34980 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

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: Proposed rule. 

SUMMARY: The Agricultural Marketing 

Service is soliciting comments on 

proposed revisions to the regulations 

under the Packers and Stockyards Act, 

1921. The proposal would revise the list 

of disclosures and information live 

poultry dealers must furnish to poultry 

growers and sellers with whom dealers 

make poultry growing arrangements. 

The proposal would establish additional 

disclosure requirements in connection 

with the use of poultry grower ranking 

systems by live poultry dealers to 

determine settlement payments for 

poultry growers. The proposals are 

intended to promote transparency in 

poultry production contracting and to 

give poultry growers and prospective 

poultry growers relevant information 

with which to make business decisions. 

DATES: Comments must be received by 

August 8, 2022. Comments on the 

information collection aspects of this 

proposed rule must be received by 

August 8, 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: 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 

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 

marketplace by prohibiting practices 

that are contrary to these goals. In the 

100 years since the Act went into effect, 

business practices changed 

significantly, particularly in the poultry 

industry, for which provisions were 

added to the law in 1935. 

Within the last 40 years, the poultry 

industry has become increasingly 

concentrated, both horizontally and 

vertically, with the use of the poultry 

grower ranking or ‘‘tournament’’ pay 

system increasingly predominant 

throughout. With vertical integration, 

live poultry dealers 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). Under this 

system, poultry grower investment is 

substantial and growing, yet they may 

face a market dominated by only one or 

two live poultry dealers for which they 

can grow. 

We will explain in this document 

how poultry growers and prospective 

poultry growers may find themselves 

unable to negotiate for (1) access to 

critical information needed to properly 

assess farm revenue streams, and (2) 

information related to the distribution of 

inputs affecting performance among 

tournament participants. The inability 

to secure this information may expose 

growers to various risks of deception 

that could be reduced or eliminated 

with the provision of the information. 

Additionally, we will establish that live 

poultry dealers possess this information 

and are able to provide it to growers. 

Most chicken growers and some 

turkey growers raise poultry under a 

growing arrangement commonly known 

as a tournament system. Under this 

system, live poultry dealers use a 

relative performance or grower ranking 

system for settlement purposes, i.e., to 

determine grower payment among a 

group of competing growers. We will 

explain in this document how poultry 

growers in tournament systems may 

find themselves competing for payment 

without access to information that 

would allow them to optimize poultry 

production and payment or manage the 

risks related thereto. 

Over the past several years, the 

Department of Agriculture (USDA) 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 

actually achieve those outcomes 

through reasonable efforts by the 

grower. Accordingly, AMS is proposing 

rules that would increase transparency 

in all poultry growing contracting, 

including tournament systems, targeted 

at key inflection points for growers—at 

the time of contracting and housing 

upgrades, and at the provision of inputs 

during tournaments. In this rulemaking, 

we are seeking to utilize transparency to 

secure a more level playing field for 

growers and enable a marketplace with 

fairer contracts and the fairer operation 

of those contracts under the contract 

production model. 

Outline of the Notice of Proposed 

Rulemaking 

I. Background 

A. Previous Rulemaking 

B. Relevant Terms and Definitions 

C. Industry Background 

1. Market Structure 

2. Poultry Housing Construction and 

Grower Debt 

3. Poultry Grower Compensation 

4. Integrator Inputs 

a. Stocking Density and Flock Placement 

Frequency 

b. Breed 

c. Gender 

d. Breeder Flock Age 

e. Breeder Flock Health 

f. Feed Disruptions 

g. Medications 

II. Poultry Growing Arrangements 

A. Incomplete Contracts 

B. Market Power and Risks to Growers 

C. Poultry Grower Earnings and Returns on 

Equity 

D. Asymmetrical Information 

E. Poultry Grower Concerns 

III. Poultry Grower Payment Systems 

A. Fixed-Performance Pay Systems 

B. Tournament Pay Systems 

IV. Poultry Grower Ranking Systems 

A. Tournament Settlements 

B. Tournament Payments as a Measure of 

Grower Skill, Effort, and Innovation 

C. Distribution of Inputs Among 

Tournament Participants 

D. Input Variability and Grower Payments 

1. Stocking Density 

2. Breed Ratios 

3. Gender Ratios 

4. Breeder Flock Age 

5. Breeder Flock Health 

6. Feed Disruptions 

7. Medications 

E. The Need for Transparency 

V. Proposed Regulations 

A. Definitions 

B. Disclosure 

C. Contract terms 

D. Poultry Grower Ranking Systems 

VI. Regulatory Analyses 

A. Executive Order 12988—Civil Justice 

Reform 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 34981 

1For example, see current 9 CFR 201.100(a)— 

Poultry growing arrangement, timing of disclosure. 

2 16 CFR part 436; 84 FR 9051 (May 2019). 

B. Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

Governments 

C. Civil Rights Impact Analysis 

D. Paperwork Reduction Act 

E. E-Government Act 

F. Executive Orders 12866 and 13563 

G. Regulatory Impact Analysis 

H. Regulatory Flexibility Analysis 

VII. Request for Comments 

Amendatory Text 

Appendices 

I. Background 

Among other things, sec. 202(a) of the 

Act (7 U.S.C. 192) 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) 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 

authorizes the Secretary of Agriculture 

(Secretary) to make rules and 

regulations as necessary to carry out the 

provisions of the Act. Such regulations 

are found, in part, in the Code of 

Federal Regulations (CFR) at 9 CFR part 

201. 

This proposed rule builds on existing 

disclosure concepts under the Packers 

and Stockyards Act in 7 U.S.C 197(a) 

through (c) and 9 CFR 201.100. The 

current disclosure framework has 

improved transparency in poultry 

contracting. However, the modern 

poultry industry now requires larger, 

and growing, capital investments, and 

growers need additional information 

with which to make business decisions. 

Growers have consistently expressed 

concerns about the inadequacy of some 

production contract terms and the 

discretionary functions exercised by live 

poultry dealers under those contracts, 

which they assert have exposed them to 

deception and other abuses. AMS agrees 

many production contracts do not 

provide enough information for growers 

to assess their expected value, and 

important information relating to live 

poultry dealer obligations and practices 

should be better illuminated. The 

purpose of this proposed rule is to 

provide growers with this type of 

relevant information. This proposal 

reflects AMS’s desire to build on 

existing Packers and Stockyard Act 

disclosure concepts to ensure poultry 

growers have the tools and information 

they need to be successful in their 

pursuits. 

Disclosure has been a staple 1 of the 

Act’s regulatory scheme and is required 

under the regulations. Moreover, 

disclosure for the primary purpose of 

providing adequate information 

necessary for parties in asymmetrical 

business relationships to make informed 

business decisions and risk assessments 

has long been the subject of Federal 

Trade Commission (FTC) regulation 

under section 5 of the FTC Act, which, 

like section 202(a) of the Packers and 

Stockyards Act, addresses deception. 

For example, the Federal Trade 

Commission’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.2 This proposed rule is 

designed to similarly provide current 

and prospective poultry growers with 

sufficient information prior to entering 

into an agreement. 

This proposed rule would revise 

§ 201.100 of the regulations by adding 

certain items to the list of required 

disclosures a live poultry dealer must 

make to poultry growers and 

prospective poultry growers in 

connection with poultry growing 

arrangements. The proposal would 

further require live poultry dealers to 

specify additional terms in poultry 

growing contracts. AMS intends these 

proposed revisions to improve 

transparency and forestall deception in 

the use of poultry growing 

arrangements. 

This proposed rule would also add a 

new § 201.214 to the regulations that 

would 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. The proposed 

provisions also would add a new level 

of transparency to grower ranking 

sheets, ensuring that poultry growers 

can evaluate the distribution of inputs 

among all tournament participants and 

better assess the effect on grower 

payment. AMS intends the proposed 

requirements to provide greater 

transparency and forestall deception in 

the use of poultry grower ranking 

systems. 

Finally, this proposed rule would 

make conforming changes to the 

regulations by adding to the list of 

definitions in § 201.2 to define terms 

used in revised § 201.100 and new 

§ 201.214. Specifics of each of these 

proposals are provided later in this 

document. 

A. Previous Rulemaking 

USDA has made previous attempts to 

address grower concerns arising from 

the use of poultry growing arrangements 

and poultry grower ranking systems. 

Two such attempts were made by 

USDA’s Grain Inspection, Packers and 

Stockyards Administration (GIPSA), 

which previously administered the 

provisions of the Act. GIPSA issued a 

proposed rule in 2010 (75 FR 35338; 

June 22, 2010) that would have, among 

other things, identified as unfair, 

unjustly discriminatory, and deceptive 

specific practices related to poultry 

contracting. The 2010 proposed rule 

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. After 

considering comments on the 2010 

proposal, GIPSA elected not to finalize 

certain provisions related to poultry 

contracting, so it modified the original 

proposal and published a second 

proposed rule in 2016 (81 FR 92723; 

December 20, 2016). 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 

proposed amendments would also have 

clarified that, absent demonstration of a 

legitimate business justification, failing 

to use a poultry grower ranking system 

in a fair manner after applying the 

identified criteria is unfair, unjustly 

discriminatory, or deceptive and a 

violation of the Packers and Stockyards 

Act, regardless of whether it harms or is 

likely to harm competition. The original 

60-day public comment period for the 

2016 proposed rule was extended an 

additional 30 days, consistent with the 

memorandum of January 20, 2017, to 

the heads of executive departments and 

agencies from the Assistant to the 

President and Chief of Staff entitled 

‘‘Regulatory Freeze Pending Review.’’ 

In November 2017, responsibility for 

GIPSA activities was transferred to 

AMS, which now administers the Act 

and regulations, and which has assumed 

responsibility for this rulemaking. In its 

review of public comments on the 2016 

proposed rule, AMS found that many of 


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34982 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

3MacDonald, James M. Technology, 

Organization, and Financial Performance in U.S. 

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

Agriculture, Economic Research Service, June 2014. 4 In a 2011 survey of 17 sample states, 97% of 

broiler production was done by contract growers. 

MacDonald (June 2014) Op. Cit. 

5Merriam-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. 

6Merriam-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.merriamwebster.com/dictionary/oligopsonist; accessed 3/8/ 

2022. 

7MacDonald, 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. 

the comments—both supportive and 

opposed—identified reasonable 

concerns regarding the proposed 

regulation’s structure and language. 

AMS recognized further that the 

proposed rule may not have adequately 

addressed information imbalances 

between contracting parties. AMS 

determined that the 2016 proposed rule 

was unable to address many of the 

commenters’ concerns without material 

changes and elected to withdraw the 

2016 proposed rule and develop a new 

regulatory proposal pertaining to 

information imbalances in poultry 

grower contracting and grower ranking 

systems. The 2016 proposed rule was 

withdrawn on November 4, 2021 (86 FR 

60779). 

