UNITED STATES OF AMERICA 

Federal Trade Commission 

WASHINGTON, D.C. 20580 

Office of Commissioner 

Rohit Chopra 

March 16, 2020 

The Honorable Sonny Perdue 

Secretary 

U.S. Department of Agriculture 

1400 Independence Avenue, N.W. 

Washington, D.C. 20250 

RE: Proposed Rule on Undue and Unreasonable Preferences and Advantages under the Packers 

and Stockyards Act 

Dear Secretary Perdue: 

The national emergency surrounding the coronavirus outbreak is a stark reminder that the United States 

must have a stable food supply that relies on a fair and competitive family farm system. When 

multinational agribusiness giants exploit their market power to abuse our nation’s farmers, ranchers, and 

producers, our nation is less secure. 

I write to share my concerns regarding the U.S. Department of Agriculture’s proposal to amend rules 

under the Packers and Stockyards Act. This law was modeled after provisions in the Federal Trade 

Commission Act and other antitrust laws to ensure that powerful meatpackers and processors could not 

take advantage of family farmers through unfair trade practices. The USDA’s proposed rules run counter 

to these objectives in both spirit and letter. As I discuss in the attached comment submission, the proposal 

fails to recognize the extreme disparity between farmers and powerful meatpackers and processors, and it 

ratifies some of the industry’s worst abuses. 

If we want to strengthen America’s rural economy and protect our national security, we need the USDA 

to put into place strong, clear rules to curb widespread abuses in the original spirit of the Packers and 

Stockyards Act and our nation’s antitrust laws. The USDA should go back to the drawing board on these 

rules. 

If you have any further questions, please do not hesitate to contact me. Thank you for considering this 

comment, and I look forward to monitoring this proceeding carefully. 

Respectfully submitted, 

Rohit Chopra 
 

 

 

 

 

 

 

Before the 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

Washington, D.C. 20250 

) 

) 

) 

Proposed Rule on Undue and ) 

Unreasonable Preferences and Advantages ) Docket No. AMS-FTTP-18-0101 

Under the Packers and Stockyards Act ) 

) 

) 

) 

COMMENT OF 

FTC COMMISSIONER ROHIT CHOPRA* 

I write to outline my opposition to the U.S. Department of Agriculture (USDA) Agricultural 

Marketing Service’s proposed rule on Undue and Unreasonable Preferences and Advantages 

Under the Packers and Stockyards Act. 

The proposal runs contrary to the objectives of the law under which it is authorized. Congress 

enacted the Packers and Stockyards Act in order to promote competition by protecting America’s 

farmers and ranchers from abuse. More than ten years ago, Congress directed the USDA to 

bolster farmer protections after market consolidation once again put America’s producers at the 

mercy of a few powerful firms. The proposed rules, a bare-minimum effort to meet this mandate, 

fail both in spirit and in letter. Instead of making it easier for farmers, ranchers, and producers to 

take action against preferential treatment that threatens their livelihoods, the proposal makes it 

nearly impossible. 

As a Commissioner of the Federal Trade Commission (FTC), I have a strong interest in 

rulemaking under the Packers and Stockyards Act, given the similar laws the FTC and the USDA 

enforce and the Commission’s role in safeguarding America’s food supply. A weak rule will 

undermine the FTC’s effectiveness. 

In 1914, the Federal Trade Commission Act, which established the FTC, was passed to halt 

abuse of corporate power and to protect competition, consumers, and communities. The FTC Act 

prohibits “unfair or deceptive acts or practices,” as well as “unfair methods of competition.”1 

That same year, Congress passed the Clayton Act, which sought to condemn anticompetitive 

* This comment represents my own views and does not necessarily reflect those of the Federal Trade Commission or 

any other Commissioner.

1 During its first two decades, the Commission challenged deceptive practices by alleging that they constituted 

unfair methods of competition. In 1938, its authority to tackle deceptive as well as unfair practices was codified 

when Congress prohibited “unfair or deceptive acts or practices.” 
 

