This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

34814 

Vol. 87, No. 110 

Wednesday, June 8, 2022 

1For a discussion of past views regarding poultry 

tournament systems, see, e.g., Agricultural 

Marketing Service, USDA, ‘‘Poultry Grower Ranking 

Systems; Withdrawal of Proposed Rule,’’ 86 FR 

60779, November 4, 2021, available at https://

www.federalregister.gov/documents/2021/11/04/ 

2021-23945/poultry-grower-ranking-systemswithdrawal-of-proposed-rule. See also Transcript, 

United States Department of Justice, United States 

Department of Agriculture, Public Workshops 

Exploring Competition in Agriculture: Poultry 

Workshop May 21, 2010, Normal, Alabama. 

Additionally, see Agricultural Marketing Service, 

USDA, ‘‘Transparency in Poultry Contracting and 

Tournaments,’’ RIN 0581–AE03, publication in the 

Federal Register forthcoming, May/June 2022. 

2 75 FR 35338; June 22, 2010. 

3 81 FR 92723; December 20, 2016. 

4 86 FR 60779, November 4, 2021. 

5 86 FR 36987; July 9, 2021. 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

9 CFR Part 201 

RIN 0581–AE18 

[Doc. No. AMS–FTPP–22–0046] 

Poultry Growing Tournament Systems: 

Fairness and Related Concerns 

AGENCY: Agricultural Marketing Service, 

U.S. Department of Agriculture. 

ACTION: Advance notice of proposed 

rulemaking; request for comments. 

SUMMARY: The Agricultural Marketing 

Service (AMS) seeks comments and 

information to inform policy 

development and future rulemaking 

proposals regarding the use of poultry 

grower ranking systems commonly 

known as tournaments in contract 

poultry production. AMS seeks this 

input in response to numerous 

complaints from poultry growers about 

the use of tournament systems. 

Comments in response to this request 

would help AMS tailor further 

rulemaking in addition to that already 

planned and under way to address 

specific industry practices in relation to 

tournament systems. 

DATES: Comments must be received by 

September 6, 2022. 

ADDRESSES: Comments must be 

submitted through the Federal erulemaking portal at https://

www.regulations.gov, and should 

reference the document number and the 

date and page number of this issue of 

the Federal Register. All comments 

submitted in response to this proposed 

rule will be included in the record and 

will be made available to the public. 

Please be advised that the identity of 

individuals or entities submitting 

comments will be made public on the 

internet at the address provided above. 

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: The 

majority of growers producing poultry 

under production contracts are paid 

under a poultry grower ranking or 

‘‘tournament’’ pay system. Under 

tournament systems, vertically 

integrated poultry companies, known as 

‘‘integrators’’, contract with farmers who 

serve as growers. Integrators provide 

growers with birds and feed; and 

growers provide facilities and labor to 

raise birds to slaughter weight. Grower 

compensation is based on a grouping, 

ranking, or comparison of poultry 

growers whose poultry was harvested 

during a specified period, usually one 

week. Tournament group averages are 

established for formulaic flock 

performance metrics, and growers are 

ranked against the averages. Grower 

contract base pay rate is adjusted by the 

individual grower’s deviation for group 

average. Growers performing better than 

average receive increased pay while 

below average growers’ contract pay rate 

is reduced. 

Over many years, the U.S. Department 

of Agriculture (USDA) has received 

numerous complaints from poultry 

growers about the use of tournament 

systems and many have suggested that 

USDA should ban, restrict, or condition 

the use of tournament systems or 

particular aspects of those systems. 

These concerns, and countervailing 

views, were extensively summarized in 

USDA’s withdrawal of previous 

proposed rulemaking on poultry 

tournaments, as well as in transcripts of 

previous listening sessions conducted 

by USDA and the Department of Justice 

(DOJ).1

USDA has made previous attempts to 

address grower concerns arising from 

the use of poultry growing arrangements 

and poultry grower ranking systems.2

The first proposed rule, in 2010, would 

have required live poultry dealers— 

when paying growers under poultry 

grower ranking systems—to pay growers 

the same base pay for growing the same 

type and kind of poultry. The 2010 

proposed rule further would have 

required that tournament system 

growers be settled in groups with other 

growers with similar house types. USDA 

did not finalize certain provisions 

related to poultry contracting. In 

December 2016, it modified the original 

proposal and published a second 

proposed rule.3

The 2016 proposed rule would have 

identified criteria that the Secretary 

could consider when determining 

whether a live poultry dealer’s use of a 

system for ranking poultry growers for 

settlement purposes is unfair, unjustly 

discriminatory, or deceptive or gives an 

undue or unreasonable preference, 

advantage, prejudice, or disadvantage. 