Executive Order 14036—Promoting 

Competition in the American Economy 

(86 FR 36987; July 9, 2021) 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. AMS has considered 

that direction in undertaking this 

rulemaking. While the discussions in 

this rule focus largely on broiler 

(chicken) production, the industry 

concepts presented—and the proposed 

regulations—are intended to apply to 

the commercial production of all 

poultry species where the proposed 

regulatory requirements are relevant. 

The bulk of available research and 

information currently available to AMS 

specifically addresses broiler 

production. Nevertheless, AMS believes 

that body of research and information is 

relevant to other poultry species, given 

the absence of material differences in 

their commercial production. 

B. Relevant Terms and Definitions 

For this preamble, section 2(a) of the 

Act (7 U.S.C. 182) provides various 

useful definitions: A live poultry dealer 

is 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. A 

poultry grower is any person engaged in 

the business of raising and caring for 

live poultry for slaughter by another, 

whether the poultry is owned by such 

a person or by another, but not an 

employee of the owner of such poultry. 

A poultry growing arrangement is 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. 

C. Industry Background 

In this section, we explain how high 

levels of vertical integration in U.S. 

commercial poultry production have 

influenced the poultry production 

contracting process and the production 

contracts themselves. We also illustrate 

how the effects of market concentration 

limit poultry growers’ options in 

relation to dealers with whom they can 

contract to produce poultry. When they 

have few or no alternative options, 

growers lack the bargaining power to 

negotiate for, among other things, better 

information symmetry, which gives rise 

to the risk of deception at a series of 

points in the relationship. We also 

describe some of the factors that affect 

grower payments as they relate to the 

information imbalances we are 

proposing to remedy. 

1. Market Structure 

Some live poultry dealer firms 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.3 These live 

poultry dealers that own and manage 

vertically integrated operations are 

referred to in the industry as 

‘‘integrators.’’ Other industries may 

follow this model to some extent (for 

example, some firms manage multiple 

aspects of hog production), but it is used 

in almost all broiler chicken 

production 4 and is fairly common in 

turkey production. 

Through vertical integration, 

integrators control the complete supply 

chain from poultry genetics to slaughter. 

Integrators also own most of the inputs 

and manage the operation of the supply 

chain. However, integrators outsource 

the function and major costs of raising 

the poultry to broiler growers, while 

controlling much of that process 

through their production contracts. 

Through the poultry growing 

arrangement, broiler growers provide 

the growout facilities and the 

equipment, labor, and management 

associated with those facilities. Broiler 

growers are responsible for utilities, 

fuel, maintenance, and repair. The 

growers’ tasks include ensuring the 

equipment functions properly and the 

environment inside the house is 

satisfactory at all times. The grower is 

responsible for waste removal and 

disposal of dead birds. These activities 

are subject to significant direction and 

control by the integrator or integratory 

subsidiary. Integrators exert significant 

power over contract poultry grower 

operations through individual 

production contracts, payment systems, 

and control of certain production 

variables, such as poultry breeds, 

breeder stock age, frequency of flock 

placements, stocking density, length of 

the growout periods (the number of days 

birds are housed on the grower’s farm), 

feed quality and delivery, and the type 

and administration of veterinary 

medicines. 

Market consolidation combined with 

certain natural factors (such as the 

fragility of birds limiting their 

transport), many integrators operate as 

monopsonists 5 or oligopsonists 6 in 

their relevant regional market. Some 

research 7 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 

market power to demand reasonable 

contract transparency. As discussed in 

the following section, growers’ plights 

are aggravated further by the substantial 

investment required to enter the poultry 

business. 

2. Poultry Housing Construction and 

Grower Debt 

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 the growing 

poultry. One of the costliest investments 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 34983 

8Cunningham, 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. 

9See, 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). 

10MacDonald (June 2014) Op. Cit. 

11Poultry 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. 

12 Growers views and practices may vary with 

respect to their preferred times between flocks for 

the purposes of appropriate maintenance and 

sanitation activities. 13National Chicken Council. National Chicken 

Council Animal Welfare Guidelines and Audit 

Checklist For Broilers, pp. 11–12, (September 2020). 

https://www.nationalchickencouncil.org/wpcontent/uploads/2021/02/NCC-Animal-WelfareGuidelines_Broilers_Sept2020.pdf; accessed 1/3/ 

2022. 

Other approaches include those set forth by the 

Better Chicken Commitment, which will set a 

Continued 

is in poultry housing and equipment. 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 

upgrade existing housing or equipment 

in order to renew or revise an existing 

contract. 

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.8 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.9

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 

2011.10 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.11 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. 

Grower debt problems are exacerbated 

by the limited number of live poultry 

dealers in most localities and by dealerspecific requirements that inhibit 

grower movement between dealers. 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 the current live poultry 

dealer. 

3. Poultry Grower Compensation 

Poultry growers are compensated on 

the growout of individual flocks. Most 

growers are paid on the basis of the 

weight of the finished poultry, adjusted 

by a feed conversion factor. Live poultry 

dealers calculate feed conversion by 

dividing the total pounds of poultry 

feed used during growout by the total 

pounds of finished poultry at the end of 

growout. The feed conversion factor is 

expressed as a ratio of pounds of feed 

to pounds of finished poultry. For 

example, a feed conversion ratio of 1.93 

means an average of 1.93 pounds of 

poultry feed were needed to produce 

each pound of finished poultry. The live 

poultry dealer uses the feed conversion 

factor to measure poultry grower 

efficiency. Specific poultry growing 

arrangements may provide for a variety 

of nuanced cost and payment formulas, 

and may include supplemental fuel and 

square footage bonus payments. 

However, the greatest portion of grower 

compensation is determined according 

to the following simplified equation: 

Farm Weight (in pounds) × Feed 

Conversion (in dollars) = Grower 

Pay 

Under a typical scenario, birds are 

caught at the end of the growout period, 

loaded onto trucks, and delivered to the 

processing facility, where they are 

weighed. The sum of all weights of all 

loads originating from a grower’s farm is 

the ‘‘farm weight.’’ ‘‘Feed conversion,’’ 

as described above, is determined by 

formula and converted to a monetary 

value. 

Alternatively, growers may receive 

partial or full compensation based on 

their growing facility square footage. For 

instance, some growers may receive 

square footage supplements as 

incentives to offset new costs for 

housing. Or in rare cases, compensation 

is based strictly on facility square 

footage. In either of these situations, 

square footage compensation is based on 

the size of the poultry growing facility, 

regardless of the number or weight of 

birds produced. 

Growers seeking to maximize farm 

returns would naturally prefer to keep 

their facilities in a near-constant state of 

production, receiving as many 

individual flock placements as possible 

over a relevant time period, with 

minimal idle or lay-out time between 

flocks.12 If they are paid on a farmweight basis, growers seeking to 

maximize individual flock returns will 

naturally strive to maximize farm 

weight. 

4. Integrator Inputs 

Two important factors affecting 

poultry grower compensation are the 

timing and quality of certain inputs 

controlled by the live poultry dealer. In 

this section we describe those inputs 

and explain how their timing and 

variation can impact farm weight and 

feed conversion, and thus grower 

payments. 

a. Stocking Density and Flock 

Placement Frequency 

Often 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. The target 

weight informs a range of stocking 

densities that may result in optimal bird 

performance. Integrators set both 

stocking density and target weight. 

For example, one approach 13

recommends the following range of 

stocking densities: 


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34984 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

maximum stocking density of 6.0 lbs./sq. foot 

starting in 2024, available at https://betterchicken

commitment.com/policy/ (last accessed March 

2022). 

14 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). 

15Muir, W.M. and SE Aggrey. Poultry Genetics, 

Breeding, and BioTechnology (2003). 

16Muir and Aggrey (2003) Op. Cit. 

17Laughlin, Ken, ‘‘The Evolution of Genetics, 

Breeding, and Production. Temperton Fellowship 

Report 15 (2007). 

18See: Cobb500TM Broiler Performance & 

Nutrition Supplement (2022), Cobb-Vantress; 

Cobb700TM Broiler Supplement, Cobb-Vantress, 

2022; Ross 308/Ross 308FF Broiler Performance 

Objectives 2019, Aviagen Ross, http://

eu.aviagen.com/tech-center/download/1339/ 

Ross308-308FF-BroilerPO2019-EN.pdf, accessed 

March 25, 2022. 

19Burke, William and Peter J. Sharp. ‘‘Sex 

Differences in Body Weight of Chicken Embryos.’’ 

Poultry Science 68.6 (1989): 805–810. 

20Beg, 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. 

Maximum bird weight 

range 

Maximum stocking 

density 

Below 4.5 lbs. 

liveweight.

6.5 pounds per sq. ft 

4.5 to 5.5 lbs. 

liveweight.

7.5 pounds per sq. ft. 

5.6 to 7.5 lbs. 

liveweight.

8.5 pounds per sq. ft. 

More than 7.5 lbs. 

liveweight.

9.0 pounds per sq. ft. 

Stocking density has critical 

implications for poultry growers 

because—up to a certain point—farm 

weight can increase as the number of 

birds per facility square foot increases. 

Because stocking densities can impact 

payments based on farm weights, 

growers desire the maximum stocking 

density that does not result in 

performance impairments.14 Integrators 

dictate the stocking density of each 

placement, and generally prefer 

maximum stocking densities to 

maximize production volume. Of 

course, complex-level supply factors 

may affect integrator decision making, 

and integrators may not place as many 

birds with growers as growers could 

accommodate and would like for 

maximum growout efficiency. 

Consumer, environmental, and animal 

welfare factors may also affect stocking 

density decisions by integrators. 

However, being able to anticipate the 

minimum size of flocks that will be 

placed for growout on their farms each 

year allows growers to make appropriate 

farm management and financial 

decisions. This is challenging because 

many poultry growing arrangements do 

not specify the minimum stocking 

density of flocks that will be placed 

with the grower. 

Obviously, maximum efficiency is 

also achieved when a grower’s facility is 

in production for as many days as 

possible during the year. Depending on 

the term of the poultry growing 

arrangement between the live poultry 

dealer and the poultry grower, the 

dealer may schedule the placement of 

one or more flocks at the grower’s 

facility over the course of a year, with 

gaps (lay-out or idle time) for necessary 

cleanup and maintenance between 

placements. Being able to anticipate the 

number of flocks that will be placed for 

growout on their farms each year allows 

growers to make appropriate farm 

management and financial decisions. 

