efforts 

were used to obtain grower receipt. The 

proof of delivery and best-efforts 

requirement, as an alternative, provide 

reasonable assurance in circumstances 

where the grower refuses to sign or 

where the grower has made him or 

herself unavailable that the grower 

receives and is able to evaluate in a 

timely manner the Disclosure 

Document. The grower receipt 

requirement, and this alternative, are 

comparable in cost and achieve the goal 

of this rule to minimize the risk that live 

poultry dealer deliver the Disclosure 

Document through means that, in 

practice, are not be read or noticed by 

the grower under the time frames 

provided, and so obstruct the purposes 

of ensuring the grower can evaluate the 

information before the grower makes 

significant decisions. 

In response to comments to the 

proposed rule, AMS changed the final 

rule to make it applicable only to live 

poultry dealers that deal in broilers. The 

rule will not apply to live poultry 

dealers that deal with turkeys, ducks, 

geese, or other fowl unless the live 

poultry dealer also deals in broilers. For 

live poultry dealers that deal in broilers 

as well as turkeys or other fowl, the 

final rule only applies to the broiler 

operations. 

In response to comments, AMS also 

added provisions to § 201.102 that will 

require live poultry dealers to assist 

growers with understanding the 

Disclosure Documents for broiler 

growers that do not speak English as a 

primary language. AMS also added 


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184U.S. Small Business Administration. Table of 

Small Business Size Standards Matched to North 

American Industry Classification System Codes. 

Effective December 19, 2022. 

185USDA, NASS. 2017 Census of Agriculture: 

United States Summary and State Data. Volume 1, 

Part 51. Issued April 2019. p. 56. https://

www.nass.usda.gov/Publications/AgCensus/2017/ 

Full_Report/Volume_1,_Chapter_1_US/usv1.pdf. 186See U.S. Bureau of Labor Statistics, May 2021 

National Occupational Employment and Wage 

Estimates, May 2022. https://www.bls.gov/oes/ 

special.requests/oesm21all.zip. Viewed January 31, 

2023. 

provisions requiring live poultry dealers 

to describe policies and procedures, as 

well as any appeal rights arising 

increased lay-out time; sick, diseased, 

and high early mortality flocks; other 

events potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability. 

Applying the rule to fewer firms 

considerably reduces the aggregate cost 

to small businesses. The proposed rule 

would have applied to 54 small live 

poultry dealers. The final rule will 

apply to 20 live poultry dealers that are 

small businesses. This is mostly due to 

removing live poultry dealers that 

handle turkeys. There were very few 

live poultry dealers active in the 

markets for ducks, geese, and other 

fowl. Also, the smallest of the small live 

poultry dealers do not deal in broilers, 

and while they would have been 

required to comply with the proposed 

rule, the final rule will not apply to 

them. 

AMS also added disclosure 

requirements to the final rule that were 

not required in the proposed rule, and 

those disclosures will increase costs to 

the small businesses that will be 

required to comply with the final rule. 

The Small Business Administration 

(SBA) defines small businesses by their 

North American Industry Classification 

System Codes (NAICS). SBA considers 

broiler producers, NAICS 112320, small 

if sales are less than $3.5 million per 

year. Live poultry dealers, NAICS 

311615, are considered small businesses 

if they have fewer than 1,250 

employees.184

AMS maintains data on live poultry 

dealers from the annual reports these 

firms file with PSD. Data from the 

annual reports indicate that 42 live 

poultry dealers would have been subject 

to the regulation in their fiscal year 

2021. Twenty of the live poultry dealers 

would be small businesses according to 

the SBA standard. In their fiscal year 

2021, live poultry dealers reported that 

they had 19,808 broiler production 

contracts with broiler growers. Small 

live poultry dealers accounted for 950 

contracts. 

Annual reports from live poultry 

dealers indicate they had 19,808 

contracts, but a broiler grower can have 

more than one contract. The 2017 

Census of Agriculture indicated that 

there were 16,524 poultry growers in the 

United States.185 AMS has no record of 

the number of broiler growers that 

qualify as small businesses but expects 

that nearly all of them are small 

businesses. 

Costs of §§ 201.102 and 201.104 to 

live poultry dealers will primarily 

consist of the time required to gather the 

information and distribute it among the 

growers. Sections 201.102 and 201.104 

will also cost broiler growers the value 

of the time they put into reviewing and 

acknowledging receipt of the 

disclosures. 

Expected costs are estimated as the 

total value of the time required to 

produce and distribute the disclosures 

that will be required by §§ 201.102 and 

201.104 as well as the time to create and 

maintain any necessary additional 

records, although live poultry dealers 

already keep nearly all of the required 

records. Estimates of the amount of time 

required to create and distribute the 

disclosure documents were provided by 

AMS subject matter experts. These 

experts were auditors and supervisors 

with many years of experience in 

auditing live poultry dealers for 

compliance with the Act. Estimates for 

the value of the time are DOL BLS 

OEWS estimated released May 2022.186

AMS marked up the wages 41.82 

percent to account for benefits. 

AMS expects § 201.102 will initially 

require 1,589 hours of management time 

at $84.27 per hour costing $134,000, 720 

hours of attorney time at $131.38 per 

hour costing $95,000, 487 hours of 

administrative time at $41.71 per hour 

costing $20,000, and 396 hours of 

information technology staff hours at 

$92.91 per hour costing $37,000 to keep 

and maintain records and produce and 

distribute the disclosures. AMS expects 

§ 201.102 will annually require an 

additional 578 hours of management 

time at $84.27 per hour costing $49,000, 

116 hours of attorney time at $131.38 

per hour costing $15,000, 254 hours of 

administrative time at $41.71 per hour 

costing $11,000, and 148 hours of 

information technology staff hours at 

$92.91 per hour costing $14,000. Total 

aggregate first-year one-time set up costs 

to small live poultry dealers for 

§ 201.102 are expected to be $286,000. 

AMS expects aggregate cost to small live 

poultry dealers to be $88,000 annually, 

for a first-year total cost of $374,000. 

AMS estimated § 201.104 will require 

a one-time first year aggregate 

investment of 300 hours of management 

time at $84.27 per hour costing $25,000, 

220 hours of administrative time at 

$41.71 per hour costing $9,000, and 840 

hours of information technology staff 

time at $92.91 per hour costing $78,000. 

Total aggregate first-year setup costs are 

expected to be $112,000. 

AMS expects § 201.104 will annually 

require an aggregate additional 1,257 

hours distributed evenly across 

management, administrative, and 

information technology staff at $84.27, 

$41.71, and $92.91 per hour, 

respectively, costing $35,000, $17,000, 

and $39,000 respectively to keep and 

maintain records and produce and 

distribute the disclosures. Total 

aggregate first-year costs to small live 

poultry dealers for § 201.104 are 

expected to be $204,000. After the first 

year, aggregate costs are expected to be 

$92,000 annually. 

The rule will regulate live poultry 

dealers’ contracts. AMS expects that 

costs per live poultry dealer would be 

correlated with number of contracts. All 

expected costs of § 201.102 are 

associated with maintaining records and 

producing and distributing Disclosure 

Documents among contract growers. 

AMS expects that firms that contract 

with few growers will have lower costs. 

Larger live poultry dealers will tend to 

have more contracts and will likely have 

more costs. Section 201.104 only 

concerns poultry ranking systems. 

Smaller live poultry dealers that do not 

have tournament contracts will not have 

any of the costs associated with 

§ 201.104, and some live poultry dealers 

have few contracts with broiler growers 

and raise broiler in their own facilities. 

Those dealers will have relatively lower 

costs. 

AMS does not regulate poultry 

growers, and the rule has no 

requirements of poultry growers. To 

benefit from the disclosures, growers 

will need to review the information 

provided. Growers are not required to 

review the disclosure information in 

§§ 201.102 and 201.104, and growers 

that do not expect a benefit from 

reviewing the disclosure information 

likely will not review it. 

AMS estimates aggregate growers’ 

costs for reviewing disclosures 

associated with §§ 201.102 and 201.104 

combined to be $93,000 in the initial 

year. After broiler growers become 

familiar with the disclosures, they will 

likely require less time to review the 

documents, and AMS expects annual 

aggregate costs to growers will be 

$41,000 for years two through five and 

$38,000 each year thereafter. This 


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amounts to $117 per grower in the first 

year. The table below summarizes costs 

of §§ 201.102 and 201.104 to small live 

poultry dealers and small broiler 

growers. 

TABLE 5—ESTIMATED COSTS TO SMALL BUSINESSES OF §§ 201.102 AND 201.104 

Type of cost 

Regulated live 

poultry dealers 

(dollars) 

Unregulated 

growers 

(dollars) 

Total 

(dollars) 

§ 201.102: 

First-year Cost .................................................................................................... 374,000 58,000 432,000 

First-year Cost per Firm ..................................................................................... 19,000 73 NA 

PV of Ten-year Cost Discounted at 3 Percent .................................................. 1,031,000 137,000 1,168,000 

PV of Ten-year Cost Discounted at 7 Percent .................................................. 888,000 120,000 1,008,000 

Ten-year Cost Annualized at 3 Percent ............................................................. 121,000 16,000 137,000 

Ten-year Cost Annualized at 7 Percent ............................................................. 126,000 17,000 143,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ............................... 6,100 20 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ............................... 6,300 22 NA 

§ 201.104: 

First-year Cost .................................................................................................... 204,000 35,000 239,000 

First-year Cost per Firm ..................................................................................... 10,000 45 NA 

PV of Ten-year Cost Discounted at 3 Percent .................................................. 891,000 252,000 1,144,000 

PV of Ten-year Cost Discounted at 7 Percent .................................................. 749,000 209,000 958,000 

Ten-year Cost Annualized at 3 Percent ............................................................. 105,000 30,000 134,000 

Ten-year Cost Annualized at 7 Percent ............................................................. 107,000 30,000 136,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ............................... 5,300 37 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ............................... 5,400 37 NA 

§§ 201.102 and 201.104: 

First-year Cost .................................................................................................... 578,000 93,000 671,000 

First-year Cost per Firm ..................................................................................... 29,000 117 NA 

PV of Ten-year Cost Discounted at 3 Percent .................................................. 1,923,000 389,000 2,312,000 

PV of Ten-year Cost Discounted at 7 Percent .................................................. 1,637,000 329,000 1,965,000 

Ten-year Cost Annualized at 3 Percent ............................................................. 225,000 46,000 271,000 

Ten-year Cost Annualized at 7 Percent ............................................................. 233,000 47,000 280,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ............................... 11,300 58 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ............................... 11,700 59 NA 

Live poultry dealers report net sales 

in annual reports to AMS. Table 6 below 

groups small live poultry dealers’ net 

sales into quartiles, reports the average 

net sales in each quartile, and compares 

average net sales to average expected 

first-year costs per firm for each of 

§ 201.102 and § 201.104 and total firstyear costs. Estimated first-year costs are 

higher than 10-year annualized costs, 

and for the threshold analysis, first-year 

costs will be higher than annualized 

costs as percentage of net sales. 

Correspondingly, the ratio of ten-year 

annualized costs to net sales is lower 

than their corresponding first-year cost 

ratios listed in Table 6. If estimated 

costs meet the threshold in the first 

year, they will in the following years as 

well. 

Estimated first-year costs per firm are 

small. The ratio is less than 0.1 percent 

of average net sales in the three largest 

quartiles. Percentage of net sales are 

about 0.26 percent in the smallest 

quartile. 

TABLE 6—COMPARISON OF SMALL LIVE POULTRY DEALERS’ NET SALES TO EXPECTED ANNUALIZED COSTS OF

§§ 201.102 AND 201.104 

Quartile Average net sales 

(dollars) 

First year costs 

related to 

§ 201.102 as a 

percent of net 

sales 

(percent) 

First year costs 

related to 

§ 201.104 as a 

percent of net 

sales 

(percent) 

Total first year 

costs as a percent 

of net sales 

(percent) 

.

0 to 25 percent ........................................................................ 11,173,037 0.260 0.101 0.105 

25 to 50 percent ...................................................................... 30,021,116 0.097 0.038 0.039 

50 to 75 percent ...................................................................... 73,471,776 0.039 0.015 0.016 

75 to 100 percent .................................................................... 193,207,736 0.015 0.006 0.006 

AMS also estimated costs of an 

alternative proposal that would exempt 

most small live poultry dealers from the 

requirements of the regulations. The 

alternative would exempt all live 

poultry dealers that process less than 2 

million pounds of poultry per week 

from all reporting requirements. The 

alternative would only apply to five 

small business under the SBA standard. 

AMS estimated the alternative to 

§ 201.102 would require a one-time first 

year aggregate investment of 488 hours 

of management time at $84.27 per hour 

costing $41,000, 180 hours of attorney 

time at $131.38 per hour costing 

$24,000, 145 hours of administrative 

time at $41.71 per hour costing $6,000, 

and 163 hours of information 

technology staff time at $92.91 per hour 

costing $15,000. Aggregate total firstVerDate Sep<11>2014 18:08 Nov 27, 2023 Jkt 262001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4700 E:\FR\FM\28NOR2.SGM 28NOR2

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year setup costs are expected to be 

$86,000. AMS expects the alternative 

proposal for § 201.102 will annually 

require an additional aggregate 198 

hours of management time at $84.27 per 

hour costing $17,000, 29 hours of 

attorney time at $131.38 per hour 

costing $4,000, 92 hours of 

administrative time at $41.71 per hour 

costing $4,000, and 64 hours of 

information technology staff hours at 

$92.91 per hour costing $6,000 to keep 

and maintain records and produce and 

distribute the disclosures. Aggregate 

total first-year costs to small live poultry 

dealers for § 201.102 are expected to be 

$116,000. After the first year AMS 

expects aggregate costs to small live 

poultry dealers to be $30,000 annually. 