The 2016 proposed rule was formally 

withdrawn in 2021.4

Executive Order 14036—Promoting 

Competition in the American Economy 

directs the Secretary of Agriculture to 

address unfair treatment of farmers and 

improve conditions of competition in 

their markets by considering rulemaking 

to address, among other things, certain 

practices related to poultry grower 

ranking systems.5 AMS has considered 

that direction in undertaking this 

Advance Notice of Proposed 

Rulemaking (ANPR). 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 34815 

6Agricultural Marketing Service, USDA, 

‘‘Transparency in Poultry Contracting and 

Tournaments,’’ RIN 0581–AE03, publication in the 

Federal Register forthcoming, May/June 2022. 7White House, ‘‘FACT SHEET: The Biden-Harris 

Action Plan for a Fairer, More Competitive, and 

More Resilient Meat and Poultry Supply Chain,’’ 

January 3, 2022, available at https:// 

www.whitehouse.gov/briefing-room/statementsreleases/2022/01/03/fact-sheet-the-biden-harrisaction-plan-for-a-fairer-more-competitive-andmore-resilient-meat-and-poultry-supply-chain/; 

USDA, ‘‘Meat and Poultry Supply Chain,’’ available 

at https://www.usda.gov/meat (last accessed May 

2022). 

8See Office of Information and Regulatory 

Affairs, Office of Management and Budget, Fall 

2021 Unified Agenda of Regulatory and 

Deregulatory Actions, available at https://

www.reginfo.gov/public/do/eAgendaMain (last 

accessed May 2022). 

9Merriam-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. 

10Merriam-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. 

11The description set forth in this background is 

drawn largely from the analyses found in 

Agricultural Marketing Service, USDA, 

‘‘Transparency in Poultry Contracting and 

Tournaments,’’ RIN 0581–AE03, publication in the 

Federal Register forthcoming, May/June 2022. 

Please consult that rulemaking for additional detail. 

12MacDonald, 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. 

13Assuming a target weight of 6 pounds, an 

average 25,000 square foot house should yield about 

21,500 birds per flock. 

14Cunningham, 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. 

15See, 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). 

Additionally, USDA is proposing in a 

separate rulemaking, under RIN 0581– 

AE03, a series of new transparency 

measures designed to address many 

grower concerns relating to deception 

and lack of access to critical information 

in connection with poultry contracting 

and tournament systems.6 Furthermore, 

USDA is taking a range of steps to 

enhance fair and competitive markets in 

the meat and poultry sectors.7 For 

example, under the American Rescue 

Plan Act’s provision to enhance supply 

chain resiliency, USDA is investing 

directly into the creation of new, and 

expansion of existing, local and regional 

meat and poultry processing enterprises. 

Also this year, USDA and DOJ 

established a joint complaints and tips 

portal, www.farmerfairness.gov, to 

enable both departments to respond in 

a more coordinated manner to a range 

of competition and fair markets 

concerns. USDA has also announced 

rulemakings to address general matters 

relating to unfair, deceptive, and 

unjustly discriminatory practices, 

undue preferences and prejudices, and 

competitive harms under sections 202(a) 

and 202(b) of the Packers and 

Stockyards Act of 1921, 7 U.S.C. 181 et 

seq,192.8 Rules on those topics will be 

forthcoming. 

Against that policy backdrop, AMS is 

considering further policy development 

and rulemaking under the Packers and 

Stockyards Act, as amended, to address, 

through specific prohibitions, limits, 

and/or conditionalities, potential 

unfairness that may arise from the use 

of the tournament contracts in the 

poultry sector. The goal of this ANPR is 

to obtain information on the industry 

and assess the extent to which 

unfairness and deception, where it may 

exist, can be remedied through 

additional regulation to level the 

playing field for growers. The focus of 

any rulemaking would be contract terms 

in contracts relating to all aspects of 

poultry production that may be unfair to 

growers. Such rulemaking would also 

address the regulation of the operation 

of those contracts so that it would be 

consistent with those principles. 