However, many poultry growing 

arrangements do not specify the number 

of flocks per year that will be placed 

with the grower. 

b. Breed 

Modern chicken breeds are the result 

years of evolution by means of natural 

selection, to which artificial selection 

for commercial objectives has been 

applied. At the highest level, the purebreeding lines are owned and controlled 

by the breeding companies. These lines 

are subjected to full scale selection 

programs; it is from these lines that all 

of a company’s broiler products have 

descended.15 The great-grandparent 

stocks, which are produced from the 

pure-bred lines, are subjected to mass 

selection for selected traits. Specific 

grandparent lines are cross bred to 

produce the parent stock, which are 

then distributed to breeder growers. The 

final step of the intensive artificial 

selection is the crossbreeding of these 

hybrids (parent stock) to give rise to the 

production broilers, which are raised for 

slaughter by contract growers. 

Growth rate has consistently been the 

prime selection trait since the 1950s, 

with more recent emphasis placed on 

the yield and other attributes of breast 

meat, limiting mortality, and feed use 

efficiency.16 17 Much progress has been 

made in artificial selection technologies 

in order to increase growth rate and feed 

use efficiency. In the production of 

broilers, different breeds may be used 

within each target weight category. 

Breeds with higher and faster growth 

rates may result in heavier farm weights, 

with the inverse also being true. 

To illustrate, the following 

comparison uses information from the 

breed performance and nutrition guides 

published by the companies 

themselves.18

Breed 

Cobb 500 Cobb 700 Ross 308/ 

308FF 

42nd Day: 

Weight: .................................................................................................................................. 7.23 6.28 6.914 

Cumulative Feed Conversion Rate: ..................................................................................... 1.555 1.597 1.596 

56th Day: 

Weight: .................................................................................................................................. 10.23 9.07 10.115 

Cumulative Feed Conversion Rate: ..................................................................................... 1.842 1.849 1.914 

c. Gender 

The gender of poultry placed on a 

grower’s farm facility may impact the 

flock’s growth rate and final farm 

weight, and thus grower payment. 

Differences between the growth rates of 

male and female broilers have been 

reported by many researchers. Under 

similar management conditions, males 

grow faster and achieve marketable 

weight earlier than females. According 

to Burke and Sharp,19 the mean body 

weight of a male embryo was 

significantly greater than that of a 

female at 11, 13, and 18 days of 

incubation. Male broilers have been 

reported to grow faster and heavier than 

females under various rearing 

conditions. Growth rate reflects 

metabolic activity, which is strongly 

influenced by sex, age, nutritional 

status, and homogeneity. It also has 

been reported that male chickens 

showed better performance than females 

in terms of more weight gain.20 The 

majority of integrators use ‘‘straightrun’’ birds to supply farms. Straight-run 


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21Washburn, 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. 

22Weatherup, 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. 

23Wilson, H.R. ‘‘Interrelationships of Egg Size, 

Chick Size, Posthatching Growth and Hatchability.’’ 

World’s Poultry Science Journal 47.1 (1991): 5–20. 

24 Goodwin, K. ‘‘Effect of Hatching Egg Size and 

Chick Size Upon Subsequent Growth Rate in 

Chickens.’’ Poultry Science 40 (1961): 1408–1409. 

25Morris, 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. 

26 Video-conference interview with Joseph L. 

Purswell, Ph.D., PE, Agricultural Engineer, Dr. Katie 

Elliot, Hatchery Research Scientist, Dr. Klint 

McCafferty, Nutrition Research Scientist, 

Agricultural Research Service, U.S. Department of 

Agriculture (Sept. 2, 2021). 

27Peebles, 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. 

28O’Neill, J.B. ‘‘Relationship of Chick Size to Egg 

Size and its Effect Upon Growth and Mortality.’’ 

Poultry Science 29 (1950): 774. 

29Wyatt, C.L., 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. 

30 Guill, R.A., and K.W. Washburn. ‘‘Genetic 

Changes in Efficiency of Feed Utilization of Chicks 

Maintaining Body Weight Constant.’’ Poultry 

Science 53.3 (1974): 1146–1154. 

31Examples include: Bacterial (pullorum and 

gallinarum), Mycoplasma, and Avian 

encephalomyelitis (AE). 

32Wells, R.G., and C.G. Belyawin. ‘‘Egg qualitycurrent problems and recent advances.’’ Poultry 

science symposium series. No. 636.513 W4. 1987. 

(citing Spackman, D. ‘‘The Effects of Disease on Egg 

Quality.’’ 

33 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. 

34Wu, S. 2014. ‘‘Adapting Contract Theory to Fit 

Contract Farming’’. American Journal of 

Agricultural Economics, Volume 96, Issue 5 

(October 2014): 1241–1256. 

birds are not sexed and are randomly 

grouped for growout. 

d. Breeder Flock Age 

Breeder facilities are populated with 

select poultry breeds whose purpose is 

to produce eggs and ultimately chicks 

that will go into broiler production. The 

age of breeder flocks may also influence 

the size and quality of eggs and chicks, 

bird mortality, and feed conversion, and 

ultimately the weight of poultry at 

harvest and thus grower payments. 

Older hens lay larger eggs that hatch 

into larger chicks,21 22 23 and egg weight 

and hatching weight of chicks are 

correlated with market age weight.24 25

Small chicks from young hens have 

higher mortality after placement and 

reach market weight at a later age, thus 

theoretically requiring more time in 

growout and more feed to achieve 

market weight. 

USDA research 26 indicates breeder 

facility flocks are typically populated 

and depopulated on an all-in and all-out 

basis. That is, the majority of birds in 

each breeder flock are all the same age. 

Each breeder flock is entirely 

depopulated (slaughtered) when it 

reaches a certain age where egg and 

progeny quality diminish. 

Composed of a high female-to-male 

ratio, a typical broiler breeder flock’s 

productive life cycle ranges from 21 

weeks to 65 weeks. Studies suggest that 

broiler offspring from hens between 35 

and 51 weeks of age perform best at 

different periods during growout.27

However, research results concerning 

feed efficiency and weights of broilers at 

market age have been mixed. Feed 

efficiency has been shown to be 

positively,28 negatively,29 or not 30

correlated to weight of broilers at market 

age. Even with the benefit of static 

growth rates, poultry grown from 

smaller chicks are unlikely to match the 

weight of poultry grown from chicks of 

more mature breeder flocks in identical 

time frames. 

e. Breeder Flock Health 

Various diseases 31 and conditions 

can adversely affect egg production and 

quality either directly, by affecting the 

reproductive system, or indirectly, by 

affecting the overall health of the bird. 

According to Spackman,32 many of the 

diseases originating in breeder flocks 

can result in suboptimal offspring 

performance. 

The progeny flocks from impaired 

breeder flocks may be associated with 

higher mortality, higher morbidity, and 

decreased growth rates, resulting in 

decreased farm weight or lower feed 

conversion, which impact grower 

payment. Disease outbreaks can 

generally be traced to an individual 

breeder farm, but growers have no 

control or knowledge regarding the 

source of young poultry placed at their 

facilities for growout. 

f. Feed Disruptions 

Poultry diets are formulated by 

integrators to optimize bird weight. 

Integrators are responsible for ensuring 

feed is consistently delivered to growout 

facilities. However, feed disruptions— 

where poultry go without feed for a 

certain length of time—may occur for 

any number of reasons, such as feed 

mill power outages, ingredient supply 

shortages, or transportation problems, 

and they may result in suboptimal 

poultry weight gain. A study by Dozier 

and others 33 indicated that broiler body 

weights decreased when feed was 

removed. Depending upon the timing 

and duration of a feed outage, a broiler 

may be able to recoup any weight loss. 

Regardless of their cause, feed 

disruptions have the potential to affect 

bird weights, result in less farm weight, 

and affect grower payments. 

g. Medications 

A live poultry dealer may find it 

necessary to supply one or more flocks 

with veterinary medicines or 

supplements during flock growout. 

Such treatments 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 and, therefore, grower 

payments. 

II. Poultry Growing Arrangements 

In this section, we explain the 

operation of poultry growing 

arrangements in general, as well as some 

of the risks growers face in connection 

with those arrangements. We also 

summarize comments we’ve received 

from growers expressing their concerns 

about contracting with live poultry 

dealers to produce poultry. 

A. Incomplete Contracts 

As explained earlier in this document, 

a poultry growing arrangement or 

production contract reflects the 

arrangement between a live poultry 

dealer and a poultry grower, under 

which the grower is compensated for 

raising live poultry for delivery to the 

dealer for slaughter. Such a contract 

may be viewed as complete if the terms 

include the substantive legal, practical, 

and economic promises, obligations, 

and contingencies needed to operate in 

a poultry growing arrangement. 

Additionally, those terms should be 

verifiable by a third-party and legally 

enforceable. Incomplete contracts may 

arise when practically important terms 

do not meet those conditions. 

Incomplete contracts may magnify risks 

with respect to the performance of the 

contractual counterparty and lead to 

other potential inefficiencies.34 In 

particular, at least one party may have 


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34986 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

35Steven Y. Wu and James MacDonald, 

‘‘Economics of Agricultural Contract Grower 

Protection Legislation,’’ Choices, Third Quarter, 

2015, pp 1–6. 

36MacDonald (June 2014) Op. Cit. 

37Merriam-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. 

38Merriam-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. 

39MacDonald, 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. 

40 Vukina, Tom, and Porametr Leegomonchai. 

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

Journal of Agricultural Economics 88 (2006). 

41MacDonald (June 2014) Op. Cit. 

42 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). 

43MacDonald (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 Financial Report (QFR): Manufacturing, 

Mining, Trade, and Selected Service Industries. 

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

qfr11q4.pdf; accessed 1/19/2022. 

discretionary latitude to deviate from 

expectations.35 For example, poultry 

production contracts often do not 

guarantee the number of flocks a grower 

will receive, even under long-term 

contracts, although this is a critical 

datapoint for understanding the value of 

the contract to the grower.36 The 

following sections will highlight areas 

and terms where AMS believes typical 

poultry growing arrangements are 

deficient or incomplete from an 

economic or operational standpoint, 

inhibiting growers’ ability to properly 

assess the expected value of the 

contract. 

B. Market Power and Risks to Growers 

Live poultry dealers often operate as 

monopsonists 37 or oligopsonists 38 in a 

local market. According to MacDonald 

and Key,39 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. Consequently, 

most poultry growers have little or no 

influence over the frequency of 

individual flock placements they 

receive over any particular time period. 

A growout period is based on the target 

weight of finished poultry, as 

determined by the live poultry dealer. 

The amount of time between flocks is 

also decided by the dealer. 

Grower payments are also influenced 

by live poultry dealer market power. In 

the study cited above, grower payments 

(per pound, controlling for bird size) 

were lower in markets with fewer 

dealers: going from four integrators to 

one lowered grower payments by eight 

percent (8%). This imbalance of 

negotiating power also exposes poultry 

growers to other risks. 