AMS estimated alternative § 201.104 

will require a one-time first year 

aggregate investment of 75 hours of 

management time at $84.27 per hour 

costing $6,000, 55 hours of 

administrative time at $41.71 per hour 

costing $2,000, and 210 hours of 

information technology staff time at 

$92.91 per hour costing $20,000. 

Aggregate total first-year setup costs are 

expected to be $28,000. 

AMS expects alternative § 201.104 

will annually require an additional 

aggregate 70 hours distributed evenly 

across management, administrative, and 

information technology staff at $84.27, 

$41.71, and $92.91 per hour, 

respectively, costing $2,000, $1,000, and 

$2,000 respectively to keep and 

maintain records and produce and 

distribute the disclosures. Aggregate 

total first-year costs to small live poultry 

dealers for alternative § 201.104 are 

expected to be $33,000. After the first 

year, costs are expected to be $5,000 

annually. 

The alternative would have a 

relatively small effect on costs to broiler 

growers on a per grower basis, and 

growers will only review the disclosures 

if they perceive that they are beneficial. 

AMS estimates growers’ aggregate costs 

for reviewing and acknowledging 

receipt of disclosures associated with 

§§ 201.102 and 201.104 to be $55,000 in 

the initial year. AMS expects annual 

aggregate costs to growers would be 

$24,000 for years two through five and 

$22,000 each year thereafter. Table 7 

below summarizes aggregate costs of 

alternative §§ 201.102 and 201.104 

combined to small live poultry dealers 

and small broiler growers. 

TABLE 7—ESTIMATED COSTS TO SMALL BUSINESSES OF ALTERNATIVE §§ 201.102 AND 201.104 

Type of cost 

Regulated live 

poultry dealers 

(dollars) 

Unregulated 

growers 

(dollars) 

Total 

(dollars) 

Alternative § 201.102: 

First-year Cost .................................................................................................... 116,000 34,000 150,000 

First Year-Cost Per Firm .................................................................................... 6,000 43 NA 

PV of Ten-year Cost Discounted at 3 Percent .................................................. 342,000 81,000 422,000 

PV of Ten-year Cost Discounted at 7 Percent .................................................. 293,000 71,000 364,000 

Ten-year Cost Annualized at 3 Percent ............................................................. 40,000 9,000 50,000 

Ten-year Cost Annualized at 7 Percent ............................................................. 42,000 10,000 52,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ............................... 2,000 12 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ............................... 2,100 13 NA 

Alternative § 201.104: 

First-year Cost .................................................................................................... 33,000 21,000 54,000 

First Year-Cost Per Firm .................................................................................... 2,000 26 NA 

PV of Ten-year Cost Discounted at 3 Percent .................................................. 71,000 149,000 220,000 

PV of Ten-year Cost Discounted at 7 Percent .................................................. 62,000 123,000 185,000 

Ten-year Cost Annualized at 3 Percent ............................................................. 8,000 17,000 26,000 

Ten-year Cost Annualized at 7 Percent ............................................................. 9,000 17,000 26,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ............................... 400 22 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ............................... 500 22 NA 

Alternative §§ 201.102 and 201.104: 

First-year Cost .................................................................................................... 150,000 55,000 204,000 

First Year-Cost Per Firm .................................................................................... 7,000 69 NA 

PV of Ten-year Cost Discounted at 3 Percent .................................................. 413,000 229,000 642,000 

PV of Ten-year Cost Discounted at 7 Percent .................................................. 355,000 193,000 549,000 

Ten-year Cost Annualized at 3 Percent ............................................................. 48,000 27,000 75,000 

Ten-year Cost Annualized at 7 Percent ............................................................. 51,000 28,000 78,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ............................... 2,400 34 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ............................... 2,600 35 NA 

Net sales for small live poultry dealers 

that will be required to make disclosure 

under alternative §§ 201.102 and 

201.104 averaged $159 million for their 

fiscal year 2020. Expected first-year cost 

per live poultry dealer will be well 

below 0.1 percent. Clearly, exempting 

live poultry dealers that process less 

than 2 million pounds of poultry per 

week will reduce cost to small live 

poultry dealers, but the benefits of the 

rule will also be less. AMS prefers the 

final §§ 201.102 and 201.104 to the 

alternative because it considers the 

information in the disclosures to be 

important for broiler growers for making 

investment and production decisions 

and necessary for the efficient 

functioning of the market. 

AMS made considerations for small 

live poultry dealers in drafting 

§§ 201.102 and 201.104. Section 201.102 

makes several exemptions for live 

poultry dealers producing less than 2 

million pounds of poultry per week. 

AMS chose not to make the final rule 

applicable to live poultry dealers that 

deal in turkeys, ducks, geese, or other 

fowl, which were some of the smallest 

live poultry dealers. 

Although costs would be smaller with 

the alternative, the costs associated with 

§§ 201.102 and 201.104 are relatively 

small. The rule seeks only to require 

live poultry dealers to provide its 

contract growers with information 

relevant to their operations, and AMS 

made every effort to limit the 

disclosures to information that live 

poultry dealer already possessed. Firstyear costs to regulated live poultry 

dealers are expected to be $578,000, 


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187The new sections that AMS proposed in 

§§ 201.100 and 201.214 are now §§ 201.102 and 

201.104 in the final rule, respectively. 

which would be about $29,000 per firm. 

Present value of ten-year costs 

annualized at 7 percent are expected to 

be $1.6 million, and ten-year costs 

annualized at 7 percent are expected to 

be $233,000. These amounts are small 

considering that small live poultry 

dealers averaged nearly $60 million in 

sales annually. Although estimates of 

costs relative net sales increase for the 

smallest live poultry dealers, §§ 201.102 

and 201.104 only apply to tournament 

contracts. Some of the smallest live 

poultry dealers do not use tournament 

contracts and will not incur any costs. 

While §§ 201.102 and 201.104 would 

have an effect on a substantial number 

(20) of small businesses, the economic 

impact would not be significant. 

Costs to growers will be limited to the 

time required to review the disclosure 

and acknowledge receipt of the 

disclosures. AMS expects that 

§§ 201.102 and 201.104 will have effects 

on a substantial number of growers 

however, the costs will not be 

significant for any of them. 

Based on the above analyses regarding 

§§ 201.102 and 201.104, this rule is not 

expected to have a significant economic 

impact on a substantial number of small 

business entities as defined in the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.) 

D. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), AMS published a 60-day 

notice and requested comments on the 

information collection and 

recordkeeping requirements of the 

proposed rule when it proposed 

revisions to §§ 201.100 and 201.214 in 

the Federal Register on June 8, 2022 (87 

FR 34980).187 The proposed information 

collection was for a total of 19,993 hours 

for the first year, and 6,066 hours per 

year thereafter. In response to 

comments, AMS revised the information 

collection requirements for the final rule 

and recalculated the information 

collection burden estimates accordingly, 

for a total of 17,205 hours for the first 

year, and 6,615 hours thereafter. The 

comment period was open for 60 days 

and was extended for an additional 15 

days. The comment period closed on 

August 23, 2022. Below is a summary of 

the final rule’s information collection 

requirements, the comments AMS 

received relating to the information 

collection requirements of the proposed 

rule, and any changes AMS made in 

response to the comments. 

This final rule requires live poultry 

dealers engaged in the production of 

broilers to provide certain disclosures to 

broiler growers in advance of entering 

into production contracts. Under the 

final rule, live poultry dealers engaged 

in the production of broilers are 

required to make certain disclosures to 

poultry growers with whom they 

contract. To assist with compliance, 

AMS is providing Form PSD 6100 (Live 

Poultry Dealer Disclosure Document 

Form Instructions), which includes 

instructions for developing the 

Disclosure Document and performing 

necessary calculations. 

This final rule also requires live 

poultry dealers engaged in the 

production of broilers who group and 

rank broiler growers for settlement 

purposes to disclose essential 

information to broiler growers about the 

flocks placed with individual growers at 

the time of placement. Live poultry 

dealers are also required to disclose 

information about the flocks and 

associated production inputs delivered 

to all broiler growers in the settlement 

group, as well as each grower’s ranking 

within the group, at the time of 

settlement. Broiler growers are not 

required to provide information but can 

use the information provided by live 

poultry dealers to improve flock 

management practices and evaluate 

grower treatment under broiler grower 

ranking systems. 

Summary information on the burdens 

of these new information collection and 

recordkeeping requirements follows 

below. Additional detail can be found in 

the Regulatory Impact Analysis (RIA). 

AMS estimates each of 42 live poultry 

dealers engaged in the production of 

broilers would develop an average of 

472 Disclosure Documents for broiler 

growers relating to new, renewed, 

revised, or updated broiler growing 

arrangements, as required under 

§ 201.102. AMS arrived at its estimate of 

472 developed Disclosure Documents 

per live poultry dealer from AMS 

records which show 42 live poultry 

dealers engaged in the production of 

broilers filed annual reports with AMS, 

and their reports indicate that they had 

19,808 growing contracts with broiler 

growers during their fiscal year 2021. 

AMS divided the 19,808 growing 

contracts by the 42 live poultry dealers 

to arrive at 472 Disclosure Documents 

per live poultry dealer. 

Live poultry dealers with current 

contracts with broiler growers would 

not be required to provide the 

Disclosure Document to those growers 

unless the dealer is renewing, revising, 

or replacing an existing contract or 

proposing modifications to the broiler 

housing specifications under the 

existing contract. AMS estimates first 

year development, production, and 

distribution of the Disclosure 

Documents in § 201.102, including 

management, legal, administrative, and 

information technology time, would 

require an average 0.59 hours each, 

while ongoing annual production and 

distribution of each Disclosure 

Document would take 0.20 hours. AMS 

arrived at the estimates of the number 

of hours per response to set up, 

produce, distribute, and maintain each 

Disclosure Document by dividing the 

annual number of hours to set up, 

produce, and distribute the disclosures 

(11,709 first year hours and 3,975 

ongoing hours) by the annual number of 

responses for all live poultry dealers 

(19,808). AMS estimated the number of 

hours for all live poultry dealers to 

develop, produce, distribute, and 

maintain each Disclosure Document 

required under § 201.102 from the 

number of hours estimated and the 

expected cost estimates in Tables 1 and 

2 in Appendix 1. 

AMS estimates 42 live poultry dealers 

engaged in the production of broilers 

would each provide placement and 

settlement records to an average of 628 

broiler growers annually under 

tournament ranking systems, as required 

under § 201.104. AMS estimated the 

annual number of placement and 

settlement records by multiplying the 

number of relevant slaughter plants in 

AMS records from the reports that live 

poultry dealers file with AMS (188) by 

the average number of tournaments at 

each plant per week from AMS subject 

matter experts (1.35) by 52 weeks. This 

product is then multiplied by two to 

account for both placement and 

settlement records. AMS then divided 

the estimated annual number of 

responses (26,395) by the number of live 

poultry dealers (42) engaged in the 

production of broilers to arrive at its 

estimate of 628 placement and 

settlement disclosure records for each 

live poultry dealer on an annual basis. 

AMS estimates first year 

development, production, and 

distribution of the required placement 

and settlement records, as required 

under § 201.104, including 

management, legal, administrative, and 

information technology time, will 

require approximately 0.21 hours. AMS 

estimates ongoing annual production 

and distribution of required tournament 

placement and settlement information 

would require an average of 0.10 hours. 

AMS arrived at the estimates of the 

number of hours per response to set up, 


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produce, distribute, and maintain each 

disclosure document by dividing the 

annual number of hours to set up, 

produce, and distribute the disclosures 

(5,496 first year hours and 2,640 

ongoing hours) by the annual number of 

responses for live poultry dealers 

(26,395). AMS estimated the number of 

hours for all live poultry dealers 

engaged in the production of broilers to 

develop, produce, and distribute each 

placement and settlement disclosure 

document required under § 201.104 

from the number of hours estimated and 

the expected cost estimates in Tables 3 

and 4 in Appendix 1. 

Under § 201.102, live poultry dealers 

are required to certify as to the accuracy 

of the Disclosure Documents and are 

required to maintain records relating to 

the Disclosure Documents for three 

years following expiration of the broiler 

growing arrangement. Under § 201.104, 

live poultry dealers are required to 

maintain records related to broiler 

grower tournament placements and 

settlement for 5 years. 

The required disclosures under 

§ 201.102 include essential information 

about the contract, the live poultry 

dealer’s business history, and financial 

projections the grower could use to 

evaluate entering into the contract. 

Under the rule, live poultry dealers are 

required to provide the Disclosure 

Documents, which include specified 

information and boilerplate grower 

notifications. AMS will make available 

PSD Form 6100 that dealers can 

download from the AMS website to 

assist with development of the required 

Disclosure Document. Live poultry 

dealers are required to obtain grower 

signatures as evidence of the grower’s 

receipt of the Disclosure Document, or 

obtain alternative documentation to 

evidence delivery and that best efforts 

were used to obtain grower receipt. Live 

poultry dealers are also required to 

retain the signature pages for three years 

following contract expiration. 