 

 

 

 

 

 

 

practices in their incipiency by prohibiting particular types of conduct, including mergers and 

acquisitions that substantially lessen competition. 

In its earliest years, the FTC published a series of reports on abuses in the meatpacking industry, 

detailing widespread unfair practices in violation of fair dealing and antitrust laws.2 The reports 

set the stage for enforcement actions and the passage of the Packers and Stockyards Act in 1921 

to protect America’s farmers and ranchers from abusive practices by meatpackers and 

processors. The Packers and Stockyards Act was clearly influenced by the FTC’s report. Its 

provisions closely mirror the Federal Trade Commission Act and other antitrust laws,

3 such as 

the prohibitions on “unfair, unjustly discriminatory, or deceptive practice[s],” and “mak[ing] or 

giv[ing] any undue or unreasonable preference or advantage.”4 

The Packers and Stockyards Act specifically provides the Federal Trade Commission with 

authorities in the agricultural sector.

5 For example, the Act provides the FTC with jurisdiction 

over transactions in poultry products and margarine; and over retail sales of meat, meat food 

products, and livestock products in unmanufactured form. The Act also provides, in certain 

cases, the FTC with jurisdiction over non-retail activities involving meat, meat food products, or 

livestock products in unmanufactured form. 

The FTC also has additional roles in safeguarding America’s food supply. For example, the 

Commission polices the market for unlawful mergers and conduct in the retail supermarket 

industry and is responsible for enforcing standards related to Made-in-USA and organic claims. 

Efforts to reduce protections under the Packers and Stockyards Act will harm the Federal Trade 

Commission’s efforts to police the marketplace effectively. 

Strong, Clear Rules Needed to Curb Abuse 

The need for strong rules is urgent. Today, for every dollar consumers spend on food in the 

supermarket, the farmer receives 14.8 cents – the lowest portion since we started measuring.

6 

When food prices go up for consumers, it doesn’t necessarily translate into higher pay for 

farmers. But when food prices go down, producers say they’re the first ones to see their pay cut. 

When packers and processors take such a substantial share of the food dollar, farmers are left to 

2 U.S. Fed. Trade Comm’n, Report of the Federal Trade Commission on the Meat-Packing Industry, Part I (Extent 

and Growth of Power of the Five Packers in Meat and Other Industries); U.S. Fed. Trade Comm’n, Report of the 

Federal Trade Commission on the Meat-Packing Industry, Part II (Evidence of Combination among Packers); U.S. 

Fed. Trade Comm’n, Report of the Federal Trade Commission on the Meat-Packing Industry, Part III (Methods of 

the Five Packers in Controlling the Meat-Packing Industry) (1919). 3 There are many examples of similarities between the FTC Act, the antitrust laws, and the Packers and Stockyards 

Act. For example, both laws prohibit unfair practices without requiring a showing of market-wide competitive 

harms, though the proposed rule improperly seeks to create such a requirement. It is worth noting that the Packers 

and Stockyards Act goes further than the antitrust laws. For example, the Act prohibits conduct that might otherwise 

require an agreement or conspiracy under the Sherman Act. See, e.g., Herbert J. Hovenkamp, Does the Packers and 

Stockyards Act Require Antitrust Harm? U. PENN. L.: LEGAL SCHOLARSHIP REPOSITORY (2011), 

http://scholarship.law.upenn.edu/faculty_scholarship/1862. 4 7 U.S.C. § 192 (a) (b). 5 7 U.S.C. § 227 (2). 

6 Rick Barrett, Farm income could be lowest in 12 years, falls by more than half, USA TODAY (May 17, 2018), 

https://www.usatoday.com/story/money/business/2018/05/17/farm-income-could-lowest-12-years-pricesfall/618204002/. 

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struggle. This contributes to a range of social and economic problems. Rural poverty is up. 