For example, the considerable 

expense associated with building, 

maintaining, and upgrading poultry 

growing facilities places growers at 

financial risk if they are unable to 

realistically predict future income under 

a poultry growing arrangement and meet 

their financial obligations. Growers 

typically make investments in long-term 

assets—poultry houses that can last 20 

years or more, and they typically take 

on long-term liabilities, in the form of 

15-year mortgages, to finance those 

assets. However, live poultry dealers 

write production contracts for 

substantially shorter terms, with 

contract durations ranging from a few 

weeks (the time needed to raise one 

flock) to five years. Substantial 

disparities exist between the periods of 

time covered by the contracts and the 

mortgages on poultry housing, creating 

uncertainty around whether growers 

will be able to repay their debt and 

recoup their investments, and 

introducing ‘‘hold-up’’ risk problems. 

Hold-up is the risk growers face at the 

time of contract renewal when live 

poultry dealers make contract renewal 

dependent on further grower 

investments not disclosed at the time of 

the original agreements.40 This is of 

particular concern in production 

contracts because the capital 

requirements related to growing poultry 

are significant and highly specialized 

(that is, they have little value outside of 

growing poultry). As a result, growers 

entering the market are tied to growing 

poultry to pay off the financing of the 

capital investment. Growers have 

reported that they must accept 

unfavorable contract terms because they 

are tied to production to pay off lenders 

and they have few, if any, alternative 

dealers with whom they can contract. 

Long term, this behavior may result in 

underinvestment in broiler production. 

The hold-up problem is a manifestation 

of both market power and incomplete 

information. 

C. Poultry Grower Earnings and Returns 

on Equity 

Poultry growing is an intensive 

capital investment endeavor where 

returns can be unstable and fail to meet 

reasonable grower expectations. Grower 

capital investment is substantial, and 

contract payments received by U.S. 

poultry growers vary widely. Lack of 

transparency in returns to grower 

investment can create underinvestment 

and overinvestment problems. In 2011 

data drawn from a nationally 

representative sample of growers, the 

mean payment received by contract 

growers was 5.77 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.41 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.42

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),43 a 

special survey conducted in 2011 

showed average returns on equity were 

negative for operations with one to two 

poultry houses, and increased with the 

size of the operation to a maximum of 

2.7 percent among operations with six 

or more houses. These figures were well 

below rates of return on equity reported 

for manufacturing, mining, and trade 

corporations in the Quarterly Financial 

Reports of the U.S. Census Bureau for 

the same period. They were also below 

average rates of return on equity for 

large and midsize U.S. farms. 

Growers must be able to evaluate their 

return on equity—a measure of a 

business’s profitability relative to the 

equity invested in it—to remain solvent. 

However, many factors, including 

monopsonistic and oligopsonistic 

market structures, incomplete contracts, 

uncertainty about the required level of 

skill and involvement, and 

asymmetrical information, make 

calculation of return on equity difficult 

for growers. The structure of the 

contracts themselves results in such a 

wide range of potential grower financial 

outcomes that it is difficult for growers 

to make reliable profitability 


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44See, for example, Doye, Damona Grace, et al. 

‘‘Broiler Production: Considerations for Potential 

Growers’’ Oklahoma Cooperative Extension Service, 

(March 2017); Rhodes, Jennifer and Jonathan Moye. 

‘‘Broiler Production Management for Potential and 

Existing Growers’’, University of Maryland 

Extension, (October 2017); and Cunningham, Dan 

L., and Brian D. Fairchild. ‘‘Broiler Production 

Systems in Georgia, Costs and Returns Analysis 

2011–2012.’’ University of Georgia Cooperative 

Extension (June 2011). 

45 ‘‘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/. 

46USDA 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. 

47See 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). 

48Transcript, United States Department of Justice, 

United States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshop May 21, 2010; Normal, Alabama. 

49The effect of tournament groupings, or league 

composition, is an area requiring additional 

exploration and research. It is not directly 

addressed in this proposal. 

projections. Absent such information, 

growers face an ongoing risk of 

deception in their contracting and 

operational decisions, risks which AMS 

believes can be mitigated through the 

provision of the information and 

transparency provided under this rule. 

D. Asymmetrical Information 

As explained earlier, one symptom of 

incomplete contracts is asymmetrical 

information. This occurs when one 

party to a contract has more and/or 

better critical information than the other 

party. For example, because live poultry 

dealers determine grower pay, they have 

access to records of the payments made 

to each grower, and have information 

regarding the complete range of 

payments across growers with birds 

delivered for processing in each week. 

The individual grower—both existing 

and prospective—however, lacks the 

same ready access to this information. 

Additionally, dealers have information 

related to (and also control) strategic 

decision making that may include 

placement frequency, stocking densities, 

and input quality and distribution— 

factors that influence the weight and 

performance elements that comprise 

individual flock payments and 

influence grower payments in the long 

term. It is unlikely that poultry growers 

are privy to information about the range 

of grower payments or dealers’ strategic 

decision making. As a result, they lack 

key information needed to make 

informed decisions with respect to the 

range of financial risks they face. 

Prospective growers can draw upon 

information provided by poultry 

specialists in state cooperative 

extension services and by lenders, but 

those sources do not have live poultry 

dealers’ internal data on the full range 

of payments or their frequencies and, as 

a result, typically base financial 

modeling and advice on average levels 

of payments received by growers, not on 

the full range of payments.44 Existing 

growers know what they have been 

paid, and may elicit further information 

from other growers, but likewise lack 

complete integrator information on the 

range of grower payments, making it 

difficult for them to accurately project 

future earnings based on the past 

experience of similarly situated growers 

and, as such, to gauge their ability to 

meet financial obligations. 

Some live poultry dealers provide pro 

forma 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.45 AMS has observed these 

projections lack standardization making 

it difficult for growers to compare 

estimates among multiple dealers. 

Additionally, the assumptions 

underlying the projections such as 

number of placements, stocking 

densities, target weight are subject to 

dealer discretion and in many cases the 

estimates themselves are expressly 

disclaimed in the production agreement. 

These risks are particularly acute 

when growers must make key 

investment decisions for their operation, 

such as whether or not to enter the 

poultry business and whether or not 

take on or invest in new or expanded 

facilities, all of which can be expected 

to involve incurring debt. AMS believes 

that the provision of the information in 

this rule will reduce the risks of these 

information asymmetries and enable 

growers to improve their decisionmaking and risk-management. 

USDA’s Farm Services Agency (FSA), 

which manages a loan guarantee 

program, has also recognized repayment 

reliability concerns related to 

informational asymmetries and their 

effect on poultry grower payments and 

total revenues. 

In order to reduce FSA’s exposure 

under the loan guarantee program, the 

FSA Handbook requires the following of 

poultry production contracts in order to 

assess their ‘‘dependability.’’ 46

Contracts must: 

• be for a minimum period of 3 years 

• provide for termination based on 

objective ‘‘for cause’’ criteria only 

• require that the grower be notified of 

specific reasons for cancellation 

• 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. 

Enhanced and more reliable 

transparency in the poultry production 

contracting process is likely to assist 

FSA’s in effectuating the mandates 

under the loan guarantee program as set 

forth in its handbook. 

E. Poultry Grower Concerns 

In 2010, USDA held a series of 

workshops in conjunction with the 

Department of Justice to hear from 

producers about concentration and trade 

practice issues in Agriculture. Normal, 

Alabama, hosted one such session with 

an emphasis on the poultry industry. 

Globally, growers complained that their 

success or failure is dependent on 

factors controlled by their integrators. 

Further, growers are troubled by the 

lack of choice among integrators in 

many regional relevant markets, which 

further enhances the bargaining position 

of integrators.47 Grower public 

comments at the workshop were 

consistent with numerous comments 

submitted to USDA on the 2010 and 

2016 GIPSA rules and identified 

specific areas of concern in the poultry 

industry. 

Growers expressed concerns about 

contract dependency, uncertainty of 

pay, and informational asymmetries 

related to farm revenues and debt. 

Poultry growers have indicated they 

lack control over and even 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, factors that heavily 

influence grower payments on an 

individual flock basis and over the long 

term.48

Growers cited the level of control and 

discretion reserved to integrators under 

their contracts, remarking how 

discretionary decisions related to flock 

placements, housing specifications, 

tournament grouping,49 and other 

production factors can significantly 

affect grower revenue and profitably. 

Many growers were worried that 

contract terms did not cover the time 

required to repay the debt on their 

farms, noting that additional capital 

investments, such as those necessitated 


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34988 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

50Transcript, United States Department of Justice, 

United States Department of Agriculture, Public 

Workshops Exploring Competition in Agriculture: 

Poultry Workshop May 21, 2010; Normal, Alabama. 

51Tsoulouhas, Theofanis, and Tomislav Vukina. 

‘‘Regulating Broiler Contracts: Tournaments Versus 

Fixed Performance Standards.’’ American Journal of 

Agricultural Economics 83 (2001). 

52MacDonald (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. 

by integrator’s housing specifications, 

can plunge growers into further debt 

without assurances of adequate or stable 

returns. 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.50 Concerns have also been 

raised regarding the use of deficient and 

unreliable ‘‘pro forma’’ financial 

estimates during the contracting 

process. 

Finally, poultry growers have 

complained to USDA about being 

prohibited by dealers from asserting 

their rights under the current 

regulations to discuss poultry growing 

contracts with government 

representatives, family members, 

lenders, and other business associates. 

Some growers allege they have been 

threatened or retaliated against for 

asserting those rights. 

As explained in section II.A., AMS 

believes that poultry growing 

arrangements are often incomplete 

contracts that may be deceptive when 

omissions or inadequate descriptions of 

key terms mislead, camouflage, conceal, 

or otherwise inhibit growers’ ability to 

assess the financial feasibility and 

expected value of investment. For 

example, for a grower to estimate future 

revenues, it is necessary for the grower 

to know how many flocks the dealer 

will place with the grower over a given 

time period. When contract terms do not 

establish the number of flocks a grower 

will receive during that time period, the 

grower could be misled or deceived into 

believing he will receive an 

optimistically high number of 

placements, which might increase the 

grower’s willingness to contract with 

the dealer. This risk is particularly acute 

if the financial statements or estimates 

provided to the grower paint only the 

most optimistic picture possible 

regarding the returns that may be 

possible under complex and opaque 

payment arrangements, such as the 

commonly used tournament ranking 

system, rather than the range of 

realistically expected outcomes. If 

poultry contracts contain more material 

terms relating to revenue over the life of 

the agreement, we believe the potential 

for deception is reduced significantly. 

AMS considers this imbalance of 

information, or ‘‘asymmetrical 

information,’’ as described in the 

previous section, an important 

consideration for this rulemaking. We 

recognize that neither dealers nor 

growers can predict market conditions 

far into the future. Yet given the 

substantial investment from the grower, 

together with the greater ability for 

dealers to monitor market trends, adjust 

contracting, and otherwise hedge risks, 

we believe these upfront and ongoing 

information asymmetries could be 

effectively mitigated through the 

disclosure regime that will be outlined 

later in this rule. 