All views are solicited so that every 

aspect of this potential regulation may 

be studied prior to formulating a 

proposed rule by AMS. This request for 

public comment does not constitute 

notification that any aspect described in 

this document is being proposed or 

adopted. At such future time, pursuant 

to the requirements set forth in the 

Regulatory Flexibility Act, Executive 

Order 12866, and other relevant laws 

and Executive Orders, AMS would 

consider the economic impact that 

implementation of any prohibitions, 

limits, or conditionalities, including 

costs and benefits and impacts on small 

entities, and would prepare a full 

regulatory impact analysis and a 

regulatory flexibility analysis for 

inclusion in any subsequent rulemaking 

action. The informational impact of this 

action would also be considered under 

the Paperwork Reduction Act, and civil 

rights impacts would be evaluated 

under a Civil Rights Impact Analysis, 

among other relevant regulatory 

analyses. 

Background 

Live poultry dealers often operate as 

monopsonists 9 or oligopsonists 10 in a 

local market.11 According to MacDonald 

and Key,12 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. Owing to their greater 

negotiating power than that of the 

poultry growers with whom they 

contract, live poultry dealers set the 

terms of the contracts and important 

aspects of their execution, such as the 

frequency of individual flock 

placements they receive over any 

particular time period. 

Most growers producing poultry 

under production contracts are paid 

under a poultry grower ranking or 

‘‘tournament’’ pay system. Under 

tournament systems, the contract 

between the poultry grower and the 

company for whom the grower raises 

poultry for slaughter provides for 

payment to the grower based on a 

grouping, ranking, or comparison of 

poultry growers delivering poultry to 

the same company during a specified 

period. 

Under tournament contracts, 

integrators provide the birds, the feed, 

and veterinary treatment as needed for 

the growing flock. The poultry grower 

provides the poultry growing facility, 

flock management, labor, and utilities 

(water, electricity, environmental 

control) required during flock growout. 

At the end of growout, the poultry 

company collects and weighs the 

mature poultry and pays the grower 

according to their individual flock’s 

performance as compared to the 

performance of all other growers’ flocks 

in the tournament. 

Poultry grower investment is 

substantial. A 2011 study estimated a 

cost of $924,000 for site preparation, 

construction, and necessary equipment 

for four 25,000-square-foot poultry 

houses 13 (or $231,000 per house) in 

rural Georgia at that time, independent 

of the cost for the land.14 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 $350,000 to 

$400,000 per poultry house.15 A poultry 

growing contract includes the live 

poultry dealer’s specifications for the 

poultry housing and equipment the 

growers are required to supply under 

the contract. At times, the live poultry 

dealer may encourage, incentivize, or 

even require a poultry grower to 


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34816 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

16 ‘‘A Poultry Grower’s Guide to FSA Loans’’ 

Rural Advancement Foundation International. July 

2017, available at https://www.rafiusa.org/blog/apoultry-growers-guide-to-fsa-loans/. 

17See, for example, Tsoulouhas, Theofanis and 

Tomislav Vukina. ‘‘Regulating Broiler Contracts: 

Tournaments Versus Fixed Performance 

Standards’’. American Journal of Agricultural 

Economics 83 (2001): 1062–1073. 

upgrade existing housing or equipment 

in order to renew or revise an existing 

contract. 

Additionally, some live poultry 

dealers provide income estimates to 

prospective growers and lenders. 

Grower advocate groups have 

complained these estimates are 

generally based on simple ‘‘average 

pay’’ projections, which are insufficient 

given fluctuations in grower payments, 

particularly under the tournament 

system discussed next.16

Integrators use a relative ranking to 

allocate payments among tournament 

participants. Tournament groupings are 

comprised of growers whose flocks are 

harvested within a specified time 

period, usually a week. Tournament 

group averages are established for 

formulaic flock performance metrics, 

and growers are ranked against the 

averages. Grower contract base pay rate 

is adjusted by the individual grower’s 

deviation from group average. Growers 

performing better than average receive 

increased pay while below average 

growers’ contract pay rate is reduced. 