Section 201.104 requires live poultry 

dealers engaged in the production of 

broilers who group or rank broiler 

growers for settlement purposes to 

disclose information about each flock of 

broiler placed with growers for growout 

at the time of placement. Additionally, 

live poultry dealers are required to 

provide to each broiler grower in the 

group, at the time of settlement, 

information about the flocks placed 

with every grower in the group, as well 

as each grower’s performance ranking 

within the group. Growers can use 

placement disclosures to inform flock 

management decisions during growout, 

and can use settlement disclosures to 

evaluate their growout performance, 

potentially improve future performance, 

and evaluate whether group members 

are treated fairly. Live poultry dealers 

are required to maintain records related 

to these disclosures for 5 years 

following settlement. 

Costs of Final §§ 201.102 and 201.104 

The combined costs to live poultry 

dealers engaged in the production of 

broilers for compliance with the 

reporting and recordkeeping 

requirements of final §§ 201.102 and 

201.104 are expected to be $1,437,096 in 

the first year, and $511,788 in 

subsequent years. The total hours 

estimated for the live poultry dealers to 

create, produce, distribute, and 

maintain these documents are 17,205 in 

the first year, and 6,615 in subsequent 

years. Complete details showing how 

AMS arrived at these cost estimates 

appear in Tables 1–4 in Appendix 1. 

Comments From the Proposed Rule and 

Changes to the Final Rule 

After consideration of public 

comments, AMS determined to adopt 

the proposed rule as a final rule with 

several modifications. This section 

provides an overview of the comments 

and how the final rule differs from the 

proposed rule. 

The proposed rule would have 

required all live poultry dealers, and not 

just those engaged in the production of 

broilers, to provide the new disclosures 

required in revised § 201.102 and new 

§ 201.104. Based on public comments 

and other information, AMS 

subsequently decided to require the new 

disclosures only of live poultry dealers 

involved in broiler production. Thus, 

the number of entities affected by the 

final rule is substantially lower than 

originally estimated. This change 

significantly reduced the recordkeeping 

burden. This and other changes between 

the proposed and final rule are 

discussed in more detail below. 

Live poultry dealers commented that 

the full cost of the proposed rule would 

likely be many times greater than 

predicted by AMS. The commenters 

asserted AMS greatly underestimated 

the costs of creating the recordkeeping 

systems needed to comply with the 

proposed rule. 

In drafting and in estimating the costs 

of proposed §§ 201.100 and 201.214, 

AMS consulted auditors and 

supervisors who are familiar with live 

poultry dealers’ records from many 

years of experience in auditing live 

poultry dealers for compliance with the 

Act. AMS expects that recordkeeping 

systems that most live poultry dealers 

already have in place will enable them 

to gather much of the information in the 

disclosures from records they already 

have available to them and limit the 

necessity of developing new 

recordkeeping systems. Thus, AMS 

made no changes to the information 

collection requirements of the proposed 

rule based on this comment. 

As mentioned above and will be 

explained in further detail below, AMS 

did change the language of the proposed 

rule to limit its application to broiler 

production. In order to make 

compliance with the final rule as easy 

as possible for regulated entities to 

follow, AMS reorganized the final rule 

by moving the new disclosures required 

into revised § 201.102 and new 

§ 201.104. 

In the final rule, AMS removed the 

proposed revisions to § 201.100 

requiring all live poultry dealers to 

provide certain additional disclosures to 

prospective or current growers and 

placed the requirements in new 

§ 201.102. AMS also amended the 

proposed requirements to apply 

exclusively to live poultry dealers 

engaged in the production of broilers 

who use a broiler growing ranking 

system to calculate grower payments, 

and moved the requirements from 

proposed new § 201.214 to new 

§ 201.104. This reorganization of the 

rule does not impact the recordkeeping 

requirements or costs of the final rule. 

A commenter representing the turkey 

industry noted the proposed rule was 

largely based on research into the 

broiler industry. The commenter 

asserted it would be extremely difficult 

for turkey companies to implement the 

rule due to differences between turkey 

and chicken production. AMS analyzed 

a sample of turkey production contracts 

from across the country and concluded 

that, although research suggests broiler 

grower contract payments span a wide 

range, a similar disparity is not readily 

apparent in turkey production. Based on 

the comment and our further study, 

AMS has limited the applicability of 

final §§ 201.102 and 201.104 to live 

poultry dealers engaged in the 

production of broilers. The final rule 

does not apply to live poultry dealers 

engaged in the production of turkeys, 

ducks, geese, and other domestic fowl. 

This change reduced the information 

collection burden from 89 respondents 

made up of live poultry dealers engaged 

in the production of broilers, turkeys, 

ducks, geese, and other domestic fowl to 

42 live poultry dealers engaged in the 

production of broilers. Accordingly, this 

change reduced the information 

collection burden on live poultry 

dealers between the proposed 

§§ 201.100 and 201.214 and final 

§§ 201.102 and 201.104. 


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AMS proposed to require live poultry 

dealers to make various financial 

disclosures to broiler growers, including 

a table showing ‘‘average annual gross 

payments’’ made to growers at all 

complexes owned or operated by the 

live poultry dealer for the previous 

calendar year, as well as to growers at 

the local complex. Poultry and meat 

trade associations suggested AMS 

require dealers to disclose average 

annual gross payments only for the 

grower’s local complex. These 

commenters noted that complexes in 

different geographic areas face different 

economic conditions, arguing that 

information about payments at other 

complexes would not be useful and 

would potentially confuse growers. 

Therefore, AMS removed the 

requirement proposed in § 201.100(d)(1) 

to disclose payment information for all 

complexes owned or operated by the 

dealer. AMS maintains the requirement 

proposed in § 201.100(d)(2) for live 

poultry dealers engaged in the 

production of broilers to disclose 

payment information only relating to 

the broiler grower’s local complex at 

§ 201.102(d)(1) of the final rule. 

Accordingly, this change reduced the 

information collection burden on live 

poultry dealers between the proposed 

and final rule. 

Both growers and live poultry dealers 

also requested in comments that AMS 

provide more specificity on how to 

calculate average annual gross 

payments. While the proposed rule 

provided detail on calculations, the 

commenters felt the instructions lacked 

sufficient specificity to assure that live 

poultry dealers could comply and that 

broiler growers received adequate data 

on which to base business decisions. 

Therefore, AMS developed more indepth instructions on how to calculate 

them, which are included in Form PSD 

6100 (Live Poultry Dealer Disclosure 

Document Form Instructions). AMS 

added a modest amount of time to its 

cost estimates for live poultry dealers to 

review the instructions. 

Several commenters recommended 

that AMS also require the disclosure of 

grower turnover data. Grower turnover 

rates relate to the general risk of 

termination and non-renewal of 

contracts with a live poultry dealer. 

This information would allow growers 

to compare the turnover rates of 

multiple live poultry dealers as a risk 

factor when making contracting 

decisions. Therefore, AMS added a 

provision at § 201.102(c)(5) of the final 

rule requiring live poultry dealers 

engaged in the production of broilers to 

disclose average annual broiler grower 

turnover rates for the previous calendar 

year and the average of the 5 previous 

calendar years at both the company 

level and the local complex level. AMS 

developed instructions for how to 

calculate average annual broiler grower 

turnover rates, which are included in 

Form PSD 6100. AMS added a modest 

amount of time to its cost estimates for 

live poultry dealers to review the 

instructions and calculate grower 

turnover rates. 

Numerous commenters from the 

grower and live poultry dealer sectors 

expressed that these provisions should 

be in plain and unambiguous language 

to avoid discrepancies in interpretation 

among the various parties, regulators, 

and courts. Some commenters also 

indicated a need to ensure growers who 

are not native speakers of English can 

understand the disclosures. Therefore, 

AMS added a provision at 

§ 201.102(g)(3) of the final rule to 

require live poultry dealers engaged in 

the production of broilers to present the 

information in the Disclosure Document 

in a clear, concise, and understandable 

manner for growers. 

AMS also added a provision at 

§ 201.102(g)(4) to require that the live 

poultry dealer must make reasonable 

efforts to ensure that growers are aware 

of their right to request translation 

assistance, and to assist the grower in 

translating the Disclosure Document at 

least 14 calendar days before the live 

poultry dealer executes the broiler 

growing arrangement although the 

grower can waive 7 calendar days of 

that time period. Reasonable efforts 

include but are not limited to providing 

current contact information for 

professional translation service 

providers, trade associations with 

translator resources, relevant 

community groups, or any other person 

or organization that provides translation 

services in the broiler grower’s 

geographic area. A live poultry dealer 

may not restrict a broiler grower or 

prospective broiler grower from 

discussing or sharing the Disclosure 

Document for purposes of translation 

with a person or organization that 

provides language translation services. 

Nothing in the rule prevents companies 

from providing a translation provided it 

is complete, accurate, and not 

misleading. AMS added a modest 

amount of time to its cost estimates for 

live poultry dealers to comply with 

these new requirements. 

In the proposed rule, AMS did not 

specifically propose to require live 

poultry dealers to disclose their policies 

on grower payments with respect to 

increased lay-out time, diseased flocks, 

natural disasters and other depopulation 

events, feed issues or outages, or 

policies on grower appeal rights and 

processes. Multiple commenters 

suggested AMS include these 

disclosures. In the final rule, AMS 

added a provision at § 201.102(c)(4) 

requiring live poultry dealers engaged in 

the production of broilers to disclose 

policies and procedures on increased 

lay-out time; sick, diseased, or high 

early mortality flocks; natural disasters, 

weather events, or other events 

adversely affecting the physical 

infrastructure of the local complex or 

the grower facility; other events 

potentially resulting in massive 

depopulation of flocks, affecting grower 

payments; feed outages including outage 

times; and grower complaints relating to 

feed quality, formulation, or suitability, 

as well as any appeal rights arising out 

of these events. AMS added a modest 

amount of time to its cost estimates for 

live poultry dealers to comply with this 

new requirement. 

The proposed rule would have 

required live poultry dealers to provide 

growers with copies of the disclosure 

document and a true written copy of the 

contract 7 calendar days prior to 

executing the contract. The final rule 

changes the 7-day requirement to a 14- 

day requirement, but the broiler grower 

has the option to waive 7 calendar days 

of that time period. 

The proposed rule also would have 

required live poultry dealers to obtain 

the broiler grower’s or prospective 

broiler grower’s dated signature as 

evidence of receipt or obtain alternative 

documentation acceptable to the 

Administrator as evidence of receipt. 

The final rule will require live poultry 

dealers to obtain the broiler grower’s or 

prospective broiler grower’s dated 

signature as evidence of receipt or 

obtain alternative documentation to 

evidence delivery and that best efforts 

were used to obtain grower receipt. 

AMS proposed in § 201.100(f)(1)(i) to 

require live poultry dealers to establish, 

maintain, and enforce a governance 

framework reasonably designed to audit 

the accuracy and completeness of the 

disclosures in the Disclosure Document, 

which must include audits and testing, 

as well as reviews of an appropriate 

sampling of Disclosure Documents by 

the principal executive officer or 

officers. AMS determined that the 

requirement in § 201.102(f)(2) for the 

principal executive officer or officers to 

certify the governance framework and 

the accuracy of the Disclosure 

Document adequately covers the 

intended requirement for officers of this 

level to be focused on the effectiveness 

of the governance framework. AMS 

concluded that this level of detail about 

the audit process for the Disclosure 


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Document was not necessary, 

particularly as AMS seeks to balance the 

need to ensure reliability of these 

statements with the burden on the 

principal executive officers regarding 

details of the governance process. 

Therefore, AMS removed the 

requirement proposed in 

§ 201.100(f)(1)(i) for audit, testing, and 

reviews of an appropriate sampling of 

Disclosure Documents by the principal 

executive officer or officers. 

E. E-Government Act 

USDA is committed to complying 

with the E-Government Act by 

promoting the use of the internet and 

other information technologies to 

provide increased opportunities for 

citizen access to Government 

information and services, and for other 

purposes. 

F. Executive Order 12988—Civil Justice 

Reform 

This final rule has been reviewed 

under Executive Order 12988—Civil 

Justice Reform. This rule is not intended 

to have retroactive effect. This rule does 

not preempt State or local laws, 

regulations, or policies, unless they 

present an irreconcilable conflict with 

this rule. There are no administrative 

procedures that must be exhausted prior 

to any judicial challenge to the 

provisions of this rule. Nothing in this 

final rule is intended to interfere with 

a person’s right to enforce liability 

against any person subject to the Act 

under authority granted in section 308 

of the Act. 

G. Executive Order 13175—Consultation 

and Coordination With Tribal Indian 

Governments 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175—Consultation 

and Coordination with Indian Tribal 

Governments. Executive Order 13175 

requires Federal agencies to consult 

with Tribes on a government-togovernment basis on policies that have 

Tribal implications, including 

regulations, legislative comments or 

proposed legislation, and other policy 

statements or actions that have 

substantial direct effects on one or more 

Indian Tribes, on the relationship 

between the Federal Government and 

Indian Tribes or the distribution of 

power and responsibilities between the 

Federal Government and Indian Tribes. 

AMS has determined that this final 

rule does not have substantial direct 

effects on one or more Tribes that would 

require consultation. If a Tribe requests 

consultation, AMS will work with 

USDA’s Office of Tribal Relations to 

ensure meaningful consultation is 

provided where changes, additions, and 

modifications identified herein are not 

expressly mandated by Congress. AMS 

will also conduct outreach to ensure 

that Tribes and Tribal members are 

aware of the requirements and benefits 

under this final rule. 