AMS believes that by providing 

critical information that addresses the 

risks that growers face, the rule would 

encourage greater certainty and 

confidence among growers, encourage 

investment, and enhance the overall 

competitive market for grower services. 

As for growers’ ability to assert their 

rights without fear of retaliation, we 

note that the current regulations, at 9 

CFR 201.100(b), already require live 

poultry dealers to allow poultry growers 

to discuss the terms of their contracts 

with government agencies, family 

members, and business associates and 

advisors, regardless of confidentiality 

provisions in the contracts. However, it 

may be appropriate to shed more light 

on those rights. AMS believes the 

proposed transparency enhancements 

would further aid growers in identifying 

illicit conduct of this type. 

III. Poultry Grower Pay Systems 

As discussed in section I.C.3.— 

Poultry Grower Compensation, the 

majority of poultry growers are paid on 

an individual flock basis, where the 

calculation for grower payments can be 

expressed as: Farm Weight (in pounds) 

× Feed Conversion (in dollars) = Grower 

Pay. Farm weight is a nearly universal 

measure among all poultry grower pay 

systems; however, the metrics and 

formulas for determining feed 

conversion vary among pay systems and 

between integrators. 

Poultry grower pay systems can be 

categorized as either ranking or nonranking. The most common non-ranking 

pay system is called ‘‘fixedperformance.’’ Pay systems that rank 

growers are called ‘‘poultry grower 

ranking systems’’ or ‘‘tournaments.’’ In 

this section we focus on the 

characteristics of—and challenges 

associated with—tournament pay 

systems, but we begin with a brief 

description of fixed-performance pay 

systems for comparison. 

A. Fixed-Performance Pay Systems 

Under fixed-performance production 

contracts, growers are paid a base rate 

for each animal or for the farm weight 

delivered to the processor. These 

contracts generally adjust payments 

based on fixed performance standards. 

For example, farmers with lower animal 

mortality or higher conversion of feed to 

live weight might receive higher pay. 

These are called fixed performance 

contracts because although 

compensation may fluctuate, the 

performance elements are tied to fixed 

standards.51 In contrast, under grower 

ranking pay systems, performance 

elements are relative standards tied to 

the performance of other growers. 

B. Tournament Pay Systems 

The majority of growers producing 

poultry under production contracts are 

paid under a poultry grower ranking or 

‘‘tournament’’ pay system.52 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. 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. The dealer 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 

base pay rate is adjusted by 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. 

Payments under tournament contracts 

still vary with flock mortality and feed 

conversion, but in tournament contracts, 

the performance elements are not fixed 

targets. The performance elements are 

compared to average performance 

results from a tournament group, which 

is group of growers delivering poultry to 

the plant during the same time period 

(usually within a week). Growers who 

exceed the group’s average performance 

get higher payment, while growers who 


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53Taylor, C. Robert, and David A. Domina, 

‘‘Restoring Economic Health to Contract Poultry 

Production.’’ Report prepared for the Joint U.S. 

Department of Justice and USDA/GIPSA Public 

Workshop on Competition Issues in the Poultry 

Industry (May 2010). 

fall short of the group average receive 

lower pay. The grower payment 

equation’s feed conversion variable is 

modified by its deviation from average 

performance, and a specific grower’s 

pay varies with his/her ranking against 

the average. Grower pay rates vary 

depending on the performance of other 

growers, even if a specific grower’s 

performance remains unchanged or 

even improved compared to their 

performance in previous growout 

periods. 

IV. Poultry Grower Ranking Systems 

A. Tournament Settlements 

9 CFR 201.100(d) and 9 CFR 

201.100(f) are important parts of the 

existing tournament payment disclosure 

regime under the Packers and 

Stockyards Act. This proposal builds on 

the existing disclosure concepts by 

incorporating new transparency into the 

distribution of inputs, which is an area 

of particular concern to growers. 

Currently, 9 CFR 201.100(d) requires 

all live poultry dealers to prepare and 

furnish a settlement sheet to a poultry 

grower at the time of settlement. Under 

that regulation, the settlement sheet 

must contain all information necessary 

to compute the grower’s payment, 

including, if applicable, the number of 

birds marketed, the total weight and 

average weight of the birds, and the 

payment per pound. Further, 

§ 201.100(f) requires live poultry dealers 

who pay growers under a tournament 

system to furnish growers with a 

grouping or ranking sheet at the time of 

settlement that shows the grower’s 

precise position in the grouping or 

ranking sheet for that period. Currently, 

the grouping or ranking sheet need not 

disclose names of other growers, nor the 

housing specifications for each 

tournament participant, but must show 

the actual figures used to compute each 

grower’s position within the ranking for 

that period. Neither section currently 

requires the live poultry dealer to 

provide information about the 

distribution or nature of integrator 

inputs among settlement participants. 

The tournament ranking sheet 

required under § 201.100(f) provides 

growers with numeric data comparing 

their performance and the performance 

of other growers in the tournament. 

While the numeric data describes the 

relationship between grower 

performance, as assessed by the 

integrator, and settlement payments, its 

value is limited without information 

about the distribution of integrator 

inputs among tournament participants. 

Poultry grower commenters on the 2010 

and 2016 GIPSA rules stated that 

without knowing how inputs they 

receive compare to inputs provided to 

other growers within their tournaments, 

growers cannot determine whether 

differences in pay are due strictly to 

grower skill or to other factors beyond 

their control. 

B. Tournament Payments as a Measure 

of Grower Skill, Effort, and Innovation 

In comments submitted to USDA on 

the 2010 and 2016 GIPSA rules, live 

poultry dealers suggested that 

tournament systems benefit poultry 

growers by offering financial incentives 

and rewards to growers who invest time 

and effort into their poultry growing 

operations. They asserted that the 

competition inherent in tournaments 

fosters grower innovation and increased 

efficiency, and rewards those growers 

who are the most efficient and provide 

the best services. They also stated that 

tournament pay systems reward aboveaverage growers that are willing to take 

risks or improve their production 

systems. One poultry processing 

company stated that contract broiler 

growers are paid for their services based 

on a formula that rewards efficiency, 

ingenuity, and good animal welfare and 

animal husbandry practices. 

Comments from some poultry growers 

and others associated with the industry 

concurred with those of processors, 

indicating that the opportunity to earn 

higher compensation for superior 

performance under tournament systems 

motivates above-average growers to 

work hard, invest in their facilities, and 

utilize innovative technology. 

At the same time, other growers 

dispute this. Indeed, growers often 

comment on wide swings in grower 

rankings from flock to flock, where the 

same individual grower ranks high in 

one tournament and much lower in 

another. One available analysis confirms 

significant volatility in grower rankings 

from flock to flock,53 This suggests that 

while grower experience and skills can 

lend to consistently successful 

individual flock performance, a grower’s 

relative success in tournaments might 

be attributed to other factors. 

Input variability is commonly cited by 

grower commenters as a key explanation 

for ranking volatility. We discuss the 

distribution of inputs and the effects of 

input variability on tournament 

rankings and grower payments in the 

following sections. 

C. Distribution of Inputs Among 

Tournament Participants 

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. In this section, we explain 

how integrator decisions about inputs 

provided to tournament growers can 

also impact growers’ relative 

performance. 

Under the tournament system, dealers 

control the source of inputs and the 

distribution of those inputs to growers. 

In section I.C.4.—Live Poultry Dealer 

Inputs—AMS has provided evidence 

that the range of inputs is 

nonhomogeneous. The range of inputs is 

selected to satisfy customer or product 

requirements, as well as efficiency in 

the slaughter process, presumably at the 

lowest costs. Input distribution has not 

been studied extensively, and little 

information is available in the public 

domain. In response to prior USDA 

rulemaking efforts, dealers have denied 

or downplayed the significance of input 

variability and its effect on bird 

performance. The existence of nonhomogeneity and the persistence of 

grower complaints raise questions about 

dealer input allocation practices and the 

extent to which tournament parity and 

cost efficiency are balanced, or whether 

other factors may also be at play. 

For example, if a complex has three 

breeder farms with different aged flocks, 

it may be costly or even impracticable 

for integrators to evenly distribute 

chicks from the three breeder flocks in 

identical ratios to all settlement 

participants. Similar cost considerations 

might play a role in distribution where 

breed and sex variation are present. In 

another example, supply considerations 

may play a role in stocking density 

differences among settlement 

participants. As a result, growers settled 

together could be allocated flocks with 

some level of variance in attributes. 

None of those input variances would be 

materially affected by incentives for 

uniformity of product or processing 

plant efficiency; they would be 

premised cost efficiencies. 

D. Input Variability and Grower 

Payment 

Tournament payments are based on 

relative measurements, including 

poultry mortality, morbidity, feed use 

efficiency, and growth rate, among 

tournament participants. As discussed 

earlier, the attributes of various 

integrator-controlled inputs can affect 

those measurements. Therefore, 


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54Stocking density is a function of the desired 

weight of uniformly sized birds at harvest. A 

placement with a specified number of smaller birds 

would have the same density as a placement with 

the same number of larger birds. Smaller birds 

would just take somewhat longer to get there. 

55Tyson Farms, Inc. 71 Agric. Dec. 1065, 1160 

(U.S.D.A. 2012). 

56See, 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). 

57For example, integrators may contract with 

Agristats, a chicken, turkey, commercial egg, and 

swine industry research company, to collect input 

information and compare such information against 

similar organizations in the industry. Agri Stats, 

Inc. Partnership and Services, https://

www.agristats.com/partnership. 

variability between the inputs provided 

to growers in a tournament can affect 

relative outcomes. Here we briefly 

review those inputs and explain how 

uneven distribution of inputs may affect 

tournament grower rankings and 

payments. 

1. Stocking Density: Variability in 

stocking densities among poultry 

growers in settlement pools are likely to 

result in farm weight and feed 

conversion disparities among settlement 

participants. If one or more growers in 

a tournament receive flocks with fewer 

birds than what would be optimal, and 

those flocks do not achieve optimal feed 

conversion efficiency, those growers 

may not rank as high as their 

tournament competitors who receive 

flocks of optimal stocking density.54

Thus, the input variability has the 

potential to affect tournament grower 

payments. 

2. Breed Ratios: As described in 

section I.C.4.b., different poultry breeds 

convert feed to weight gain with varying 

efficiency. Thus, differences between 

the breeds or ratios of breeds of poultry 

flocks placed with individual growers 

within a tournament group may 

ultimately affect each grower’s relative 

performance and tournament ranking. 

Depending on the specific breeds 

involved, USDA has connected 

variances in the distribution of poultry 

breeds or breed ratios with farm weight 

disparities,55 affecting grower pay. 