In a simplified example, the poultry 

company places flocks with ten growers 

(tournament group) under contract to 

deliver the same size of finished poultry 

to the company’s processing plant at the 

end of a specified growout period. Upon 

harvest, each grower’s performance with 

respect to the weight of poultry 

produced and the amount of poultry 

feed used during flock growout is 

determined. The company 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 

pay comprises a contract base amount 

per pound of poultry produced plus or 

minus an adjustment based on the 

grower’s deviation from average within 

the tournament grouping for that 

specific growout period. For example, a 

contract-based pay rate of $.06 per 

pound might be adjusted to $.0725 for 

an above average grower, while a below 

average grower may be paid $.048. 

Group composition risk is 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. 

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 

integrator 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, an 

integrator 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. 

A number of variable factors can 

influence individual grower 

performance, including the number, 

breed, sex, and condition of the young 

birds and the contents and quality of the 

feed provided by the poultry company, 

the growing facility environment, and 

the management practices of individual 

growers. Growers have expressed 

concern that the variability of inputs 

among tournament participants—for 

reasons outside of the grower’s control 

but which may be within the control of 

the integrator—may impair the integrity 

of tournaments, and adversely affects 

the integrator’s ability to effectively 

convey incentives to motivate optimal 

grower performance. Many growers 

have complained that tournament 

systems are inherently unfair because 

growers have no control over the inputs 

they receive from poultry companies, 

and thus have limited control over their 

performance and earnings. Commenters 

have also suggested input variability can 

be used as a tool for unlawful 

discrimination, retaliation, and 

deception in the development and 

execution of poultry growing contracts. 

Agricultural production is an 

inherently risky endeavor, and returns 

have some level of risk no matter the 

marketing channel or structural 

arrangement. However, researchers have 

noted that in addition to mitigating the 

risks of input cost and output price 

variation, the tournament system can 

also help insulate poultry growers from 

some aspects of what are known as 

common production risks. These are 

systematic risks common to all growers 

in a tournament such as weather or 

widespread disease, feed quality, or 

genetic strains. This academic research 

finds that since those 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.17 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. 

At the same time, tournament 

contracts still leave growers exposed to 

some common risks. For example, when 

plants had to reduce processing capacity 

due to the Covid pandemic, growers 

experienced reduced compensation to 

the extent that they received fewer or 

less dense placements from the 

integrators. Moreover, as noted, no 

contract type will protect growers from 

all market risks. Tournament systems do 

not insulate growers from the other risks 

of contracts discussed above such as the 

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: 

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. 

In a rulemaking being published 

simultaneously as a separate notice in 

the Federal Register, USDA has 

proposed enhancing transparency in 

poultry growing arrangements to 

address deception risks and information 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 34817 

18USDA Farm Service Agency, Guaranteed Loan 

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

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

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

asymmetries that growers face in 

modern, vertically integrated markets. 

The first part of the rule would give 

growers information regarding realistic 

outcomes relevant to poultry growing 

arrangements and poultry housing 

upgrades—information such as the 

number of bird placements per year and 

stocking density, earnings realized by 

other poultry growers displayed across 

quintiles and compared to other 

complexes, sale-of-farm policies, and 

more. The second part of the rule would 

give poultry growers information about 

the inputs they receive under their 

poultry growing arrangements, to enable 

them to be more effective growers and 

to protect them against deception and 

other potential abuses. Information— 

including stocking density of the 

placement, the breeder facility, breeder 

flock age, health impairments, and 

more—would be provided when the 

inputs are delivered and when any 

tournament settlement is completed. 

AMS believes that transparency will 

be transformative in securing a more 

level playing field for growers and 

enabling a marketplace with fairer 

contracts and the fairer operation of 

those contracts. Transparency will be 

useful not only in addressing deception 

risks, in particular those arising from 

information asymmetries, but also in 

providing data and information needed 

to assess a range of potentially unfair, 

unjustly discriminatory, and other 

unreasonable practices that may be 

present or arise from time to time in the 

poultry marketplace. 