H. Civil Rights Impact Analysis 

AMS has considered the potential 

civil rights implications of this final rule 

on members of protected groups to 

ensure that no person or group will be 

adversely or disproportionately at risk 

or discriminated against on the basis of 

race, color, national origin, gender, 

religion, age, disability, sexual 

orientation, marital or family status, or 

protected genetic information. The rule 

does not create a program that would 

recruit or require the opt-in 

participation of poultry producers, 

growers, or live poultry dealers. This 

rule does not contain any requirements 

related to eligibility, benefits, or services 

that will have the purpose or effect of 

excluding, limiting, or otherwise 

disadvantaging any individual, group, 

or class of persons on one or more 

prohibited bases. In fact, the regulation 

will create means by which AMS may 

be able to address potential civil rights 

issues in violation of the Act. 

In its review, AMS conducted a 

disparate impact analysis, using the 

required calculations, which resulted in 

a finding that Asian Americans, Pacific 

Islanders, and Native Hawaiians were 

disproportionately impacted by the rule, 

insofar as fewer farmers in those groups 

participate in poultry production than 

would be expected by their 

representation among U.S. farmers in 

general and therefore are less likely to 

benefit from the enhanced transparency 

provided by the rule. The final 

regulations will nevertheless provide 

benefits to all poultry growers. AMS 

will institute enhancement efforts to 

notify the groups found to be 

disproportionately impacted of the 

regulations and their implications. AMS 

outreach will specifically target several 

organizations that regularly engage with 

or otherwise may represent the interests 

of these impacted groups. 

I. Congressional Review Act 

Pursuant to Subtitle E of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, also known as the 

Congressional Review Act (5 U.S.C. 801 

et seq.), the Office of Information and 

Regulatory affairs designated this final 

rule as not a major rule as defined by 

5 U.S.C. 804(2). 

List of Subjects in 9 CFR Part 201 

Confidential business information, 

Reporting and recordkeeping 

requirements, Stockyards, Surety bonds, 

Trade practices. 

For the reasons set forth in the 

preamble, the Agricultural Marketing 

Service amends 9 CFR part 201 as 

follows: 

PART 201—ADMINISTERING THE 

PACKERS AND STOCKYARDS ACT 

■ 1. The authority citation for 9 CFR 

part 201 continues to read as follows: 

Authority: 7 U.S.C. 181–229c. 

■ 2. Section 201.2 is revised to read as 

follows: 

§ 201.2 Terms defined. 

The definitions of terms contained in 

the Act shall apply to such terms when 

used in Administering the Packers and 

Stockyards Act, 9 CFR part 201; Rules 

of Practice Governing Proceedings 

Under the Packers and Stockyards Act, 

9 CFR part 202; and Statements of 

General Policy Under the Packers and 

Stockyards Act, 9 CFR part 203. In 

addition, the following terms used in 

these parts shall be construed to mean: 

Act means the Packers and Stockyards 

Act, 1921, as amended and 

supplemented (7 U.S.C. 181 et seq.). 

Additional capital investment means 

a combined amount of $12,500 or more 

per structure paid by a poultry grower 

or swine production contract grower 

over the life of the poultry growing 

arrangement or swine production 

contract beyond the initial investment 

for facilities used to grow, raise, and 

care for poultry or swine. Such term 

includes the total cost of upgrades to the 

structure, upgrades of equipment 

located in and around each structure, 

and goods and professional services that 

are directly attributable to the additional 

capital investment. The term does not 

include costs of maintenance or repair. 

Administrator or agency head means 

the Administrator of the Agricultural 

Marketing Service or any person 

authorized to act for the Administrator. 

Agency means the Agricultural 

Marketing Service of the United States 

Department of Agriculture. 

Breeder facility identifier means the 

identification that a live poultry dealer 

permanently assigns to distinguish 

among breeder facilities supplying eggs 

for the poultry placed at the poultry 

grower’s facility. 

Breeder flock age means the age in 

weeks of the egg-laying flock that is the 

source of poultry placed at the poultry 

grower’s facility. 

Broiler means any chicken raised for 

meat production. 


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Broiler grower means a poultry grower 

engaged in the production of broilers. 

Broiler growing arrangement means a 

poultry growing arrangement pertaining 

to the production of broilers. 

Commerce means commerce between 

any State, Territory, or possession, or 

the District of Columbia, and any place 

outside thereof; or between points 

within the same State, Territory, or 

possession, or the District of Columbia, 

but through any place outside thereof; 

or within any Territory or possession, or 

the District of Columbia. 

Complex means a group of local 

facilities under the common 

management of a live poultry dealer. A 

complex may include, but not be 

limited to, one or more hatcheries, feed 

mills, slaughtering facilities, or poultry 

processing facilities. 

Custom feedlot means any facility 

which is used in its entirety or in part 

for the purpose of feeding livestock for 

the accounts of others, but does not 

include feeding incidental to the sale or 

transportation of livestock. 

Department means the United States 

Department of Agriculture. 

Gross payments are the total 

compensation a poultry grower receives 

from the live poultry dealer, including, 

but not limited to, base payments, new 

housing allowances, energy allowances, 

square footage payments, extended layout time payments, equipment 

allowances, bonus payments, additional 

capital investment payments, poultry 

litter payments, etc., before deductions 

or assignments are made. 

Grower variable costs means those 

costs related to poultry production that 

may be borne by the poultry grower, 

which may include, but are not limited 

to, utilities, fuel, water, labor, repairs 

and maintenance, and liability 

insurance. 

Housing specifications means a 

description of—or a document relating 

to—a list of equipment, products, 

systems, and other technical poultry 

housing components required by a live 

poultry dealer for the production of live 

poultry. 

Inputs means the various 

contributions to be made by the live 

poultry dealer and the poultry grower as 

agreed upon by both under a poultry 

growing arrangement. Such inputs may 

include, but are not limited to, animals, 

feed, veterinary services, medicines, 

labor, utilities, and fuel. 

Letter of intent means a document that 

expresses a preliminary commitment 

from a live poultry dealer to engage in 

a business relationship with a 

prospective poultry grower and that 

includes the chief terms of the 

agreement. 

Live poultry dealer means any person 

engaged in the business of obtaining live 

poultry by purchase or under a poultry 

growing arrangement for the purpose of 

either slaughtering it or selling it for 

slaughter by another, if poultry is 

obtained by such person in commerce, 

or if poultry obtained by such person is 

sold or shipped in commerce, or if 

poultry products from poultry obtained 

by such person are sold or shipped in 

commerce. 

Live Poultry Dealer Disclosure 

Document means the complete set of 

disclosures and statements that the live 

poultry dealer must provide to the 

poultry grower. 

Minimum number of placements 

means the least number of flocks of 

poultry the live poultry dealer will 

deliver to the grower for growout 

annually under the terms of the poultry 

growing arrangement. 

Minimum stocking density means the 

ratio that reflects the minimum weight 

of poultry per facility square foot the 

live poultry dealer intends to harvest 

from the grower following each 

growout. 

Number of placements means the 

number of flocks of poultry the live 

poultry dealer will deliver to the grower 

for growout during each year of the 

poultry growing arrangement period. 

Original capital investment means the 

initial financial investment for facilities 

used to grow, raise, and care for poultry 

or swine. 

Packers and Stockyards Division 

(PSD) means the Packers and Stockyards 

Division of the Fair Trade Practices 

Program (FTPP), Agricultural Marketing 

Service. 

Person means individuals, 

partnerships, corporations, and 

associations. 

Placement means delivery of a 

poultry flock to the poultry grower for 

growout in accordance with the terms of 

a poultry growing arrangement. 

Poultry grower means any person 

engaged in the business of raising and 

caring for live poultry for slaughter by 

another, whether the poultry is owned 

by such person or by another, but not 

an employee of the owner of such 

poultry. 

Poultry grower ranking system means 

a system where the contract between the 

live poultry dealer and the poultry 

grower provides for payment to the 

poultry grower based upon a grouping, 

ranking, or comparison of poultry 

growers delivering poultry during a 

specified period. 

Poultry growing arrangement means 

any growout contract, marketing 

agreement, or other arrangement under 

which a poultry grower raises and cares 

for live poultry for delivery, in accord 

with another’s instructions, for 

slaughter. 

Poultry growout means the process of 

raising and caring for poultry in 

anticipation of slaughter. 

Poultry growout period means the 

period of time between placement of 

poultry at a grower’s facility and the 

harvest or delivery of such animals for 

slaughter, during which the feeding and 

care of such poultry are under the 

control of the grower. 

Principal part of performance means 

the raising of and caring for livestock or 

poultry, when used in connection with 

a livestock or poultry production 

contract. 

Prospective broiler grower means a 

person or entity with whom the live 

poultry dealer is considering entering 

into a broiler growing arrangement. 

Prospective poultry grower means a 

person or entity with whom the live 

poultry dealer is considering entering 

into a poultry growing arrangement. 

Regional director means the regional 

director of the Packers and Stockyards 

Division (PSD) for a given region or any 

person authorized to act for the regional 

director. 

Registrant means any person 

registered pursuant to the provisions of 

the Act and the regulations in this part. 

Schedule means a tariff of rates and 

charges filed by stockyard owners and 

market agencies. 

Secretary means the Secretary of 

Agriculture of the United States, or any 

officer or employee of the Department 

authorized to act for the Secretary. 

Stocking density means the ratio that 

reflects the number of birds in a 

placement, expressed as the number of 

poultry per facility square foot. 

Stockyard means a livestock market 

which has received notice under section 

302(b) of the Act that it has been 

determined by the Secretary to come 

within the definition of ‘‘stockyard’’ 

under section 302(a) of the Act. 

■ 3. Amend § 201.100 by revising 

paragraphs (a) and (b) to read as follows: 

§ 201.100 Records to be furnished poultry 

growers and sellers. 

(a) Poultry growing arrangement; 

timing of disclosure. A live poultry 

dealer who offers a poultry growing 

arrangement to a poultry grower must 

provide the poultry grower with a true 

written copy of the offered poultry 

growing arrangement on the date the 

dealer provides the poultry grower with 

poultry housing specifications. 

(b) Right to discuss the terms of 

poultry growing arrangement offer. A 

live poultry dealer, notwithstanding any 

confidentiality provision in the poultry 


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growing arrangement, may not prohibit 

a poultry grower or prospective poultry 

grower from discussing the terms of a 

poultry growing arrangement offer or, if 

applicable, the accompanying Live 

Poultry Dealer Disclosure Document 

described in § 201.102 (b) through (d) of 

this part with any of the following: 

(1) A Federal or State agency. 

(2) The grower’s financial advisor or 

lender. 

(3) The grower’s legal advisor. 

(4) An accounting services 

representative hired by the grower. 

(5) Other growers for the same live 

poultry dealer. 

(6) A member of the grower’s 

immediate family or a business 

associate. A business associate is a 

person not employed by the grower, but 

with whom the grower has a valid 

business reason for consulting with 

when entering into or operating under a 

poultry growing arrangement. 

* * * * * 

■ 4. Add § 201.102 to read as follows: 

§ 201.102 Disclosures for broiler 

production. 

(a) Obligation to furnish information 

and documents. In addition to the 

requirements of § 201.100 of this part, a 

live poultry dealer engaged in the 

production of broilers must provide the 

documents described in this section to 

the prospective or current broiler 

grower. 

(1) Except as provided in paragraph 

(e) of this section, when a live poultry 

dealer seeks to renew, revise, or replace 

an existing broiler growing arrangement, 

or to establish a new broiler growing 

arrangement that does not contemplate 

modifications to the existing housing 

specifications, the live poultry dealer 

must provide the following documents 

at least 14 calendar days before the live 

poultry dealer executes the broiler 

growing arrangement (provided that the 

grower may waive up to 7 calendar days 

of that time period): 

(i) A true, written copy of the 

renewed, revised, replacement, or new 

broiler growing arrangement. 

(ii) The Live Poultry Dealer Disclosure 

Document, as described in paragraphs 

(b), (c), and (d) of this section. 

(2) When a live poultry dealer seeks 

to enter a broiler growing arrangement 

with a broiler grower or prospective 

broiler grower that will require an 

original capital investment, the live 

poultry dealer must provide the 

following to the broiler grower or 

prospective broiler grower 

simultaneously with the housing 

specifications: 

(i) A copy of the broiler growing 

arrangement that is affiliated with the 

current housing specifications. 

(ii) The Live Poultry Dealer Disclosure 

Document, as described in paragraphs 

(b), (c), and (d) of this section. 

(iii) A letter of intent that can be 

relied upon to obtain financing for the 

original capital investment. 

(3) When a live poultry dealer seeks 

to offer or impose modifications to 

existing housing specifications that 

could reasonably require a broiler 

grower or prospective broiler grower to 

make an additional capital investment, 

the live poultry dealer must provide the 

following to the broiler grower or 

prospective broiler grower 

simultaneously with the modified 

housing specifications: 

(i) A copy of the broiler growing 

arrangement that is affiliated with the 

modified housing specifications. 

(ii) The Live Poultry Dealer Disclosure 

Document, as described in paragraphs 

(b), (c), and (d) of this section. 

(iii) A letter of intent that can be 

relied upon to obtain financing for the 

additional capital investment. 

(b) Prominent Disclosures. The Live 

Poultry Dealer Disclosure Document 

must include a cover page followed by 

the disclosures as required in 

paragraphs (c) and (d) of this section. 

The order, form, and content of the 

cover page shall be and include: 

(1) The title ‘‘LIVE POULTRY 

DEALER DISCLOSURE DOCUMENT’’ in 

capital letters and bold type. 

(2) The live poultry dealer’s name, 

type of business organization, principal 

business address, telephone number, 

email address, and, if applicable, 

primary internet website address. 

(3) The length of the term of the 

broiler growing arrangement. 