3. Gender ratios: As explained in 

section I.C.4.c., The majority of 

integrators use straight-run (not sorted 

by gender) flocks to supply farms. AMS 

would not view the placement of 

randomized straight-run flocks as an 

input variability if all tournament 

growers received randomized straightrun flocks, since the ratio of males to 

females in each flock would be 

randomized and not dictated by the 

integrator. However, integrators placing 

sexed flocks, or integrators 

supplementing straight-run flocks with 

sexed flocks, may create input 

variability in the distribution of birds 

that could result in farm weight and 

feed conversion disparities. 

4. Breeder Flock Age: As discussed in 

section I.C.4.d., the age of breeder flocks 

is correlated with egg and chick size, 

mortality, and eventual weight gain. 

Variability between the ages of breeder 

flocks producing the young poultry 

placed with different growers in a 

tournament may result in farm weight 

and feed conversion disparities at the 

end of growout, which may impact the 

rankings and payments to individual 

growers in that tournament. 

5. Breeder Flock Health: Placing birds 

from breeder flocks of varying health 

with tournament participants may affect 

each flock’s performance and thus each 

grower’s ranking and pay. Other factors, 

such as variations between facility 

sanitation practices and performance 

may exist among breeder facilities 

within the same complex, and may 

impact progeny growout performance, 

creating an input variability when 

poultry sourced from multiple breeder 

farms are settled together. 

6. Feed Disruptions: As described in 

section I.C.4.f., bird growth may be 

affected by feed disruptions (where 

poultry go without feed for a certain 

length of time), possibly resulting in less 

farm weight, which affects grower 

tournament rankings and payments. 

Feed disruptions for any cause, if they 

do not affect all growers equally, may 

constitute an input disparity that can 

affect grower ranking and pay. 

7. Medications: The integrator may 

find it necessary to supply one or more 

flocks with veterinary medicines or 

supplements during flock growout. 

Such treatments, when provided on a 

flock-by-flock basis, may impact relative 

flock performance and grower pay. 

As described in the previous section, 

an integrator’s input allocation 

decisions are impacted by cost 

efficiencies that may be inconsistent 

with individual growers’ interests, 

including risk management and 

earnings maximization. But variability 

in integrator-provided inputs among 

settlement participants can ultimately 

influence settlement rankings and 

payments. Thus, tournament 

participants prefer some level of parity 

in input distributions, or at least 

mitigation of any disparities, in order to 

evaluate whether grower compensation 

is related to grower management and 

skill or correlated with ‘‘favorable’’ 

inputs. 

E. The Need for Transparency 

Input variability among settlement 

participants have long been a point of 

contention between growers and 

integrators because growers are not 

involved in input distribution decisions, 

and any balancing between cost 

efficiency and parity is not transparent. 

With respect to this input variability, 

growers have repeatedly complained in 

public forums and to USDA of 

retaliation, discrimination, and other 

disputes arising in connection with 

distributions of inputs, including in 

ways that result in significant economic 

harm to growers.56

AMS has not identified research 

regarding whether variability in inputs 

between tournament growers affects 

grower outcomes. However, some 

existing research establishes the effects 

of certain inputs on poultry growth and 

feed conversion. 

We believe growers’ assertions 

regarding the connection have merit. 

AMS is aware that integrators collect 

input information for private use,57

although we do not know whether it 

includes information about how inputs 

are distributed among individual 

growers. Nevertheless, growers 

complain that this information, which 

could be useful to them in flock 

management, is not generally provided 

to them. 

At the 2010 Normal, Alabama, 

workshop referenced earlier, contract 

poultry growers further raised 

significant concerns regarding the 

design and operation of tournament 

systems. Commenters asserted that the 

high degree of integrators’ control over 

the inputs, the reliance that growers 

have on the inputs for outcomes under 

the system, and the opacity of the 

tournament calculations fostered a range 

of risks, including risks relating to 

deception. These include the inability to 

verify the accuracy of payments, the 

inability to measure and manage risks, 

and the ways in which tournament 

systems can mask or facilitate hard-todetect forms of discrimination or 

retaliation for disputes arising under the 

poultry growing arrangement. 

These concerns reflect similar issues 

of market power and information 

asymmetry discussed earlier. Where 

integrators have made business 

decisions to procure and distribute 

inputs in a manner that most suits their 

cost structure and business strategies, 

poultry growers have limited- or no 

ability to negotiate, including for 

information that would enable them to 

avoid, mitigate, or manage the risks 

arising from the integrator’s decisions. 

Growers may or may not be able to 

discern from a visual inspection of the 

flocks certain important information, 


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58One example of deception risk is the alleged 

practice of dealers offering more lucrative contracts 

to attract new growers but then reducing the pay 

once the grower is secured and in debt, (Taylor and 

Domina 2010; Vukina and Leegomonchai 2006). See 

also Vukina, T. 2001. Vertical integration and 

contracting in the US poultry industry. Journal of 

Food Distribution Research 81: 61–74. 

such as breeder age, to which the 

integrator is privy. Other information, 

such as bird sex, may be more readily 

available to the integrator than to the 

grower. 

Their lack of information at the time 

of placement about the specific inputs 

delivered to growers exposes them to 

the performance risks described in 

section IV.D. associated with the 

variability of those inputs. Those 

performance risks may manifest in in 

tournament ranking. Similarly, the 

absence of input distribution 

information at the time of settlement 

undermines growers’ ability to manage 

their operations to address those 

performance risks. In both cases, 

growers are disadvantaged in their 

performance by a lack of information 

outside of their control. Conversely, the 

ability of growers to monitor and 

measure input differences is especially 

important for mitigating risks relating to 

the accuracy of payments and the ways 

in which tournament systems may mask 

or facilitate hard-to-detect forms of 

discrimination or retaliation for 

disputes.58

AMS believes that tournament 

growers need information about input 

distribution—particularly at the stage 

where the input is provided—when they 

could apply, to the extent possible, their 

experience and skills to the adjustment 

of flock management as necessary in 

response. For example, a grower is 

informed he has received a salmonella 

infected broiler flock, which will 

present with loose, runny stools that can 

cause floors to cake quickly, leading to 

burnt paws and increased coccidiosis. A 

grower aware of the condition can 

manage the flock through use of 

migration fences early in flock and with 

increased ventilation to remove excess 

ammonia and to help dry floors. These 

management adjustments may be 

departures from normal growout 

procedure, but could lower mortality, 

decrease condemnations, and result in 

higher farm weights and feed efficiency. 

Thus, improved outcomes would benefit 

growers and integrators alike. 

Further, growers seek transparency 

regarding flock input distribution 

among tournament participants so they 

can individually assess the relationships 

between input variability, grower 

management and skills, and tournament 

payments. Such information is also 

particularly important, when shown 

together with housing specifications, for 

growers to assess the relative value and 

necessity of making additional capital 

investments. Put another way, failure to 

make this information available to 

growers puts them at risk of making 

very expensive investments with very 

little insight into their value and risks 

involved. 

For both at placement and settlement 

disclosures, growers have expressed a 

mistrust of live poultry dealers when 

information about flock placements is 

not transparent. Improving transparency 

is intended to reduce concerns relating 

to input distribution and may help 

establish a higher degree of trust in the 

integrity of the marketplace. 

Finally, relative ranking systems 

(tournament) premised on grower skill, 

effort, and innovation should measure 

and compensate based upon those 

merits. Pay systems highly correlated 

with individual input variability may be 

inconsistent with the merit premise and 

demonstrate misrepresentations and 

deception in the operation of 

tournament pay systems. 

V. Proposed Regulations 

AMS proposes to address concerns 

related to market power imbalance and 

asymmetrical information in poultry 

grower contracting by revising the 

regulations at 9 CFR part 201 that 

effectuate the Packers and Stockyards 

Act. AMS intends the proposals to 

better balance the quantity, quality, and 

type of critical information poultry 

growers, prospective poultry growers, 

and live poultry dealers have as they 

enter into and operate under poultry 

growing arrangements. AMS expects 

that these proposed rules would 

improve transparency and reduce the 

risk of deception in the contracting 

process. This section provides detailed 

descriptions and explanations for the 

proposals. 

A. Definitions 

Section 201.2—Terms defined—of 9 

CFR part 201 provides definitions for 

terms used in the regulations. AMS 

proposes to revise § 201.2 by removing 

the paragraph designations within the 

section, reorganizing the definitions 

alphabetically, and adding definitions 

for new terms used in the proposed rule. 

Proposed additions to the list of terms 

defined in § 201.2 are described as 

conforming changes in connection with 

the proposed regulatory changes 

described below. 

Additionally, to ensure a common 

understanding of the use and meaning 

of certain terms already used in the 

regulations and in the proposed 

regulatory revisions, AMS proposes to 

incorporate into § 201.2 the statutory 

definitions for those terms. Specifically, 

the term 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. The term 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. The term 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. Finally, the term 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. 

AMS invites comments on proposed 

additions to the list of definitions, 

including those described later in this 

section. Please explain fully all views 

and suggestions, supplying examples 

and data or other information to support 

your views where possible. 

B. Disclosure 

To address concerns identified in the 

section on Poultry Growing 

Arrangements earlier in this document, 

including industry concerns related to 

dealer transparency in poultry growing 

arrangements, AMS proposes to amend 

§ 201.100—Records to be furnished 

poultry growers and sellers. 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. Paragraph 

(b) 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 


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family members or other business 

associates with whom growers have 

valid business reasons for consulting 

about the offered poultry growing 

arrangements. Paragraph (c) specifies 

required contents of the poultry growing 

arrangement, including contract terms 

and information about payment 

calculations and performance 

improvement plans. Paragraph (d) 

requires dealers to furnish growers with 

settlement sheets and supporting 

documents showing how grower pay is 

calculated. Paragraph (e) requires 

dealers to obtain USDA condemnation 

or grading certificates for poultry and to 

provide copies to growers at settlement. 

Paragraph (f) requires dealers to provide 

growers in a poultry grower ranking 

system copies of grouping or ranking 

sheets that show growers their precise 

positions within the grouping or ranking 

for that period, as well as the actual 

figures rankings are based upon. 

Paragraph (g) requires dealers who 

purchase live poultry to provide 

detailed purchase invoices, including 

applicable USDA condemnation or 

grading certificates, to poultry sellers at 

the time of settlement. Finally, 

paragraph (h) requires dealers to 

provide notices regarding termination or 

non-renewal of poultry growing 

arrangements to affected growers at least 

90 days before termination. Under 

paragraph (h), dealers must provide the 

reason for a termination, the effective 

date of the termination, and information 

about grower appeal rights with the 

dealer. Further, dealers must provide 

the opportunity for growers to notify 

dealers in writing at least 90 days before 

the scheduled termination of a poultry 

growing arrangement of the grower’s 

intent to terminate the arrangement. 