Family farmers are disappearing. Despair has fueled an opioid epidemic across rural America. 

And suicides are far too high. 

These problems are structural. Concentration has allowed a handful of firms – often referred to 

as “Big Meat” – to wield excessive market power over millions of American farmers, ranchers, 

and producers. These firms exert and maintain their control by imposing arbitrary, draconian 

contract terms that no rational market participant would take if they were in a position to leave. 

Despite the significant record detailing the crippling conditions farmers face, the USDA’s 

proposal could end up extinguishing a critical legal avenue for America’s farmers and ranchers 

to ensure a competitive market and fair dealing.

7 At issue is the criteria to use in determining 

whether a packer, swine contractor, or live poultry dealer has either made or given “any undue or 

unreasonable preference or advantage to any particular person or locality” in violation of the 

law.8 

Rather than spelling out specific practices deemed illegal, the proposal outlines four vague 

criteria that could be used to defend preferential treatment. According to the proposal, preference 

would be justified: to save on costs between producers; to meet competitors’ prices; to meet 

competitors’ terms; or as a “reasonable business decision that would be customary in the 

industry.”9 

Vague standards are ill-suited for addressing competitive harms because they favor incumbents 

looking to further exploit their market power. Dominant players can use their substantial legal 

budgets to turn loose terms into legal loopholes that wind up swallowing up the law. The 

resulting uncertainty, endless legal costs, and heightened risk deter strong government 

enforcement and discourage private actions. Competition rules that lay out bright-line bans on 

certain market structures or practices work better than highly subjective guidelines. When rules 

are clear-cut, violations are easier to detect, claims are easier to prove, and cases are easier to 

decide. 

Unfortunately, the only clarity provided by this proposal overwhelmingly supports Big Meat 

over family farmers. Rather than spelling out for farmers which specific abusive practices are 

illegal, USDA did the opposite and clarified for incumbent packers and processors when abusive 

practices are legally justified. Adding insult to injury, the proposal also fails to restate the 

USDA’s long-held position that farmers do not need to show industry-wide harm to make an 

individual claim. As discussed earlier, this is inconsistent with our nation’s approach to halting 

unfair trade practices. Individual farmers do not have the means, access, or resources to prove 

market-wide competitive harm. Combined, these provisions make Big Meat practically 

bulletproof. It’s hard to see how any claim can succeed under an unattainable standard of 

evidence and against well-funded lawyers armed with vaguely-written legal justifications. 

7 Dep’t. of Just. & Dep’t. of Agric., Public Workshops Exploring Competition in Agriculture, Poultry Workshop 

(May 21, 2010), https://www.justice.gov/sites/default/files/atr/legacy/2010/11/04/alabama-agworkshoptranscript.pdf. 8 Undue and Unreasonable Preferences and Advantages Under the Packers and Stockyards Act, 85 Fed. Reg. 1,772 

(Jan. 13, 2020).

9 Id. at 1,783. 

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The proposal would make a bad situation even worse for many of America’s farmers, ranchers, 

and producers. It fails to address how vertical integration and concentration have given Big Meat 

an unfair competitive advantage over small producers. And worse, it effectively legalizes current 

industry practices like the “tournament system” by giving them a safe harbor justification. 

Ignores Unfair Advantage Created by Big Meat’s Concentration 

The proposal fails to acknowledge the extreme disparity between farmers and powerful 

meatpackers and processors. Like so many other modern industries, the meat and poultry 

business operates as a contracting model, where the contractors do the work at great personal 

cost, while the middlemen make the serious money. In the meat industry, the middlemen are the 

meatpackers, and farmers are the contractors. 

Thanks to decades of unchecked consolidation and vertical integration, just a few huge, 

multinational firms, like Smithfield Foods, JBS, Tyson, and Cargill, now control all of the 

essential parts of the meat supply chain from farm to table.