Transparency may also complement 

requirements for poultry production 

contracts set by USDA’s Farm Services 

Agency (FSA), which manages a loan 

guarantee program that covers poultry 

lending.18 Under FSA standards, 

contracts must: 

(a) be for a minimum period of 3 years 

(b) provide for termination based on 

objective ‘‘for cause’’ criteria only 

(c) require that the grower be notified 

of specific reasons for cancellation 

(d) 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, 

minimum number of bird placements 

per year, or similar quantifiable 

requirements. 

AMS recognizes that measures 

beyond disclosure and transparency 

may be necessary to address those 

practices, given the economic power 

imbalances and competition concerns 

that exist in today’s markets. We also 

believe that the market may benefit from 

greater certainty around which specific 

practices relating to tournaments would 

be considered unfair, unjustly 

discriminatory, or otherwise 

unreasonable under the Packers and 

Stockyards Act. 

Accordingly, we are considering 

further regulatory steps to address live 

poultry dealer conduct and business 

practices related to tournaments. 

Specific areas of consideration include 

whether there is a need for, and if so, 

how USDA could and should establish, 

rules relating to: 

(a) Flock placement and density 

guarantees, including in relation to debt 

levels incurred by the grower; 

(b) Quality and timing with respect to 

inputs provided under a contract that 

are factored into calculations in a 

tournament; 

(c) Tournament payment allocations 

resulting in degradation of contractual 

base pay rates; 

(d) Payment floors in relation to 

efforts or investments made by a grower, 

as opposed to a comparison on efforts or 

investments made by other growers; 

(e) How integrators place a grower 

into tournament settlement groupings 

(also known as league composition); 

(f) Oversight of an integrator’s local 

agents; 

(g) Alignment of incentives between 

growers and integrators, such as the 

incorporation of wholesale values into 

payment mechanisms for growers or the 

incorporation of grower outcomes into 

executive compensation mechanisms; 

(h) Matching capital investment 

requirements with the length of poultry 

production contracts and the usable life 

of an asset; 

(i) Obligations to provide growers 

with notice of breach and opportunities 

to cure when contract terms are not met; 

(j) Opportunities for growers to form 

cooperatives so as to enable growers to 

collectively negotiate or arbitrate terms 

of poultry growing arrangements; 

(k) Competitiveness of input markets, 

including relating to chick genetics, 

feed, and access to veterinary care; 

(l) Information exchanges in poultry 

competition and ways to improve 

information access; 

(m) Lending institutions that provide 

credit relating to poultry production 

agreements, their relationships to 

integrators, and their responsibilities to 

borrowers, including underserved 

borrowers with respect to nondiscriminatory and fair credit 

opportunities; 

(n) Availability of insurance and riskmanagement tools for growers and the 

potential for risk-sharing with 

integrators with respect to retail market 

demand changes. 

AMS also seeks comment on whether 

there should be regulations that 

condition integrators’ permissible use of 

the tournament system to circumstances 

in which they offer growers one or more 

of the following options: 

(i) Allowing each grower to decide 

whether they want to be compared to 

other growers and to opt out of such 

comparisons; 

(ii) Treating growers substantially 

equally regarding inputs, delivery, and 

payment over a given time period; 

(iii) Guaranteeing growers a base price 

that enables the grower to pay for any 

debt incurred as result of technical 

specifications provided by the live 

poultry dealer plus an appropriate 

profit; and 

(iv) Permitting growers to form 

cooperatives so as to cooperate and 

communicate amongst themselves and 

to negotiate collectively with the live 

poultry dealer. 

Additionally, AMS is focused on 

improving research in poultry market 

practices and competition. AMS 

recognizes the presence of gaps in 

publicly available data and analysis 

with respect to poultry grower 

competition matters, which serves as a 

barrier for regulators and the public to 

recognizing and addressing potentially 

problematic practices in the poultry 

sector. In part, this may be because 

robust data of the quality necessary to 

provide useful insights has not been 

collected or made available on a regular 

basis or is otherwise made available 

only to private market participants. 

AMS and other USDA agencies have 

heard concerns regarding obstacles, 

burdens, and costs that may exist with 

respect to growers freely and fully 

participating in surveys, including risks 

of retaliation against growers, the costs 

to growers of participating in surveys, 

the burden of reporting due to duplicate 

requests, inefficiency in survey or 

gathering mechanisms, and lack of 

appropriate digital access by the 

producer. Concerns have also been 

noted regarding whether the 

information collected permits a 

sufficiently targeted analysis with 

respect to poultry growing, as opposed 

to the farm’s economics as a whole. 