(4) The following statement: ‘‘The 

income from your poultry farm may be 

significantly affected by the number of 

flocks the poultry company places on 

your farm each year, the density or 

number of birds placed with each flock, 

and the target weight at which poultry 

is caught. The poultry company may 

have full discretion and control over 

these and other factors. Please carefully 

review the information in this 

document.’’ 

(5) The following minimums 

established under the terms of the 

broiler growing arrangement: 

(i) The minimum number of 

placements on the broiler grower’s farm 

annually. 

(ii) The minimum stocking density for 

each flock to be placed on the broiler 

grower’s farm. 

(6) The applicable of the following 

two statements: 

(i) ‘‘This disclosure document 

summarizes certain provisions of your 

broiler growing arrangement and other 

information. You have the right to read 

this disclosure document and all 

accompanying documents carefully. At 

least 14 calendar days before the live 

poultry dealer executes the broiler 

growing arrangement (provided that the 

grower may waive up to 7 calendar days 

of that time period), the poultry 

company is required to provide you 

with: (1) this disclosure document, and 

(2) a copy of the broiler growing 

arrangement.’’ or 

(ii) ‘‘This disclosure document 

summarizes certain provisions of your 

broiler growing arrangement and other 

information. You have the right to read 

this disclosure document and all 

accompanying documents carefully. The 

live poultry dealer is required to 

provide this disclosure document to you 

simultaneously with (a) a copy of the 

broiler growing arrangement, (b) any 

new or modified housing specifications 

that would require you to make an 

original or additional capital 

investment, and (c) a letter of intent.’’ 

(7) The following statement: ‘‘Even if 

the broiler growing arrangement 

contains a confidentiality provision, by 

law you still retain the right to discuss 

the terms of the broiler growing 

arrangement and the Live Poultry Dealer 

Disclosure Document with a Federal or 

State agency, your financial advisor or 

lender, your legal advisor, your 

accounting services representative, 

other growers for the same live poultry 

dealer, and your immediate family or 

business associates. A business 

associate is a person not employed by 

you but with whom you have a valid 

business reason for consulting when 

entering into or operating under a 

broiler growing arrangement.’’ 

(8) The following statement in bold 

type: ‘‘Note that USDA has not verified 

the information contained in this 

document. If this disclosure by the live 

poultry dealer contains any false or 

misleading statement or a material 

omission, a violation of Federal and/or 

State law may have occurred.’’ 

(c) Required disclosures following the 

cover page. The live poultry dealer shall 

disclose, in the Live Poultry Dealer 

Disclosure Document following the 

cover page, the following information: 

(1) A summary of litigation over the 

prior 5 years between the live poultry 

dealer and any broiler grower, including 

the nature of the litigation, its location, 

the initiating party, a brief description 

of the controversy, and any resolution. 

(2) A summary of all bankruptcy 

filings in the prior 5 years by the live 

poultry dealer and any parent, 


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subsidiary, or related entity of the live 

poultry dealer. 

(3) A statement that describes the live 

poultry dealer’s policies and procedures 

regarding the potential sale of the 

broiler grower’s facility or assignment of 

the broiler growing arrangement to 

another party, including the 

circumstances under which the live 

poultry dealer will offer the successive 

buyer a broiler growing arrangement. 

(4) A statement describing the live 

poultry dealer’s policies and 

procedures, as well as any appeal rights 

arising from the following events 

described in paragraphs (c)(4)(i) through 

(c)(4)(vi) of this section. If no policy or 

procedure exists, the live poultry dealer 

will acknowledge ‘‘no policy exists’’ 

relating to the items in paragraphs 

(c)(4)(i) through (c)(4)(vi) of this section. 

(i) Increased lay-out time. 

(ii) Sick, diseased, and high earlymortality flocks. 

(iii) Natural disasters, weather events, 

or other events adversely affecting the 

physical infrastructure of the local 

complex or the grower facility. 

(iv) Other events potentially resulting 

in massive depopulation of flocks, 

affecting grower payments. 

(v) Feed outages, including outage 

times. 

(vi) Grower complaints relating to 

feed quality, formulation, or suitability. 

(5) A table showing the average 

annual broiler grower turnover rates for 

the previous calendar year and the 

average of the 5 previous calendar years 

at a company level and at a local 

complex level. 

(d) Financial Disclosures. The live 

poultry dealer must include in the Live 

Poultry Dealer Disclosure Document the 

following information: 

(1) Tables showing average annual 

gross payments to broiler growers at the 

local complex for each of the 5 previous 

years. The tables must express average 

payments in U.S. dollars per farm 

facility square foot. The tables must be 

organized to present the following 

elements: 

(i) Year. 

(ii) Housing specification tier (lowest 

to highest). 

(iii) Distribution of payments, 

specifically either— 

(A) Quintile (lowest to highest), for a 

local complex comprising 10 or more 

growers, or 

(B) Mean and one standard deviation 

from the mean, for a local complex 

comprising 9 or fewer growers. 

(2) If poultry housing specifications 

for broiler growers under contract with 

the complex are modified such that an 

additional capital investment may be 

required, or if the 5-year averages 

provided under paragraph (d)(1) of this 

section do not accurately represent 

projected grower gross annual payments 

under the terms of the applicable broiler 

growing arrangement for any reason, the 

live poultry dealer must provide the 

following information: 

(i) Tables providing projections of 

average annual gross payments to 

broiler growers under contract with the 

complex with the same housing 

specifications for the term of the broiler 

growing arrangement at five quintile 

levels or by mean and standard 

deviation expressed as dollars per farm 

facility square foot. 

(ii) An explanation of why the annual 

gross payment averages for the previous 

5 years, as provided under paragraph 

(d)(1) of this section, do not provide an 

accurate representation of projected 

future payments, including the basic 

assumptions underlying the projections 

provided under paragraph (d)(2)(i) of 

this section. 

(3) A summary of information the live 

poultry dealer collects or maintains 

relating to grower variable costs 

inherent in broiler production. 

(4) Current contact information for the 

State university extension service office 

or the county farm advisor’s office that 

can provide relevant information about 

broiler grower costs and broiler farm 

financial management in the broiler 

grower’s geographic area. 

(e) Small Live Poultry Dealer 

Financial Disclosures. A live poultry 

dealer engaged in the production of 

broilers is exempt from the 

requirements in paragraph (a)(1) of this 

section if the live poultry dealer, 

together with all companies controlled 

by or under common control with the 

live poultry dealer, slaughters fewer 

than 2 million live pounds of broilers 

weekly (104 million pounds annually). 

(f) Governance and Certification. (1) 

The live poultry dealer engaged in the 

production of broilers must establish, 

maintain, and enforce a governance 

framework that is reasonably designed 

to: 

(i) Audit the accuracy and 

completeness of the disclosures 

required under paragraphs (a) through 

(d) of this section. 

(ii) Ensure compliance with all 

obligations under the Packers and 

Stockyards Act and regulations 

thereunder. 

(2) The principal executive officer or 

officers, or persons performing similar 

functions, must certify in the Live 

Poultry Dealer Disclosure Document 

that the live poultry dealer has 

established, maintains, and enforces the 

governance framework and that, based 

on the officer’s knowledge, the Live 

Poultry Dealer Disclosure Document 

does not contain any untrue statement 

of a material fact or omit to state a 

material fact which would render it 

misleading. 

(g) Receipt by Growers. (1) The Live 

Poultry Dealer Disclosure Document 

must include a broiler grower’s 

signature page that contains the 

following statement: ‘‘If the live poultry 

dealer does not deliver this disclosure 

document within the timeframe 

specified herein, or if this disclosure 

document contains any false or 

misleading statement or a material 

omission (including any discrepancy 

with other oral or written statements 

made in connection with the broiler 

growing arrangement), a violation of 

Federal and State law may have 

occurred. Violations of Federal and 

State laws may be determined to be 

unfair, unjustly discriminatory, or 

deceptive and unlawful under the 

Packers and Stockyards Act, as 

amended. You may file a complaint at 

farmerfairness.gov or call 1–833–DIAL– 

PSD (1–833–342–5773) if you suspect a 

violation of the Packers and Stockyards 

Act or any other Federal law governing 

fair and competitive marketing, 

including contract growing, of livestock 

and poultry. Additional information on 

rights and responsibilities under the 

Packers and Stockyards Act may be 

found at www.ams.usda.gov.’’ 

(2) The live poultry dealer must 

obtain the broiler grower’s or 

prospective broiler grower’s dated 

signature on the broiler grower’s 

signature page in paragraph (g)(1) of this 

section as evidence of receipt or obtain 

alternative documentation to evidence 

delivery and that best efforts were used 

to obtain grower receipt. The live 

poultry dealer must provide a copy of 

the dated signature page or alternative 

documentation to the broiler grower or 

prospective broiler grower and must 

retain a copy of the dated signature page 

or alternative documentation in the 

dealer’s records for 3 years following 

expiration, termination, or non-renewal 

of the broiler growing arrangement. 

(3) Information in the Live Poultry 

Dealer Disclosure Document must be 

presented in a clear, concise, and 

understandable manner for growers. 

Live poultry dealers may refer to Form 

PSD 6100 for further instructions on the 

presentation of information and certain 

calculations. 

(4) The live poultry dealer must make 

reasonable efforts to ensure that growers 

are aware of their right to request 

translation assistance, and to assist the 

grower in translating the Disclosure 

Document at least 14 calendar days 

before the live poultry dealer executes 


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the broiler growing arrangement that 

does not contemplate modifications to 

the existing housing specifications 

(provided that the grower may waive up 

to 7 calendar days of that time period) 

or where modifications to the existing 

housing specifications are contemplated 

when the live poultry dealer provides 

the grower with the Disclosure 

Document. Reasonable efforts include 

but are not limited to providing current 

contact information for professional 

translation service providers, trade 

associations with translator resources, 

relevant community groups, or any 

other person or organization that 

provides translation services in the 

broiler grower’s geographic area. A live 

poultry dealer may not restrict a broiler 

grower or prospective broiler grower 

from discussing or sharing the 

Disclosure Document for purposes of 

translation with a person or 

organization that provides language 

translation services. 

(h) Contract terms. A live poultry 

dealer engaged in the production of 

broilers must specify in the true written 

copy of the broiler growing arrangement 

the following: 

(1) The minimum number of 

placements of poultry at the broiler 

grower’s facility annually. 

(2) The minimum stocking density for 

each flock placed with the broiler 

grower under the broiler growing 

arrangement. 

■ 5. Add § 201.104 to read as follows: 

§ 201.104 Disclosures for broiler grower 

ranking system payments. 

(a) Poultry grower ranking system 

records. If a live poultry dealer engaged 

in the production of broilers uses a 

poultry grower ranking system to 

calculate broiler grower payments, the 

live poultry dealer must produce 

records in accordance with paragraphs 

(b) and (c) of this section. The live 

poultry dealer must maintain these 

records for 5 years. 

(b) Placement Disclosure. Within 24 

hours of flock delivery to a broiler 

grower’s facility, the live poultry dealer 

must provide all the following 

information to the broiler grower 

regarding the placement: 

(1) The stocking density of the 

placement. 

(2) Names and all ratios of breeds of 

the poultry delivered. 

(3) If the live poultry dealer has 

determined the sex of the birds, all 

ratios of male and female poultry 

delivered. 

(4) The breeder facility identifier. 

(5) The breeder flock age. 

(6) Information regarding any known 

health impairments of the breeder flock 

or of the poultry delivered. 

(7) Adjustments, if any, that the live 

poultry dealer may make to the 

calculation of the grower’s pay based on 

the inputs in paragraphs (b)(1) through 

(b)(6) of this section. 

(c) Poultry grower ranking system 

settlement documents. In addition to the 

requirements of § 201.100 of this part, a 

live poultry dealer must provide 

disclosures to all broiler growers on the 

grouping or ranking sheets as described 

in paragraphs (c)(1) and (c)(2) of this 

section. The disclosures need not show 

the names of other growers. 

(1) Live poultry dealers must disclose 

the housing specification for each 

broiler grower grouped or ranked during 

the specified period. 

(2) Live poultry dealers must disclose 

all the following information to each 

broiler grower participant ranked under 

a poultry grower ranking system: 

(i) The stocking density for each 

placement in the ranking. 

(ii) The names and all ratios of breeds 

of the poultry for each placement in the 

ranking. 

(iii) If the live poultry dealer has 

determined the sex of the birds, all 

ratios of male and female poultry for 

each placement in the ranking. 

(iv) All breeder facility identifiers for 

each placement in the ranking. 

(v) The breeder flock age(s) for each 

placement in the ranking. 

(vi) The number of feed disruptions 

each ranked broiler grower endured 

during the growout period where the 

grower was completely out of feed for 

12 hours or more. 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

Appendix 1. Details of the Estimated 

One-Time, First-Year Costs and OnGoing Annual Costs of Providing 

Disclosure Documents Required in 

§§ 201.102 and 201.104 

Table 1 below provides the details of the 

estimated one-time, first-year costs to live 

poultry dealers (LPD) of providing disclosure 

documents required in § 201.102. AMS 

expects that the direct costs will consist 

entirely of the value of the time required to 

produce and distribute the disclosures and 

maintain proper records. The number of 

hours the second column were provided by 

AMS subject matter experts. These experts 

were auditors and supervisors with many 

years of experience in auditing live poultry 

dealers for compliance with the Act. They 

provided estimates of the average amount of 

time that would be necessary for each live 

poultry dealer to meet each of the elements 

listed in the ‘‘Regulatory Requirements’’ 

column. Estimates for the value of the time 

are U.S. Bureau of Labor Statistics 

Occupational Employment and Wage 

Statistics estimated released May 2022. Wage 

estimates are marked up 41.82 percent to 

account for benefits. The ‘‘Adjustment’’ 

column allows for estimation of costs that 

will only apply to a subset of the poultry 

growers or to the live poultry dealers. A 

blank value in the Adjustment column 

indicates that no adjustments were made to 

the costs. Each adjustment is different and 

described in the relevant footnote. Expected 

costs for each ‘‘Regulatory Requirement’’ and 

are listed in the ‘‘Expected Cost’’ column. 