10 The firms’ ubiquity has made Big 

Meat, its bottlenecks, and its bullying unavoidable. While producers have just a few firms that 

will bring their supply to market, dominant packers and processors have thousands of producers 

to go to for supply. Big Meat has used its power disparity to exploit contract animal farmers, 

turning a once stable livelihood into one of desperation and despair. 

This is not a new concern. Today’s significant concentration has, in effect, simply resurrected the 

meat cartel of the early twentieth century. More than a century ago, the President asked the FTC 

to investigate the concentration in the meat packing industry. In 1918, the FTC published a 

report finding that a small number of companies had “attained such a dominant position that they 

control at will the market in which they buy their supplies, the market in which they sell their 

products, and hold the fortunes of their competitors in their hands.”11 The Commission’s 

investigation found that the packers’ practices were so egregious that large numbers of producers 

were closing shop altogether.12 A hundred years later, many family farmers feel like they are 

reliving this history. 

Ratifies Existing Abuses 

The hearings held nearly a decade produced a substantial record detailing a laundry list of 

abuses.13 Most of this abuse is executed through the punishing and exploitative contracts that 

dominant firms imposed on farmers and ranchers. These contracts have functionally become 

private laws imposed on farmers by multinational corporations from afar. Through these onesided contracts, Big Meat maintains unilateral control over farmers, their farms, and farming. 

10 Claire Kelloway & Sarah Miller, OPEN MARKETS INST., FOOD AND POWER: ADDRESSING MONOPOLIZATION IN 

AMERICA’S FOOD SYSTEM (2019), https://openmarketsinstitute.org/wpcontent/uploads/2019/04/190322_MonopolyFoodReport-v7.pdf. 11 U.S. Fed. Trade Comm’n, Report of the Federal Trade Commission on the Meat-Packing Industry 88 (1919). 12 The Commission wrote, “It is our opinion that the failure of American meat production to keep pace with 

population is in large measure due to the conditions created and maintained in the markets by the Big Five. Their 

conspiracies and unfair practices have disheartened producers of livestock by destroying their confidence in the 

fairness of the marketing system to such an extent that large numbers have abandoned or curtailed their operations.” 

Meat-Packing Report, supra note 11, at 71. 13 Dep’t. of Just. & Dep’t. of Agric., supra, note 7. 

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Family farmers are so dependent on one big firm that any preference or disfavor can have a 

profound and existential impact on their livelihood. 

Nowhere is the power of preference more apparent than the “tournament system,” an apt 

moniker for the rigged game that animal farming has become. Most prevalent in the poultry 

market, the tournament system ranks animals according to their health and weight and then 

compensates each farmer based on where they fall within the rankings, rather than paying 

everyone the same rate. It is an opaque, arbitrary system where Big Meat’s thumb on the scale 

can be make-or-break. 

In hearings and in court filings, producers report that they are exploited at every stage. Big Meat 

controls the sale of livestock and their feed, the critical entry point for animal farming. To be 

eligible to buy animals, powerful packers and processors require farmers to foot the full bill for 

farming facilities and their ongoing maintenance. These capital costs create significant debt and 

risk for farmers – and huge savings for the firms that don’t have to invest in farms or pay for 

upkeep. It also gives Big Meat the upper hand from the start; a farmer in debt is in no position to 

negotiate for the supply they need to recoup their investment. 

And that supply matters a great deal. The health of the animals and the quality of the feed plays a 

big role in their ultimate ranking within the tournament system. When a farmer receives subpar 

supplies, they risk receiving less pay per pound if their animals rank lower. Sick animals are a 

significant setback that few farmers can afford, but having no access to animals is even worse. 

Faced with the choice between paying full price for damaged goods or receiving nothing at all, 

farmers take what they can get. 

Indeed, because many producers are completely reliant on an individual powerful firm for highquality supplies, they lack the leverage to turn down bad deals that make exploitation a condition 

of access. Big Meat takes full advantage of the precarious financial position they put farmers in 

by forcing them into abusive, one-sided contracts. These contracts read like a laundry list of 

demands: specific and exacting conditions for care that must be followed in order to bring the 

animals back to sell. Big Meat imposes these terms without any commitment to compensate for 

meeting them. 