With respect to the areas of focus 

noted above, as well as more broadly, 

AMS is interested in the manner which 

the tournament system pay mechanisms 

may be modified to better meet the 

needs of poultry market participants, in 

particular growers, while still retaining 

market flexibility and an appropriate 

role for performance-based incentives. 


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34818 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

Request for Comments and Information 

As noted above, USDA has received 

numerous comments expressing 

concern about the use of tournaments in 

poultry production, as well as 

expressions of support for the 

tournament system. To ensure we have 

the most up-to-date analyses and views, 

we invite comments, including 

additional facts and data and views 

regarding their relevance to USDA or 

other legal authorities, with which to 

evaluate the industry’s use of 

tournament systems and develop policy 

or regulations. In particular, AMS 

invites responses to the following 

questions: 

(1) What is the tournament system’s 

intended purpose and does the system 

achieve its intended purpose(s)? 

(a) If yes, please describe what they 

are and how specific elements of the 

system help achieve those purposes. 

(b) If not, why not? Moreover, please 

describe what you believe the intended 

purpose(s) are. 

(c) Additionally, please describe what 

you believe should be the purpose of a 

payment and settlement system between 

integrators and growers? 

(2) What specific practices under the 

tournament system are the most 

problematic, and why? 

(3) Which practices should be 

addressed through regulatory or other 

administrative steps? Are regulatory 

steps the only path to curbing these 

practices? 

(a) Should certain practices be subject 

to whole or partial prohibitions, limits, 

conditionalities? If so, which ones? Why 

or why not? 

(b) Should certain practices be subject 

to additional disclosures? Why or why 

not? 

(c) Please explain any reasoning for 

why such specific practices may be 

unfair, unjustly discriminatory, provide 

undue preferences or prejudices, are 

deceptive, or are otherwise 

unreasonable or anticompetitive under 

the law. If you are suggesting a 

particular regulatory standard for any 

such terms, please define it clearly. If 

you suggest administrative (nonregulatory) steps, please explain those. 

(d) Do any specific practices harm 

competition among growers, among 

poultry companies for the services of 

growers, or among poultry companies in 

the sale of poultry products? 

(f) Do the practices concerned give 

rise to significant harms that are 

unavoidable by certain parties or that 

undermine supply chain resiliency, 

price discovery, or open, competitive 

markets? 

(g) Are there competitive or other 

benefits or legitimate business 

justifications that should be taken into 

consideration with respect to such 

practices? 

(4) For the areas of focus listed as (a) 

through (n) in the introduction above: 

(a) Are there minimum regulatory 

standards that would help address 

marketplace practices of concern, and if 

so, what are they? Please discuss both 

the marketplace concerns and the way 

that the minimum standards may 

address those concerns. 

(b) Are any of the areas more, or less, 

amenable to transparency-oriented 

solutions, such as disclosures? Please 

explain why or why not. 

(c) For these areas, please share any 

views regarding the scope and 

applicability, or inapplicability, of 

relevant USDA authorities, in particular 

(but not necessarily exclusively) the 

Packers and Stockyards Act. 

(d) Are there any other Federal or 

state authorities that may be relevant to 

USDA’s analysis of these issues? 

(5) Please comment on the specific 

conditional approaches to the 

tournament system listed as (i) through 

(iv) in the introduction above. 

(a) Which aspects of the tournament 

system are unfair as to warrant the 

possible conditions set forth? Do the 

conditional approaches appropriately 

address those concerns? Why or why 

not. 

(b) What are the strengths and 

limitations, and costs and benefits, for 

each approach? 

(c) Are there any competition 

implications to their adoption? 

(d) Are there any other risks that 

should be considered with respect to the 

approaches? 

(e) With particular respect to the 

cooperative negotiation option: 

(I) Are there additional steps that 

USDA could take under the laws 

governing cooperatives that could 

facilitate the formation of cooperatives 

for those engaged in providing growout 

services? 

(II) Alternatively, to what extent can 

poultry grower organizations adequately 

rely on the Capper-Volstead Act (in 

particular it’s exemption from the 

antitrust statutes) to accomplish goals 

such as cooperating to negotiate or 

arbitrate for better terms and conditions 

of contracts? If not, why not? 