Summing the values in the ‘‘Expected Cost’’ 

column provides the total expected first-year, 

one-time costs for setting-up and producing 

the disclosure documents associated with 

§ 201.102. 

TABLE 1—EXPECTED FIRST-YEAR DIRECT COSTS ASSOCIATED WITH § 201.102 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Adjustment 

(percent) 

Expected cost 

($) 

201.102(b)(1)–(8) ................................ 1 Manager .............................................. 84.27 42 ........................ 3,539 

4 Lawyer ................................................. 131.38 42 ........................ 22,072 

201.102(c)(1)–(3) ................................. 10 Manager .............................................. 84.27 42 ........................ 35,393 

5 Administrative ...................................... 41.71 42 ........................ 8,759 

10 Lawyer ................................................. 131.38 42 ........................ 55,180 

201.102(c)(4) ....................................... 2 Manager .............................................. 84.27 a 188 ........................ 31,685 

4 Manager .............................................. 84.27 42 ........................ 14,157 

1 Lawyer ................................................. 131.38 42 ........................ 5,518 

201.102(c)(5) ....................................... 1 Manager .............................................. 84.27 a 188 ........................ 15,843 

201.102(d)(1)(2)(i) ............................... 30 Manager .............................................. 84.27 b 27 c 90 61,432 

8 Administrative ...................................... 41.71 b 27 c 90 8,108 

22 Information Tech ................................. 92.91 b 27 c 90 49,667 

201.102(d)(1)(2)(ii)–(v) ........................ 60 Manager .............................................. 84.27 42 d 5 10,618 

16 Administrative ...................................... 41.71 42 d 5 1,401 


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TABLE 1—EXPECTED FIRST-YEAR DIRECT COSTS ASSOCIATED WITH § 201.102—Continued 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Adjustment 

(percent) 

Expected cost 

($) 

44 Information Tech ................................. 92.91 42 d 5 8,584 

201.102(d)(3) ....................................... 20 Manager .............................................. 84.27 42 e 5 3,539 

5 Administrative ...................................... 41.71 42 e 5 438 

15 Information Tech ................................. 92.91 42 e 5 2,927 

201.102(d)(4) ....................................... 6 Manager .............................................. 84.27 42 ........................ 21,236 

2 Administrative ...................................... 41.71 42 ........................ 3,504 

201.102(d)(5) ....................................... 0.5 Manager .............................................. 84.27 42 ........................ 1,770 

0.5 Administrative ...................................... 41.71 42 ........................ 876 

201.102(f) ............................................ 40 Manager .............................................. 84.27 42 ........................ 141,572 

20 Lawyer ................................................. 131.38 42 ........................ 110,360 

10 Administrative ...................................... 41.71 42 ........................ 17,518 

10 Information Tech ................................. 92.91 42 ........................ 39,020 

201.102(g)(1)(2) .................................. 1 Manager .............................................. 84.27 42 ........................ 3,539 

1 Administrative ...................................... 41.71 42 ........................ 1,752 

201.102(i)(2) ........................................ 1 Manager .............................................. 84.27 42 ........................ 3,539 

1 Lawyer ................................................. 131.38 42 ........................ 5,518 

Total Cost ..................................... ........................ ............................................................. ........................ ........................ ........................ f 689,063 

aAMS estimated a manager’s time required for each of the 188 broiler complexes rather than the 42 live dealer firms. 

b 201.102(d)(1)(i) only applies to live poultry dealers that process more than 2 million pounds of broilers per week. 

c Reduces estimated costs by 10 percent to exclude the 5 percent for the estimated proportion of growers that require upgrades to poultry housing and 5 percent 

for the estimated proportion of growers that enter a contract for the first time. dEstimates costs for the 5 percent of the growers that require upgrades to poultry housing and enter into contracts for the first time. 

eEstimates costs for the 5 percent of the growers that require upgrades to poultry housing. 

fTotal may not sum due to rounding. 

Table 2 provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in § 201.102. 

Table 2 is laid out the same as Table 1. AMS 

subject matter experts provided estimates in 

the second column of the average amount of 

time that would be necessary for each live 

poultry dealer to meet each of the elements 

listed in the ‘‘Regulatory Requirements’’ 

column. Estimates for the value of the time 

are from U.S. Bureau of Labor Statistics 

Occupational Employment and Wage 

Statistics released May 2022. Wage estimates 

are marked up 41.82 percent to account for 

benefits. The ‘‘Adjustment’’ column allows 

for estimation of costs that will only apply 

to a subset of the poultry growers or to the 

live poultry dealers. Expected costs for each 

‘‘Regulatory Requirement’’ and are listed in 

the ‘‘Expected Cost’’ column. Summing the 

values in the ‘‘Expected Cost’’ column 

provides the total expected costs for 

producing and distributing the disclosure 

documents associated with § 201.102 on an 

ongoing basis. 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH § 201.102 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

201.102(a)(1) ....................................... 0.08 Evenly distributed among management, administrative, and information tech.

a 72.96 19,417 b 74.72 88,212 

201.102(a)(2) ....................................... 0.08 Evenly distributed among management, administrative, and information tech.

1 72.96 19,808 c 5 6,022 

201.102(a)(3) ....................................... 0.08 Evenly distributed among management, administrative, and information tech.

1 72.96 19,808 d 5 6,022 

201.102(b) ........................................... 0.5 Manager .............................................. 84.27 42 ........................ 1,770 

0.5 Administrative ...................................... 41.71 42 ........................ 876 

201.102(c)(1)–(3) ................................. 1 Manager .............................................. 84.27 42 ........................ 3,539 

1 Administrative ...................................... 41.71 42 ........................ 1,752 

1 Lawyer ................................................. 131.38 42 ........................ 5,518 

201.102(c)(4) ....................................... 0.5 Manager .............................................. 84.27 e 188 ........................ 7,921 

1 Manager .............................................. 84.27 42 ........................ 3,539 

0.5 Lawyer ................................................. 131.38 42 ........................ 2,759 

201.102(c)(5) ....................................... 0.5 Manager .............................................. 84.27 e 188 ........................ 7,921 

201.102(d) ........................................... 0.17 (10 min.) Administrative ...................................... 41.71 e 188 ........................ 1,307 

201.102(d)(1)(i) .................................... 15 Manager .............................................. 84.27 f 27 g 90 30,716 

3 Administrative ...................................... 41.71 f 27 g 90 3,041 

6 Information Tech ................................. 92.91 f 27 g 90 13,546 

201.102(d)(1)(ii)–(v) ............................. 30 Manager .............................................. 84.27 42 h 5 5,309 

6 Administrative ...................................... 41.71 42 h 5 526 

12 Information Tech ................................. 92.91 42 h 5 2,341 

201.102(d)(2) ....................................... 10 Manager .............................................. 84.27 f 27 i 5 1,770 

2 Administrative ...................................... 41.71 f 27 i 5 175 

4 Information Tech ................................. 92.91 f 27 i 5 780 

201.102(d)(3) ....................................... 0.25 Manager .............................................. 84.27 42 ........................ 885 

0.25 Administrative ...................................... 41.71 42 ........................ 438 

201.102(d)(4) ....................................... 0.25 Manager .............................................. 84.27 42 ........................ 885 

0.25 Administrative ...................................... 41.71 42 ........................ 438 

201.102(f) ............................................ 20 Manager .............................................. 84.27 42 ........................ 70,786 

5 Lawyer ................................................. 131.38 42 ........................ 27,590 


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83296 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH § 201.102—Continued 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

3 Administrative ...................................... 41.71 42 ........................ 5,255 

4 Information Tech ................................. 92.91 42 ........................ 15,608 

201.102(g) ........................................... 0.25 Administrative ...................................... 41.71 e 188 ........................ 1,960 

Total Cost ..................................... ........................ ............................................................. ........................ ........................ ........................ j 319,206 

a $72.96 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff at $84.27, $41.71, 

and $92.91 respectively. b 74.72 is the percentage of the existing poultry grower contracts that are expected to come up for renewal each year. It includes all flock-to-flock and single year 

contracts as well as longer term contracts that are expected to expire within a year. cEstimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

dEstimates costs for only the 5 percent of growers that that enter contract for the first time. 

eAMS estimated a manager’s time required for each of the 188 broiler complexes rather than the 42 live dealer firms. 

f 201.102(d)(1)(i) only applies to live poultry dealers that process more than 2 million pounds of poultry per week. 

g Reduces estimated cost by 10 percent to exclude the 5 percent for the estimated proportion of growers that require upgrades to poultry housing and 5 percent for 

the estimated proportion of growers that enter a contract for the first time. hEstimates cost for the 5 percent of the growers that require upgrades to poultry housing and enter into contracts for the first time. 

iEstimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

jTotal may not sum due to rounding. 

Table 3 below provides the details of the 

estimated one-time, first-year costs to live 

poultry dealers of providing disclosure 

documents required in § 201.104. Like the 

previous tables, AMS subject matter experts 

provided estimates in the second column of 

the average amount of time that would be 

necessary for each live poultry dealer to meet 

each of the elements listed in the ‘‘Regulatory 

Requirements’’ column. Values in the 

‘‘Expected Wage’’ column are taken from U.S. 

Bureau of Labor Statistics Occupational 

Employment and Wage Statistics released 

May 2022. Wage estimates are marked up 

41.82 percent to account for benefits. The 

number of LPDs is the number of live poultry 

dealers that filed annual reports with AMS 

for their 2021 fiscal years. ‘‘Expected Cost’’ 

is the estimate of the cost of each ‘‘Regulatory 

Requirement.’’ Summing the ‘‘Expected 

Cost’’ column provides the total expected 

first-year, one-time costs for setting-up and 

producing the disclosure documents 

associated with § 201.104. 

TABLE 3—ONE TIME FIRST-YEAR COSTS ASSOCIATED WITH § 201.104 

Regulatory requirement Number of 

hours per LPD Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Expected cost 

($) 

201.104(a) ......................................................... 2 Manager ............................................................ 84.27 42 7,079 

4 Administrative ................................................... 41.71 42 7,007 

2 Information Technology .................................... 92.91 42 7,804 

201.104(b) ......................................................... 5 Manager ............................................................ 84.27 42 17,696 

2 Administrative ................................................... 41.71 42 3,504 

18 Information Technology .................................... 92.91 42 70,237 

201.104(c) .......................................................... 8 Manager ............................................................ 84.27 42 28,314 

5 Administrative ................................................... 41.71 42 8,759 

22 Information Technology .................................... 92.91 42 85,845 

Total Cost ................................................... ........................ ........................................................................... ........................ ........................ a 236,244 

aTotal may not sum due to rounding. 

Table 3 below provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in § 201.104. 

AMS subject matter experts provided 

estimates in the second column of the 

average amount of time that would be 

necessary for each live poultry dealer to meet 

each of the elements listed in the ‘‘Regulatory 

Requirements’’ column. They also provided 

the expected number of tournaments per 

plant. The number of processing plants was 

tallied from the annual reports that live 

poultry dealers file with AMS. Values in the 

‘‘Expected Wage’’ column were found in U.S. 

Bureau of Labor Statistics Occupational 

Employment and Wage Statistics released 

May 2022. Wage estimates are marked up 

41.82 percent to account for benefits. 

Multiplying across the row provides the 

‘‘Cost’’ for each ‘‘Regulatory Requirement,’’ 

and summing the ‘‘Cost’’ column provides 

the total expected costs for producing and 

distributing the disclosure documents 

associated with § 201.104 on an ongoing 

basis. 

TABLE 4—ONGOING EXPECTED COSTS ASSOCIATED WITH § 201.104 

Regulatory requirement Hours Profession Number of 

plants 

Number of 

tournaments 

per plant 

Weeks in a 

year 

Avg. wage 

($) 

Cost 

($) 

201.104(b) ............................. 0.1 Evenly distributed among 

management, administrative, and information tech.

188 1.35 52 a 72.96 96,291 

201.104(c) ............................. 0.1 Evenly distributed among 

management, administrative, and information tech.

188 1.35 52 a 72.96 96,291 

Total Cost ....................... ........................ ................................................ ........................ ........................ ........................ ........................ 192,582 

a $72.96 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff at $84.27, $41.71, 

and $92.91 respectively. 


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188This Risk Premium may be considered a 

special case of the compensating variation concept 

in economics. With the proposed rule changes 

leading to greater transparency in returns, the 

grower would be getting a decrease in revenue 

variability but would not have to pay to get this. 

Hence the Risk Premium is a measure of benefit to 

the grower of being under the new contract rules. 

189The academic literature tends to be vague as 

to setting w0, with it either set at $0 or some 

unspecified amount. In principle, it could be set at 

the producer’s net equity going into the year, but 

if one wants initial wealth for the proposes of utility 

analysis to be relative liquid assets, net equity 

maybe too high a value. 

190To put this coefficient of variation of broiler 

revenue of 0.16 in perspective, note that the lowerend estimate of the coefficient of variation of farm 

level revenue for major row crops is considerably 

higher as one might expect, at 0.25 even with crop 

insurance (Cooper 2010; Belasco, Cooper, and 

Smith, 2019). 