These contracts give Big Meat nearly complete control over the way the animals are raised – a 

sharp departure from independent farming. Farmers are micromanaged to such an extent that an 

investigation by the Small Business Administration’s Inspector General found that the control 

imposed by poultry processors “overcame practically all of a grower’s ability to operate their 

business independent” of them.14 And farmers are expected to meet their standards, to endure 

their oversight, and to do the hard work of caring and feeding with no guarantee that Big Meat 

will buy their animals back for slaughter and sale. 

Assuming that their animals successfully make it to maturity, producers face further tournament 

troubles at point of sale. For example, grown animals are often evaluated by powerful firms 

behind closed doors, away from the farmer who lacks the means of independent verification and 

14 SMALL BUS. ADMIN., REP. NO. 18-13, EVALUATION OF SBA 7(A) LOANS MADE TO POULTRY FARMERS at 1 

(2018), https://www.sba.gov/document/report-18-13-evaluation-sbas-7a-loans-poultry-farmers. 

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must trust the measurements.15 Without factoring in the size and health of the animals that were 

initially supplied, these metrics are then stacked against competing farmers. This means that it’s 

the farmer, not Big Meat, who takes the financial hit for subpar supplies by paying the same 

amount for them but receiving less compensation than farmers who received healthier animals or 

higher-quality feed. 

Without protections, many farmers that raise concerns about the tournament system and other 

practices report that they face retaliation, putting them at a further disadvantage.16 In pursuit of 

economic survival, many simply comply with orders and rules forced upon them by companies, 

even when those powerful firms are violating the law. 

Conclusion 

U.S. Senator Charles E. Grassley has reminded the public that “the USDA is the U.S Department 

of Agriculture, not the U.S. Department of Big Business.”17 America’s family farms are clearly 

in crisis. Rather than being independent businesses charting their own destiny and contributing to 

their communities, many find their fortunes dictated by foreign-owned companies. Our nation’s 

health and security depends on a flourishing family farming economy. The proposed rule would 

contribute to further decline in family farms, making our country and our communities less 

secure, especially in a time of conflict. 

Vertical integration and concentration has turned the animal supply chain into a series of choke 

points used by Big Meat to coerce farmers and ranchers into accepting terrible terms as a price of 

participation. The result is that growers take on all of the risk but have little to show for it while a 

few incumbents retain complete control over the process and pocket most of the profits. Because 

these abuses may represent “customary” business practices, they would potentially be justified 

under the proposal’s safe harbor loophole. Rather than ridding the market of its exploitation, it is 

treated as business-as-usual and given a legal blessing. The proposal should be scrapped, and the 

USDA should go back to the drawing board. 

If we want to strengthen America’s rural economy and protect our national security, we need the 

USDA to put into place strong, clear rules to curb widespread abuses in the original spirit of the 

Packers and Stockyards Act and our nation’s antitrust laws. 

15 Lina Khan, Obama’s Game of Chicken, WASH. MONTHLY (2012), 

https://washingtonmonthly.com/magazine/novdec-2012/obamas-game-of-chicken/. 16 Comment of Open Markets Inst., Docket No. AMS-FTTP-18-010, Proposed Rule on Undue and Unreasonable 

Preferences and Advantage, The Department of Agriculture Must Strengthen the Packers and Stockyards Act to 

Protect Farmers and Ranchers from Abusive Meatpacker Monopolies at 10 (Mar. 13, 2020). 17 Audio Recording: Farm Broadcasters Call, Grassley Comments on GIPSA Withdrawal (Oct. 17, 2017) (on file 

with U.S. Senate), https://www.grassley.senate.gov/news/audio/grassley-comments-gipsa-withdrawl. 

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