Specifically, AMS proposes to amend 

§ 201.100 by revising paragraph (a); 

redesignating paragraphs (b) through (h) 

as paragraphs (h) through (n), 

respectively; moving current paragraph 

(f) to a new regulatory section that 

addresses poultry grower ranking 

systems specifically; adding new 

paragraphs (b) through (g); and revising 

redesignated paragraph (i). 

Proposed revisions to § 201.100(a) 

would modify the heading to read 

‘‘Disclosures and records to be 

furnished poultry growers and sellers’’ 

and would require the dealer to provide 

the prospective or current poultry 

grower with the Live Poultry Dealer 

Disclosure Document (the Disclosure 

Document), as described in proposed 

new paragraph (b) of the section, in 

addition to the true written copy of the 

poultry growing arrangement, under 

three different scenarios. A proposed 

conforming change to § 201.2 would 

define the term prospective poultry 

grower to mean a person or entity with 

whom the live poultry dealer is 

considering entering into a poultry 

growing arrangement. AMS would add 

this definition to distinguish between a 

current or existing poultry grower who 

has previously entered into a poultry 

growing arrangement with the dealer 

and a grower who has not signed a 

contract. The proposed requirements for 

live poultry dealers are somewhat 

different depending on the status of 

growers with whom they are working. 

Under the first scenario, provided in 

proposed new § 201.100(a)(1), a dealer 

seeking to renew, revise, or replace an 

existing poultry growing arrangement 

(or newly establish a poultry growing 

arrangement) that does not contemplate 

modifications to existing housing 

specifications would be required to 

provide both the poultry growing 

arrangement and the Disclosure 

Document at least seven days before the 

dealer executes the poultry growing 

arrangement. This proposal is intended 

to give growers adequate time to 

consider all the information provided 

and consult with others as needed 

before committing to the new, revised, 

or replacement poultry growing 

arrangement. Because this scenario 

involves growers already familiar with 

their dealers, and because in this 

scenario the contract renewal does not 

involve additional capital investment, 

we believe seven days would provide 

time for adequate review. AMS proposes 

to exempt certain small businesses from 

this requirement, as described in the 

discussion about proposed new 

§ 201.100(e)below. 

AMS proposes a conforming change 

to § 201.2 to add a definition for housing 

specifications to mean a description 

of—or 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. Live poultry 

dealers commonly develop multiple 

housing specifications. Accordingly, by 

defining this term, AMS does not intend 

to limit live poultry dealers to a single 

housing specification. Another 

proposed definition would define Live 

Poultry Dealer Disclosure Document to 

mean the complete set of disclosures 

and statements that the live poultry 

dealer must provide to current or 

prospective poultry growers. 

Under a second scenario, as described 

in proposed new § 201.100(a)(2), a 

dealer seeking to enter into a poultry 

growing arrangement that would require 

the grower to make an original capital 

investment to comply with the dealer’s 

housing specifications would be 

required to provide the grower with a 

true written copy of the poultry growing 

arrangement, the housing specifications, 

the Disclosure Document, and a letter of 

intent simultaneously. Because the 

Disclosure Document and letter of intent 

would be required to accompany the 

housing specifications, growers would 

have more information with which to 

assess economic and financial 

considerations prior to obtaining 

financing for the original capital 

investment. This proposal is intended to 

give the grower and their lender 

adequate time to consider all the 

information provided and consult with 

others as needed, and to provide 

assurance with which to move forward 

with the necessary financing. A letter of 

intent would signal to the prospective 

poultry grower and their prospective 

lender that the dealer’s contract offer is 

earnest and that the preliminary terms 

of the agreement should be assessed to 

determine practical and financial 

feasibility. Further, having the letter of 

intent would allow the poultry grower 

to discuss proposed or required 

upgrades to existing housing 

specifications with lenders and other 

advisors while considering whether to 

make those modifications and financial 

investments. Growers, working with 

their lenders, can establish an 

appropriate period to review and assess 

the disclosure document and letter of 

intent prior to undertaking the 

investment. 

A proposed conforming change to 

§ 201.2 would add a definition for letter 

of intent to mean 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. 

Another proposed revision to § 201.2 

would add a definition for original 

capital investment to mean the initial 

investment for facilities used to grow, 

raise, and care for poultry or swine. The 

proposed definition for original capital 

investment uses similar language as the 

existing definition for additional capital 

investment, and is intended to help 

differentiate between situations where a 

new or prospective grower would be 

required to make an initial capital 

investment for poultry housing in order 

to become a poultry grower and where 

a current grower has already made a 

capital investment related to poultry 

housing requirements. 

Finally, under the third scenario, as 

described in proposed new 

§ 201.100(a)(3), a live poultry dealer 

seeking to offer or impose modifications 

to existing housing specifications that 


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could reasonably require the current 

poultry dealer to make an additional 

capital investment would be required to 

provide the grower simultaneously with 

a true written copy of the poultry 

growing arrangement, modified housing 

specifications, the Disclosure 

Document, and a letter of intent. AMS 

expects the majority of growers will 

seek financing for additional capital 

investments, and the simultaneous 

production of the three documents is 

designed to (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. Additional capital 

investment, as it pertains to poultry 

production, is defined in the current 

regulations at § 201.2(n) as a combined 

amount of $12,500 or more per structure 

paid by a poultry grower over the life of 

the poultry growing arrangement 

beyond the initial investment for 

facilities used to grow, raise, and care 

for poultry. The 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. 

The requirement in current 

§ 201.100(a) to provide true written 

copies of the poultry growing 

arrangement, whether to establish a new 

arrangement or to renew, revise, or 

replace an existing arrangement, helps 

improve transparency in the new or 

ongoing relationship between the live 

poultry dealer and the prospective or 

current poultry grower, which mitigates 

the information asymmetries and other 

deception-related concerns discussed 

above. AMS would retain that 

requirement under the proposed rule. 

AMS believes providing written 

documents helps ensure that both 

parties have the opportunity to read and 

understand all the terms of the poultry 

growing arrangement. Further, the 

requirement in current § 201.100(a) to 

provide a copy of the poultry growing 

arrangement at the same time housing 

specifications are disclosed ensures 

transparency about the dealer’s 

expectations regarding the grower’s 

responsibility under the arrangement. 

Under the proposed revisions to 

§ 201.100(a), and in the three scenarios 

described above, the required 

documents and the timelines for 

providing them are determined 

according to whether new or revised 

housing specifications are involved. 

In each of the three scenarios 

presented above, the live poultry dealer 

must provide the grower with the 

Disclosure Document. The Disclosure is 

a set of documents prepared by the live 

poultry dealer. AMS believes providing 

the Disclosure Document to growers 

along with the true written copy of the 

poultry growing arrangement, housing 

specifications, and letter of intent, 

where applicable, would help mitigate 

the asymmetric information problem 

described earlier in this document by 

giving growers more information with 

which to assess poultry growing 

arrangements and efficiently allocate 

resources. 

The contents and format of the 

Disclosure Document cover pages would 

be provided in proposed new 

§ 201.100(b)—Prominent disclosures. 

Proposed § 201.100(b) would specify the 

elements to be included with the cover 

pages of the Disclosure Document, 

including basic information about the 

live poultry dealer, key points in the 

poultry growing arrangement, and 

precise language for certain notices the 

dealer must make to the grower. In 

conjunction with the requirement to 

include specific language in the 

Disclosure Document, AMS is 

requesting Office of Management and 

Budget (OMB) approval of a new 

information collection, as described 

more fully in the Paperwork Reduction 

Act section of this proposed rule. AMS 

is proposing to provide a downloadable 

and printable electronic form containing 

the required language described in 

proposed § 201.100(b). The proposed 

form is for the use of live poultry 

dealers and is intended to reduce the 

burden of creating such a form and 

simplify compliance with the 

requirement to make certain 

notifications to poultry growers. 

Proposed new § 201.100(b)(1) would 

require the Disclosure Document cover 

page to include the title ‘‘LIVE 

POULTRY DEALER DISCLOSURE 

DOCUMENT’’ in capital letters and bold 

type. Proposed § 201.100(b)(2) would 

require the live poultry dealer to list 

their name, type of business 

organization, principal business 

address, telephone number, email 

address, and if applicable, primary 

internet website address. Proposed 

§ 201.100(b)(3) would require the dealer 

to specify the length of the term of the 

poultry growing arrangement. Including 

this information at the front of the 

Disclosure Document clearly identifies 

for growers the live poultry dealer and 

the associated poultry growing 

arrangement under consideration. 

Under proposed § 201.100(b)(4), the 

live poultry dealer would be required to 

include a notice to the grower that, ‘‘The 

income from your poultry farm may be 

significantly affected by the number of 

flocks placed on your farm each year, 

the stocking 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.’’ Then, 

under proposed § 201.100(b)(5), the 

dealer would be required to state the 

minimum number of poultry 

placements and the minimum stocking 

density, which 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 poultry growers may not 

understand how the discretionary 

actions of live poultry dealers affect 

grower payments. The majority of 

poultry growers are paid on the basis of 

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 poultry 

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 poultry growing arrangement 

would help growers assess the projected 

baseline value of their poultry growing 

arrangement. As discussed above, the 

provision of this information would 

mitigate the information asymmetries 

and other deception-related risks AMS 

has identified. It would enable growers 

to more accurately measure their 

financial commitments and risks based 

on information that they would 

otherwise be unable to obtain. It would 

also mitigate the risks of being attracted 

by the integrator or any other party into 

a poultry growing arrangement, or an 

additional capital expenditure in 

furtherance of one, based on overly 

optimistic scenarios. 

AMS proposes to make conforming 

changes to § 201.2 by adding definitions 

for the terms placement, minimum 

number of placements, growout, 

stocking density, and minimum stocking 

density. Placement would be defined as 

the delivery of a poultry flock to the 

poultry grower for growout. Minimum 

number of placements would mean the 

least number of flocks of animals the 

live poultry dealer will deliver to the 

grower for growout annually under the 

terms of the poultry growing 

arrangement. Growout would be defined 

as the period of time between placement 

of livestock or poultry on a farm and the 

harvest or delivery of such animals for 


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slaughter, during which the feeding and 

care of such livestock or poultry are 

under the control of the farmer. 

Stocking density would be defined to 

mean a ratio that reflects the number of 

birds in a placement, generally 

expressed as head or pounds per square 

foot of the poultry growing facility or 

facilities. Minimum stocking density 

would be defined to mean 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. 