(f) For all of these conditions, please 

share any views regarding the scope and 

applicability, or limits and 

inapplicability, of relevant USDA 

authorities, in particular the Packers 

and Stockyards Act, and whether any 

other Federal or state authorities are 

also relevant. 

(6) With respect to the following 

areas, to what extent can the tournament 

system pay mechanisms be modified to 

achieve the following goals, while still 

retaining performance-based incentives? 

If so, how? 

(a) Can they be modified to avoid 

degradation of base pay rates? 

(b) Can they be modified to reduce 

variability or unpredictability in 

outcomes (at least over any short-term 

horizon)? 

(c) Can they be modified to better 

reflect factors that are largely within 

own the control of growers? 

(d) Can they be modified so that an 

integrator cannot terminate without 

cause, and if so, under what conditions 

would performance in the tournament 

be a basis for terminating a contract? 

(e) Are there other targeted ways in 

which they should modified? 

(f) If not, what alternatives may exist 

to it, and what risks might arise from 

such alternatives? What are the 

economic implications, including 

relating to competition, that may arise 

from the alternatives and any transition 

to them? 

(g) For these questions, please share 

any views regarding the scope and 

applicability, or inapplicability, of 

relevant USDA authorities, in particular 

(but not necessarily exclusively) the 

Packers and Stockyards Act, and 

whether any other Federal or state 

authorities are also relevant. 

(7) We further seek comments on the 

following additional related matters: 

(a) Should capital investment 

provisions (9 CFR 201.216) be revised to 

address compensation requirements 

when integrators require upgrades 

beyond the original housing 

specification? 

(b) Are there minimum standards or 

protections needed to prevent 

interference with the rights of growers 

to sell their farms? If so, what should 

they be? 

(c) Are protections needed against 

premature contract cancellation without 

reasonable cause, and if so, how should 

they be designed? 

(d) Should the remedy for breach of 

contract rules (9 CFR 201.217) be 

revised to provide for a specific time 

period that constitutes a reasonable 

period to remedy a breach of contract 

that could lead to termination (and if so, 

how long)? 

(e) Should provisions relating to the 

suspension of the delivery of birds (9 

CFR 201.215) be revised to protect 

against arbitrary suspensions of flocks, 

and if so, how? 

(f) For these questions, please share 

any views regarding the scope and 

applicability, or inapplicability, of 

relevant USDA authorities, in particular 

(but not necessarily exclusively) the 


khammond on DSKJM1Z7X2PROD with PROPOSALS
Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 34819 

Packers and Stockyards Act, and 

whether any other Federal or state 

authorities are also relevant. 

(8) What role can reforms of lending 

and loan guarantee systems play to 

ensure better alignment between 

borrowers and lenders? Consider the 

following questions and please explain 

what authorities USDA or other relevant 

agencies might deploy, if any. 

(a) Should borrower income be 

evaluated by lending institutions for 

justification of loan cash-flow only 

based on the minimum or lowest 

quartile of returns, or based on median 

returns, or in some other way? 

(b) Should limitations or additional 

transparency cover the relationship 

between lenders and integrators? Are 

steering payments, prepayment 

penalties, or other finders’ fees of 

concern? 

(c) Should standards and oversight be 

improved for ensuring that credit is fair 

and nondiscriminatory? If so, how? 

(d) How might relevant agencies 

better monitor the lending marketplace, 

including through data collection, 

reporting, and supervision? 

(9) We also invite input on how to 

improve data collection and research 

generally. 

(a) What data and information should 

be collected to assist with analyzing the 

concerns highlighted above? 

(b) How can that information be more 

effectively collected? 

(c) In what ways can AMS or USDA’s 

research agencies make that information 

more available to growers, academics, 

smaller market participants, and other 

relevant parties? 

(d) Please discuss concerns or risks 

with respect to confidentiality or 

collusion that should be considered as 

well. 

(e) How might USDA support 

additional academic research with 

respect to poultry market practices and 

competition? 

(10) Are there other approaches or 

proposals pertaining to regulation of the 

tournament system that USDA should 

consider? 