191USDA, NASS. 2017 Census of Agriculture: 

United States Summary and State Data, (April 

2019). 

192For estimation, G = 10,000 is used to allow for 

a larger λ and reduce the potential for machine error 

in rounding. 

Appendix 2. Technical Overview of 

Estimates of the Economic Benefits of 

Reduction in Profit Uncertainty to 

Contract Broiler Growers With Rule 

Changes Promoting Greater 

Transparency in Returns 

A potential benefit of the contract 

disclosure rules providing increased 

transparency would be that doing so could 

lower the uncertainty in the contract broiler 

grower’s profit stream. According to 

economic principles, a risk averse producer 

will benefit economically from a reduction in 

profit risk, a component of the proposed 

rule’s benefits, discussed above. Given 

assumptions about the level of risk aversion 

of the producer, the distribution of contract 

grower profit, and the grower’s utility 

function (an economic concept that in this 

case measures the grower’s preferences over 

a set of goods), it is possible to calculate the 

range of economic benefits to contract 

growers of decreased profit uncertainty 

associated with greater transparency. For this 

analysis, we assume that the producer 

maximizes an absolute risk aversion (ARA) 

utility function. The alternative to an 

absolute risk aversion function is a relative 

risk aversion function (RRA). For the former, 

the coefficient of risk aversion is the negative 

of the ratio of the second to first derivatives 

of the utility function with respect to the 

good (e.g., wealth or consumption) while the 

latter multiples this ratio times the level of 

the good. We could find only two papers that 

used either RRA or ARA for examining North 

American poultry contract growers. Hu 

(2015) and Hegde and Vukina (2003) assume 

CARA for U.S. broiler contract growers. The 

former is an econometric exercise that does 

not provide sufficient information to obtain 

a risk aversion parameter for use in a 

scenario analysis and the latter is simply a 

simulation exercise of a wide range of 

arbitrary parameter values for the absolute 

risk aversion parameters without referring 

them to a given range of risk aversion 

premium (RAP) levels to provide context. 

A benefit of relative risk aversion is that 

the relative risk aversion parameter is scale 

free, which represents a convenience for 

analysis. We assume that one reason for the 

greater use of relative risk aversion compared 

to absolute risk aversion is that it saves the 

researcher the work of having to solve the 

nonlinear equations necessary to scale the 

risk parameters to the size of the risky bet. 

A nice property of the absolute risk aversion 

is that the preferences for risk aversion are 

directly reflective of where the researcher 

wants risk preferences to be on a 0%-100% 

percentage of the standard deviation of the 

gamble that a risk averter would pay to avoid 

the gamble altogether. With relative risk 

aversion in contrast, the researcher instead 

refers to say, ‘‘typical’’ values of the relative 

risk aversion coefficient. Relative risk 

aversion measure is sensitive to what is 

included or excluded when defining or 

measuring the outcome variable, e.g., 

whether wealth or profits (Meyer and Meyer, 

2005). When the focus is on representing and 

measuring the risk preferences of the 

decision maker, as it is in the analysis of 

broiler growers, either relative or absolute 

risk aversion is sufficient as the basis for the 

analysis, and since simple arithmetic allows 

one to go from model to the other, only one 

of these approaches is needed (ibid.). 

Another decision to be made is how the 

producer’s risk aversion changes with 

wealth. Under constant absolute risk aversion 

(CARA), the grower’s risk aversion does not 

change as wealth increases. Decreasing 

absolute risk aversion (DARA) assumes that 

the grower’s risk aversion increases as wealth 

increases. Another possibility is that the 

grower’s risk aversion is increasing in wealth 

(IARA). While no evidence exists one way or 

another for how risk preferences of broiler 

contract growers change with wealth, the 

agricultural economics literature generally 

assumes DARA over IARA. We have no 

information one way or another on how the 

risk aversion of contract growers changes 

with wealth, and hence, we use both CARA 

and DARA. 

First, we assume that the grower has 

constant absolute risk aversion (CARA) and 

makes management decisions to maximize 

the expected value of a negative exponential 

utility function over N simulated returns, or 

U(w) = (1¥e¥lw) 

where l is the grower’s absolute risk aversion 

coefficient and w is the grower’s wealth that 

proxies for a set of goods and services. The 

higher is l, the higher the grower’s aversion 

variability in w. Wealth w is a stochastic 

variable defined as the grower’s initial (fixed) 

wealth w0 plus the stochastic net returns. A 

negative exponential utility function 

conforms to the hypothesis that growers 

prefer less risk to more given the same 

expected, or average, return. 

The specific functional form in the 

equation above also assumes that growers 

view the riskiness of profit variability the 

same without regard for their level of wealth, 

i.e., CARA (e.g., Goodwin, 2009). A risk 

averse grower will be willing to accept lower 

mean net returns in exchange for lower 

variability in returns w. Let U0 be the 

grower’s current utility and U1 be the 

grower’s utility with the new contract rules 

and their associated lower variability of w. 

Assuming mean w is constant between states, 

for the risk averse grower, U1 > U0. The 

question then becomes how to translate the 

benefit U1–U0 into a dollar value. We define 

the Risk Premium (RP), or the dollar benefit 

to growers of decreased profit risk, as the 

amount of mean profit they would be willing 

to give up such that U1 = U0, i.e., such that 

they are indifferent between the two states 

(e.g., Sproul et al. 2013; Schnitkey et al., 

2003).188

The first step is to construct an empirical 

distribution of grower profit or net revenue. 

The market value of contracted share of 

broilers in 2020 was $20.9 billion given 

NASS data on their total value of production 

and the 96.3 percent shares that are contract. 

Eleven percent of this value goes to contract 

growers, based on the ratio of the USDA’s 

Livestock Indemnity Program (LIP) payment 

rate for contract growers divided by the rate 

for livestock owners, leading to a mean gross 

revenue of $2.3 billion for broiler growers. 

Variable and fixed costs are assumed to be 

non-stochastic and are set at 24 and 19 

percent of the 2020 mean gross revenue, 

based on the proportions from Table 1 in 

Maples et al. (2020), and net revenue is the 

gross revenue less the variable and fixed 

costs. Initial (non-stochastic) wealth w0 is set 

equal to 2020 mean net revenue.189 Grower 

net revenue is assumed to follow a normal 

distribution. A normal distribution of net 

revenue will approximate the distribution in 

cumulative distribution function of net 

revenue in Figure 1 of Maples et al. (2020) 

with a coefficient of variation of revenue of 

0.16.190 Given this estimate of the coefficient 

of variation of net revenue, and the mean net 

revenue of $1.33 billion for broiler contract 

grower net revenue, the standard deviation 

can be simply found as the coefficient of 

variation of net revenue times this mean. 

The associated absolute risk aversion 

coefficient l is associated with a grower’s 

risk aversion premium (RAP), a value that 

varies between 0 and 100 percent (of the 

potential loss) and reflects the amount the 

grower is willing to pay to avoid the potential 

loss, with higher values reflecting higher risk 

aversion. The l is linked to the RAP on a 

theoretical basis outlined in Babcock, Choi, 

and Feinerman (1993). The associated 

absolute risk aversion coefficient l is scaled 

to the standard deviation of net revenue 

using the approach in Babcock, Choi, and 

Feinerman (1993). Note that since l is scaled 

to the standard deviation of net revenue, the 

calculation of the total Risk Premium across 

all growers, or RP = Si RPi, i = 1 . . . , G 

equal size growers is invariant to 

assumptions about the total number of 

growers G, whether set to an arbitrary value 

or to the 16,524 contract broiler growers per 

the 2017 Agricultural Census.191 The 

estimated value of l is 1.10E–09, 1.10E–06, 

and 1.1E–05 for G = 1, 1,000, and 10,000 

equal sized growers, respectively, with an 

RAP of 20 percent.192 A von NeumannMorgenstern expected utility is estimated 

over N = 1,000 draws of wj where EU0 is 


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83298 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

and EU1 is 

where w1j are draws from the normal 

distribution given an assumption for a lower 

coefficient of variation of gross revenue with 

the new rules, but with the same initial 

wealth, costs, and mean gross revenue as in 

the base case. The risk premium RP that 

solves EU1(w1) = EU0(w) is found using a 

numerical search routine. 

For the DARA scenario, we follow 

Hennessy (1998), and the CARA utility 

function becomes 

U (w) = (1¥e¥lw) + βw 

where β is greater than zero. Let ρ(w) be the 

risk aversion coefficient under DARA, i.e., 

r(w) is decreasing in w. Hennessy (ibid.) 

shows that ρ(w) is a function of λ and β as 

Per Hennessy (ibid.), we solve for the values 

of λ and β to simultaneously satisfy a ρ(w = 

0) associated with a RAP of 40 percent and 

a ρ(w = w) associated with a RAP of 20 

percent. Like Hennessy (ibid.), we assume 

that the Babcock, Choi, and Feinerman 

approach to relate the risk coefficient to the 

RAP level holds approximately for DARA 

preferences. The rest of the approach for 

finding the risk premium RP that solves 

EU1(w1) = EU0(w) is the same as for the CARA 

scenarios. Appendix Table A1 summarizes 

the parameters and risk attitudes used in the 

analysis, with the RAP value denoted as θ. 

APPENDIX TABLE A1—NATURE OF CHOSEN UTILITY FUNCTIONS

Parameters and risk attitudes Low and CARA High and CARA DARA 

λ ................................................................................................................................. 1.099164E–05 2.40788E–05 2.0533761e–05 

β ................................................................................................................................. 0 0 3.9580000e–09 

θ[w = 0] ...................................................................................................................... 0.20 0.40 0.40 

θ[w = w] ..................................................................................................................... 0.20 0.40 0.20 

ρ[w = 0] ...................................................................................................................... 1.099164E–05 2.40788E–05 2.0529804e–05 

ρ[w = w] ..................................................................................................................... 1.099164E–05 2.40788E–05 1.0991640e–05 

References 

Babcock, B.E. Choi, and E. Feinerman, ‘‘Risk 

and Probability Premiums for CARA 

Utility Functions’’, J. Agric. & Res. Econ., 

Vol 18(1):17–24. 1993. 

Belasco, Eric, Joseph Cooper, and Vincent 

Smith. ‘‘The Development of a Weatherbased Crop Disaster Program,’’ American 

Journal of Agricultural Economics Vol. 

102/1(August 2019):240–258. 

Cooper, Joseph. ‘‘Average Crop Revenue 

Election: A Revenue-Based Alternative to 

Price-Based Commodity Payment 

Programs,’’ American Journal of 

Agricultural Economics, Vol. 92/4 (July 

2010): 1214–1228. 

Goodwin, B. ‘‘Payment Limitations and 

Acreage Decisions Under Risk Aversion: 

A Simulation Approach,’’ American 

Journal of Agricultural Economics, 91(1) 

(February 2009): 19–41. 

Hegde, S. Aaron, and Tomislav Vukina. 2003. 

Risk Sharing in Broiler Contracts: A 

Welfare Comparison of Payment 

Mechanisms Paper prepared for 

presentation at the American 

Agricultural Economics Association 

Annual Meeting, Montreal, Canada, July 

27–30, 2003. 

Hennessy, D.A. 1998. ‘‘The Production 

Effects of Agricultural Income Support 

Policies under Uncertainty.’’ American 

Journal of Agricultural Economics 80:46– 

57. 

Hu, W. (2015) The role of risk and riskaversion in adoption of alternative 

marketing arrangements by the U.S. 

farmers, Applied Economics 47:27, 

2899–2912 

Hurley, T., P. Mitchell, and M. Rice. ‘‘Risk 

and the Value of Bt Corn,’’ Am. J. Agric. 

Econ. Vol 82, no. 2 (May 2004): 345–358. 

Maples, Joshua G., Jada M. Thompson, John 

D. Anderson, and David P. Anderson. 

‘‘Estimating COVID–19 Impacts on the 

Broiler Industry,’’ Applied Economic 

Perspectives and Policy, September 9, 

2020. 

Mitchell, P.M. Gray, and K. Steffey. ‘‘A 

Composed-Error Model for Estimating 

Pest-Damage Functions and The Impact 

of the Western Corn Rootworm Soybean 

Variant in Illinois,’’ Amer. J. Agri. Econ., 

Vol 86, no. 2 (May 2004): 332–344. 

Schnitkey, Gary, Bruce Sherrick, and Scott 

Irwin. ‘‘Evaluation of Risk Reductions 

Associated with Multi-Peril Crop 

Insurance Products,’’ Agricultural 

Finance Review, Spring 2003: 1–21. 

Sproul, Thomas, David Zilberman, and 

Joseph Cooper. ‘‘Deductibles versus 

Coinsurance in Shallow-Loss Crop 

Insurance,’’ Choices, 3rd Quarter 2013. 

Appendix 3. Details of the Estimated 

One-Time, First-Year Costs and OnGoing Annual Costs of Providing 

Disclosure Documents Required in 

§§ 201.102 and 201.104 Under the 

Small Business Exemption Alternative 

Costs for the alternative that would exempt 

live poultry dealers that produced and 

average of less than 2 million pounds of 

broilers per week were estimated similarly to 

cost for the §§ 201.102 and 201.104. AMS 

subject matter experts provided estimates of 

the average amount of time that would be 

necessary for each live poultry dealer to 

comply with each new requirement in 

§§ 201.102 and 201.104, and the hours were 

multiplied by wage estimates to arrive at an 

expected cost for each regulatory element. 

The tables are set up the same as before. 

Multiplying across row for each regulatory 

element provides the expected cost for the 

element. Summing the expected costs for 

element provides the total cost. 

Table 1 below provides the details of the 

estimated one-time, first-year costs of 

providing disclosure documents required in 

§ 201.102. AMS expects that the direct costs 

will consist entirely of the value of the time 

required to produce and distribute the 

disclosures and maintain proper records. The 

number of hours the second column were 

provided by AMS subject matter experts. 

These experts were auditors and supervisors 

with many years of experience in auditing 

live poultry dealers for compliance with the 

Act. They provided estimates of the average 

amount of time that would be necessary for 

each live poultry dealer to meet each of the 

elements listed in the ‘‘Regulatory 

Requirements’’ column. Estimates for the 

value of the time are U.S. Bureau of Labor 

Statistics Occupational Employment and 

Wage Statistics estimates released May 2022. 

The wage estimates are marked up 41.82 

percent to account for benefits. The 

‘‘Adjustment’’ column allows for estimation 

of costs that will only apply to a subset of 

the poultry growers or to the live poultry 

dealers. A blank value in the Adjustment 

column indicates that no adjustments were 

made to the costs. Each adjustment is 

different and described in the relevant 

footnote. Expected costs for each ‘‘Regulatory 

Requirement’’ and are listed in the ‘‘Expected 

Cost’’ column. Summing the values in the 

‘‘Expected Cost’’ column provides the total 

expected first-year, one-time costs for settingup and producing the disclosure documents 

associated with § 201.102. 


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Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 83299 

TABLE 1—EXPECTED FIRST-YEAR DIRECT COSTS ASSOCIATED WITH § 201.102 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs a

Adjustment 

(percent) 

Expected cost 

($) 

201.102(b)(1)–(8) ................................ 1 Manager .............................................. 84.27 27 ........................ 2,275 

4 Lawyer ................................................. 131.38 27 ........................ 14,189 

201.102(c)(1)–(3) ................................. 10 Manager .............................................. 84.27 27 ........................ 22,753 

5 Administrative ...................................... 41.71 27 ........................ 5,631 

10 Lawyer ................................................. 131.38 27 ........................ 35,473 

201.102(c)(4) ....................................... 2 Manager .............................................. 84.27 b 121 ........................ 20,369 

4 Manager .............................................. 84.27 27 ........................ 9,101 

1 Lawyer ................................................. 131.38 27 ........................ 3,547 

201.102(c)(5) ....................................... 1 Manager .............................................. 84.27 b 121 ........................ 10,184 

201.102(d)(1)(2)(i) ............................... 30 Manager .............................................. 84.27 27 c 90 61,432 

8 Administrative ...................................... 41.71 27 c 90 8,108 

22 Information Tech ................................. 92.91 27 c 90 49,667 

201.102(d)(1)(2)(ii)–(v) ........................ 60 Manager .............................................. 84.27 27 d 5 6,826 

16 Administrative ...................................... 41.71 27 d 5 901 

44 Information Tech ................................. 92.91 27 d 5 5,519 

201.102(d)(3) ....................................... 20 Manager .............................................. 84.27 27 f 5 2,275 

5 Administrative ...................................... 41.71 27 f 5 282 

15 Information Tech ................................. 92.91 27 f 5 1,881 

201.102(d)(4) ....................................... 6 Manager .............................................. 84.27 27 ........................ 13,652 

2 Administrative ...................................... 41.71 27 ........................ 2,252 

201.102(d)(5) ....................................... 0.5 Manager .............................................. 84.27 27 ........................ 1,138 

0.5 Administrative ...................................... 41.71 27 ........................ 563 

201.102(f)(1)(2) ................................... 40 Manager .............................................. 84.27 27 ........................ 91,010 

20 Lawyer ................................................. 131.38 27 ........................ 70,946 

10 Administrative ...................................... 41.71 27 ........................ 11,261 

10 Information Tech ................................. 92.91 27 ........................ 25,084 

201.102(g)(1)(2) .................................. 1 Manager .............................................. 84.27 27 ........................ 2,275 

1 Administrative ...................................... 41.71 27 ........................ 1,126 

201.102(i)(2) ........................................ 1 Manager .............................................. 84.27 27 ........................ 2,275 

1 Lawyer ................................................. 131.38 27 ........................ 3,547 

Total Cost ..................................... ........................ ............................................................. ........................ ........................ ........................ g 485,543 

aAnnual reports filed by live poultry dealers indicated 27 processed an average of more than 2 million pounds of broilers per week. bAMS estimated a manager’s time required for each of the 121 broiler complexes rather than the 27 live dealer firms. 

c 201.102(d)(1)(i) exempts live poultry dealers that process less than 2 million pounds of broilers per week. 

d Reduces estimated costs by 10 percent to exclude the 5 percent for the estimated proportion of growers that require upgrades to poultry housing and 5 percent 

for the estimated proportion of growers that enter a contract for the first time. eEstimates costs for the 5 percent of the growers that require upgrades to poultry housing and enter into contracts for the first time. 

fEstimates costs for the 5 percent of the growers that require upgrades to poultry housing. 

gTotal may not sum due to rounding. 

Table 2 provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in § 201.102. 

Table 2 is laid out the same as Table 1. AMS 

subject matter experts provided estimates in 

the second column of the average amount of 

time that would be necessary for each live 

poultry dealer to meet each of the elements 

listed in the ‘‘Regulatory Requirements’’ 

column. Estimates for the value of the time 

are from U.S. Bureau of Labor Statistics 

Occupational Employment and Wage 

Statistics released May 2022. The wage 

estimates are marked up 41.82 percent to 

account for benefits. The ‘‘Adjustment’’ 

column allows for estimation of costs that 

will only apply to a subset of the poultry 

growers or to the live poultry dealers. 

Expected costs for each ‘‘Regulatory 

Requirement’’ and are listed in the ‘‘Expected 

Cost’’ column. Summing the values in the 

‘‘Expected Cost’’ column provides the total 

expected costs for producing and distributing 

the disclosure documents associated with 

§ 201.102 on an ongoing basis. 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH § 201.102 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

201.102(a)(1) ....................................... 0.08 Evenly distributed among management, administrative, and information tech.

a 72.96 19,417 b 74.72 88,212 

201.102(a)(2) ....................................... 0.08 Evenly distributed among management, administrative, and information tech.

a 72.96 19,417 c 5 5,903 

201.102(a)(3) ....................................... 0.08 Evenly distributed among management, administrative, and information tech.

a 72.96 19,417 d 5 5,903 

201.102(b) ........................................... 0.5 Manager .............................................. 84.27 27 ........................ 1,138 

0.5 Administrative ...................................... 41.71 27 ........................ 563 

201.102(c)(1)–(3) ................................. 1 Manager .............................................. 84.27 27 ........................ 2,275 

1 Administrative ...................................... 41.71 27 ........................ 1,126 

1 Lawyer ................................................. 131.38 27 ........................ 3,547 

201.102(c)(4) ....................................... 0.5 Manager .............................................. 84.27 e 121 ........................ 5,092 

1 Manager .............................................. 84.27 27 ........................ 2,275 

0.5 Lawyer ................................................. 131.38 27 ........................ 1,774 

201.102(c)(5) ....................................... 0.5 Manager .............................................. 84.27 e 121 ........................ 5,092 

201.102(d) ........................................... 0.17 Administrative ...................................... 41.71 e 121 ........................ 840 


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83300 Federal Register / Vol. 88, No. 227 / Tuesday, November 28, 2023 / Rules and Regulations 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH § 201.102—Continued 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

201.102(d)(1)(i) .................................... 15 Manager .............................................. 84.27 27 f 90 30,716 

3 Administrative ...................................... 41.71 27 f 90 3,041 

6 Information Tech ................................. 92.91 27 f 90 13,546 

201.102(d)(1)(ii)–(v) ............................. 30 Manager .............................................. 84.27 27 g 5 3,413 

6 Administrative ...................................... 41.71 27 g 5 338 

12 Information Tech ................................. 92.91 27 g 5 1,505 

201.102(d)(2) ....................................... 10 Manager .............................................. 84.27 27 h 5 1,138 

2 Administrative ...................................... 41.71 27 h 5 113 

4 Information Tech ................................. 92.91 27 h 5 502 

201.102(d)(3) ....................................... 0.25 Manager .............................................. 84.27 27 ........................ 569 

0.25 Administrative ...................................... 41.71 27 ........................ 282 

201.102(d)(4) ....................................... 0.25 Manager .............................................. 84.27 27 ........................ 569 

0.25 Administrative ...................................... 41.71 27 ........................ 282 

201.102(f) ............................................ 20 Manager .............................................. 84.27 27 ........................ 45,505 

5 Lawyer ................................................. 131.38 27 ........................ 17,736 

3 Administrative ...................................... 41.71 27 ........................ 3,378 

4 Information Tech ................................. 92.91 27 ........................ 10,034 

201.102(g) ........................................... 0.25 Administrative ...................................... 41.71 e 121 ........................ 1,260 

Total Cost ..................................... ........................ ............................................................. ........................ ........................ ........................ i 257,665 

a $72.96 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff at $84.27, $41.71, 

and $92.91 respectively. b 74.72 is the percentage of the existing poultry grower contracts that are expected to come up for renewal each year. It includes all flock-to-flock and single year 

contracts as well as longer term contracts that are expected to expire within a year. cEstimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

dEstimates costs for only the 5 percent of growers that that enter contract for the first time. 

eAMS estimated a manager’s time required for each of the 121 broiler complexes rather than the 27 live dealer firms. 

f Reduces estimated cost by 10 percent to exclude the 5 percent for the estimated proportion of growers that require upgrades to poultry housing and 5 percent for 

the estimated proportion of growers that enter a contract for the first time. gEstimates cost for the 5 percent of the growers that require upgrades to poultry housing and enter into contracts for the first time. 

hEstimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

iTotal may not sum due to rounding. 

Table 3 below provides the details of the 

estimated one-time, first-year costs of 

providing disclosure documents required in 

§ 201.104. Like the previous tables, AMS 

subject matter experts provided estimates in 

the second column of the average amount of 

time that would be necessary for each live 

poultry dealer to meet each of the elements 

listed in the ‘‘Regulatory Requirements’’ 

column. Values in the ‘‘Expected Wage’’ 

column are taken from U.S. Bureau of Labor 

Statistics Occupational Employment and 

Wage Statistics released May 2022. The wage 

estimates are marked up 41.82 percent to 

account for benefits. The number of LPDs is 

the number of live poultry dealers that filed 

annual reports with AMS for their 2020 fiscal 

years. ‘‘Expected Cost’’ is the estimate of the 

cost of each ‘‘Regulatory Requirement.’’ 

Summing the ‘‘Expected Cost’’ column 

provides the total expected first-year, onetime costs for setting-up and producing the 

disclosure documents associated with 

§ 201.104. 

TABLE 3—ONE TIME FIRST-YEAR COSTS ASSOCIATED WITH § 201.104 

Regulatory requirement Number of 

hours per LPD Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Expected cost 

($) 

201.104(a) ......................................................... 2 Manager ............................................................ 84.27 27 4,551 

4 Administrative ................................................... 41.71 27 4,505 

2 Information Technology .................................... 92.91 27 5,017 

201.104(b) ......................................................... 5 Manager ............................................................ 84.27 27 11,376 

2 Administrative ................................................... 41.71 27 2,252 

18 Information Technology .................................... 92.91 27 45,152 

8 Manager ............................................................ 84.27 27 18,202 

201.104(c) .......................................................... 5 Administrative ................................................... 41.71 27 5,631 

22 Information Technology .................................... 92.91 27 55,186 

Total Cost ................................................... ........................ ........................................................................... ........................ ........................ a 151,871 

aTotal may not sum due to rounding. 

Table 4 below provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in § 201.104. 

AMS subject matter experts provided 

estimates in the second column of the 

average amount of time that would be 

necessary for each live poultry dealer to meet 

each of the elements listed in the ‘‘Regulatory 

Requirements’’ column. They also provided 

the expected number of tournaments per 

plant. The number of poultry processing 

plants was tallied from the annual reports 

that live poultry dealers file with AMS. 

Values in the ‘‘Expected Wage’’ column were 

found in U.S. Bureau of Labor Statistics 

Occupational Employment and Wage 

Statistics released May 2022. The wage 

estimates are marked up 41.82 percent to 

account for benefits. Multiplying across the 

row provides the ‘‘Cost’’ for each ‘‘Regulatory 

Requirement,’’ and summing the ‘‘Cost’’ 

column provides the total expected costs for 

producing and distributing the disclosure 

documents associated with § 201.104 on an 

ongoing basis. 


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TABLE 4—ONGOING EXPECTED COSTS ASSOCIATED WITH § 201.104 

Regulatory requirement Hours Profession Number of 

plants 

Number of 

tournaments 

per plant 

Weeks in a 

year 

Avg. wage 

($) 

Cost 

($) 

201.104(b) ............................. 0.1 Evenly distributed among 

management, administrative, and information tech.

121 1.35 52 a 72.96 $61,901 

201.104(c) ............................. 0.1 Evenly distributed among 

management, administrative, and information tech.

121 1.35 52 a 72.96 61,901 

Total Cost ....................... ........................ ................................................ ........................ ........................ ........................ ........................ b 123,803 

a $72.96 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff at $84.27, $41.71, 

and $92.91 respectively. bTotal may not sum due to rounding. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2023–24922 Filed 11–27–23; 8:45 am] 

BILLING CODE P 


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