We invite all comments, suggestions, 

information, and data that would inform 

our thinking on these areas. We are 

particularly interested in views and 

information from poultry companies 

that use tournament systems, from 

poultry growers who operate under such 

arrangements, from rural communities 

that have experience with them, and 

from other participants in the food 

supply chain. To the maximum extent 

possible, and to facilitate effectiveness 

by AMS in analyzing the information, 

please identify submitted comments by 

referring to the enumerated questions in 

this request. 

Additionally, please ensure that your 

comments to this ANPR are separate 

from any comments that you may 

submit to other proposed rules or 

requests for information under the 

Packers and Stockyards Act. To the 

extent that your comment to this ANPR 

repeats information you are filing in 

another comment file to AMS, you may 

reference that other filing by name and 

date of your submission or simply 

repeat that information in your 

submission to this ANPR. 

Comments received by the September 

6, 2022 deadline will be considered. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2022–11998 Filed 6–7–22; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Part 25 

[Docket No. TTB–2022–0006; Notice No. 

212] 

RIN 1513–AC48 

Modernization of Qualification 

Requirements for Brewer’s Notices 

AGENCY: Alcohol and Tobacco Tax and 

Trade Bureau, Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: In this notice of proposed 

rulemaking, the Alcohol and Tobacco 

Tax and Trade Bureau (TTB) proposes 

deregulatory amendments to its 

regulations to modernize and streamline 

the qualification requirements for 

Brewer’s Notices. The proposed 

amendments also relax requirements 

associated with reporting certain 

changes to brewery businesses and other 

notification requirements. The proposed 

amendments are a result of TTB’s 

evaluation of its qualification 

requirements and consideration of 

relevant public comments submitted to 

the Treasury Department in response to 

its request for recommendations 

concerning regulations that can be 

eliminated, modified, or streamlined to 

reduce burdens. 

DATES: Comments must be received on 

or before August 8, 2022. 

ADDRESSES: You may electronically 

submit comments to TTB on this 

proposal using the comment form for 

this document as posted within Docket 

No. TTB–2022–0006 on the 

‘‘Regulations.gov’’ website at https://

www.regulations.gov. Within that 

docket, you also may view copies of this 

document, its supporting materials, and 

any comments TTB receives on this 

proposal. A direct link to that docket is 

available on the TTB website at https:// 

www.ttb.gov/beer/notices-of-proposedrulemaking under Notice No. 212. 

Alternatively, you may submit 

comments via postal mail to the 

Director, Regulations and Ruling 

Division, Alcohol and Tobacco Tax and 

Trade Bureau, 1310 G Street NW, Box 

12, Washington, DC 20005. Please see 

the Public Participation section below 

for further information on the comments 

requested regarding this proposal and 

on the submission, confidentiality, and 

public disclosure of comments. 

FOR FURTHER INFORMATION CONTACT: 

Jesse Longbrake, Regulations and 

Rulings Division, Alcohol and Tobacco 

Tax and Trade Bureau, 1310 G Street 

NW, Box 12, Washington, DC 20005; 

telephone (202) 453–1039, extension 

066. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

A. TTB Evaluation of Permit and 

Registration Application Requirements 

B. TTB Authority 

C. Relationship to Other Notices of 

Proposed Rulemaking 

II. Proposed Changes to the Regulations 

A. Retail Service Operations 

B. Premises Description 

C. Statements of Interest 

D. 30-Day Filing Requirements for Certain 

Changes in the Business 

E. Changes in Trade Names 

F. Retention of Records Off-Premises 

G. Inventory Requirements 

H. Discontinuance of Business 

I. Blanket Bond Form for Multiple 

Breweries 

J. Notice of Intent To Destroy Taxpaid Beer 

Off Premises 

K. Update of OMB Control Numbers 

III. Public Participation 

A. Comments Invited 

B. Submitting Comments 

C. Confidentiality and Disclosure of 

Comments 

IV. Regulatory Analyses and Notices 

A. Executive Order 12866 

B. Regulatory Flexibility Act 

C. Paperwork Reduction Act 

I. Background 

A. TTB Evaluation of Permit and 

Registration Application Requirements 

In fiscal year 2017, the Alcohol and 

Tobacco Tax and Trade Bureau (TTB) 

began an evaluation of the information 

collected in TTB’s permit and 

registration applications. The purpose 

was to identify ways to streamline the 


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