Under proposed § 201.100(b)(6), the 

live poultry dealer would be required to 

include one of two alternative 

statements, depending on whether the 

offered poultry growing arrangement 

includes housing specifications that 

require or could reasonably require an 

original or additional capital investment 

under one of the scenarios described 

earlier in connection with proposed 

§ 201.100(a). If the new, renewed, 

revised, or replacement poultry growing 

arrangement does not contemplate 

modifications to existing housing 

specifications, the dealer would include 

the statement in proposed 

§ 201.100(b)(6)(1) in the Disclosure 

Document cover pages. The 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 poultry grower with the 

Disclosure Document and a copy of the 

poultry growing arrangement at least 

seven calendar days before the dealer 

executes the poultry growing 

arrangement. Alternatively, if the dealer 

offers a new poultry growing 

arrangement that would require the 

current or prospective poultry grower to 

make an original capital investment, as 

in proposed § 201.100(a)(2), or offers or 

imposes modifications to existing 

housing specifications that could 

reasonably require the current poultry 

grower to make an additional capital 

investment, as in proposed 

§ 201.100(a)(3), the dealer would be 

required to include the statement in 

proposed § 201.100(b)(6)(ii). The 

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 poultry grower 

with the Disclosure Document, a copy of 

the poultry growing arrangement, the 

new or modified housing specifications, 

and the letter of intent simultaneously. 

Inclusion of one of these statements in 

the Disclosure Document cover pages is 

intended to notify poultry growers of 

their rights under the regulations and 

indicate what documents they should 

receive from the live poultry dealer 

within the described timeframes. 

Under proposed § 201.100(b)(7), the 

live poultry dealer would be required to 

include a statement notifying the 

poultry grower that the terms of the 

poultry growing arrangement will 

govern the grower’s relationship with 

the live poultry dealer’s company. The 

proposed statement would further notify 

the poultry grower of their right, 

notwithstanding any confidentiality 

provision in the poultry growing 

arrangement, to discuss the terms of the 

poultry 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 poultry 

grower’s immediate family or a business 

associate. The proposed statement 

would explain that a business associate 

is a person not employed by the poultry 

grower, but with whom the current or 

prospective grower has a valid business 

reason for consulting when entering into 

or operating under a poultry growing 

arrangement. 

AMS believes requiring this statement 

in the Disclosure Document cover pages 

would help growers understand their 

rights under the Act and the regulations 

and avert deception of growers. In the 

past, industry stakeholders have 

reported to USDA that they believed the 

terms of their poultry growing 

arrangements forbid growers from 

discussing those arrangements with 

Federal and State agencies, other 

growers for the same live poultry dealer, 

and other advisors. Commenters on 

previous proposed rulemakings have 

reported fearing reprisals from live 

poultry dealers for discussing their 

poultry growing arrangements with 

others, although the current regulations 

specify, at § 201.100(b), that live poultry 

dealers must allow poultry growers to 

do so. The proposed requirement to 

include this statement in the Disclosure 

Document cover pages would advise 

poultry growers that they have the right 

to discuss the terms of the poultry 

growing arrangement with the entities 

listed, regardless of confidentiality 

provisions that may be included in the 

arrangement. Further, AMS is proposing 

to redesignate § 201.100(b) as 

§ 201.100(h) and to revise the language 

to provide that the live poultry dealer 

cannot prohibit current or prospective 

poultry growers from discussing the 

terms of a poultry growing arrangement 

offer or the accompanying Live Poultry 

Disclosure Document with the entities 

listed above. The remainder of 

redesignated § 201.100(h) would remain 

unchanged. 

Finally, proposed § 201.100(b)(8) 

would require the live poultry dealer to 

include the following sentence in bold 

type in the Disclosure Document cover 

pages: ‘‘Note that USDA has not verified 

the information contained in this 

document. However, if it contains any 

false or misleading statement or a 

material omission, a violation of federal 

and/or state law may have occurred.’’ 

With this language, AMS intends to 

clarify that the Disclosure Document is 

not subjected to agency review prior to 

submission to poultry growers, and that 

legal recourse may be available for some 

present and future controversies related 

to the Disclosure Document and the 

poultry growing arrangement. 

Proposed § 201.100(c)—Required 

disclosures following the cover page— 

would specify the information live 

poultry dealer must provide in the 

Disclosure Document following the 

cover pages. Under proposed 

§ 201.100(c)(1), the dealer would be 

required to provide a summary of 

litigation over the previous six years 

between the live poultry dealer and any 

poultry 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, would help growers identify 

conflict origins and better assess 

potential risk of conflict. 

Proposed § 201.100(c)(2) would 

require the live poultry dealer to 

provide a summary of all bankruptcy 

filings in the previous six 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. It is unclear to AMS 

to what extent lenders analyze these 

issues. While bankruptcy proceedings 

should be public, that does not mean 

growers would be aware of the 

proceedings or where the live poultry 

dealer might be in an ongoing process. 

Recent or current bankruptcy filing is an 

indicator relating to the financial health 

of the live poultry dealer, which a 

poultry grower may need to consider 

when deciding whether to enter or 

continue a contractual relationship with 

the dealer. 

Proposed § 201.100(c)(3) would 

require the live poultry dealer to 

provide a statement that describes the 


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59Most dealers do not own or operate growout 

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. So, the 

required table would show average payments to 

growers in each of the different housing 

specifications at the complex. 

60The 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. 

dealer’s policies and procedures 

regarding the potential sale of the 

poultry grower’s farm or assignment of 

the poultry growing arrangement to 

another party. AMS believes it is 

important for poultry growers to have 

this information when considering a 

poultry growing arrangement, because 

growers may encounter future scenarios 

where they choose or are forced to exit 

poultry farming. These scenarios might 

include the unfortunate death or 

disability of the grower or the prospect 

of other occupational opportunities, etc. 

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 would have the opportunity 

to develop a coherent strategy, should 

they desire to exit poultry farming. 

Under § 201.100(d)—Financial 

disclosures—of this proposed rule, live 

poultry dealers would be required to 

provide certain additional information 

in the Disclosure Document. Under 

proposed § 201.100(d)(1), dealers would 

be required to provide a table showing 

average annual gross payments to 

poultry growers for the previous 

calendar year. The table would be 

organized by housing specification as 

required for growers in each complex 

located in the United States that is 

owned or operated by the live poultry 

dealer.59 The table would be required to 

express average payments on the basis 

of U.S. dollars per farm facility square 

foot. Under § 201.100(d)(2), live poultry 

dealers would be required to provide 

tables showing quintiles of average 

annual gross payments to poultry 

growers at the local complex for each of 

the previous five years.60 Again, average 

payments would be expressed on the 

basis of U.S. dollars per farm facility 

square foot. Further, the required tables 

would be organized by year, housing 

specification tier, and quintile. The 

proposed provision would describe the 

process dealers should use to calculate 

and normalize table values. A proposed 

conforming change to § 201.2 would add 

a definition for complex, meaning a 

group of local facilities under the 

common management of a live poultry 

dealer. The definition would explain 

further that a complex may include, but 

not be limited to, one or more 

hatcheries, feed mills, slaughtering 

facilities, or poultry processing 

facilities. 

AMS is proposing to require live 

poultry dealers to provide recent 

average revenue information relating to 

growers at all the live poultry dealer’s 

U.S. complexes to illuminate the range 

of payments to growers throughout the 

country. This information would allow 

growers to better assess housing 

specifications and related payment 

variability elsewhere in relation to what 

is offered at the local complex. AMS is 

proposing to require dealers to provide 

historical revenue information relating 

to growers in the same local complex 

because the information would give the 

current or prospective poultry grower 

considering a poultry growing 

arrangement a fairer picture of potential 

earnings under the arrangement and 

would help the grower evaluate whether 

those earnings would be sufficient to 

meet personal and business financial 

obligations. As described earlier, 

research shows poultry grower 

payments range widely above and below 

the mean received by contract growers. 

As well, payments range widely 

between specific contracts and grower 

pools. AMS believes providing quintiles 

for the previous five years, as proposed, 

organized by housing specification tier 

and normalized by square footage 

payments, would give growers 

information with which to better assess 

projected payments under the poultry 

growing arrangement. We believe that 

providing insights into the variability of 

cash flow within any given year would 

enable growers to make informed 

business decisions, manage risk, and 

improve farm management. 

Proposed § 201.100(d)(3) would 

provide that if the housing 

specifications for poultry growers under 

contract with the live poultry dealer in 

the local complex may be modified so 

that an additional capital investment 

may be required, or if for some other 

reason annual gross payment averages 

for the previous five years do not 

accurately represent expected future 

grower payment averages, the live 

poultry dealer also would be required to 

provide the grower annual payment 

projections for the term of the poultry 

growing arrangement under 

consideration by housing specification 

and quintile, as under proposed 

§ 201.100(d)(2). The dealer would also 

be required to explain why the 

historical data does not provide an 

accurate representation of future 

earnings. AMS is proposing this 

conditional requirement because there 

are situations in which historical data 

may not accurately reflect future 

projections. For example, changes in 

pay rates, pay systems, housing 

specifications, growout models, stocking 

densities, or number of annual 

placements are generally discretionary 

functions of the live poultry dealer. 

These decisions can directly impact 

grower payments. Live poultry dealers 

considering or undertaking actions 

related to the aforementioned functions 

would be obligated to 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 would include 

realistic expectations about future 

earnings. Nothing in the proposed 

provision would prohibit a live poultry 

dealer from providing grower payment 

projections even if they were not 

required to do so under § 201.100(d)(2). 

Under proposed § 201.100(d)(4), the 

live poultry dealer would be required to 

provide a summary of any information 

the dealer collects or maintains 

pertaining to grower variable costs 

inherent to poultry production. A 

proposed conforming change to § 201.2 

would add a definition for grower 

variable costs to mean 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. 

Based on discussions with integrators 

and other in the industry, AMS has 

found that many integrators collect this 

data to inform grower pay rates. Thus, 

AMS believes that live poultry dealers 

routinely collect and maintain this 

information, and that providing such 

information to poultry growers 

considering a poultry growing 

arrangement would help growers make 

informed decisions about their 

participation in the poultry production 

business. 

Finally, under proposed 

§ 201.100(d)(5), the live poultry dealer 

would be required to 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 poultry grower about 

grower costs and poultry farm financial 

management in the grower’s geographic 

area. AMS believes that growers can 

benefit from the expertise and 


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61 ‘‘Four Executives and Company Charged with 

Price Fixing in Ongoing Investigation into Broiler 

Chicken Industry’’. Justice News, U.S. Department 

of Justice Office of Public Affairs, July 29, 2021. 

Press Release. (referencing indictments against 

Koch Foods and former Pilgrim’s Pride executives). 62 Department of Justice Press Release No. 21– 

172. ‘‘One of the Nation’s Largest Chicken 

Producers Pleads Guilty to Price Fixing and is 

Sentenced to a $107 Million Criminal Fine’’. 

February 23, 2021. 63Audits, testing, and executive review and 

certification of regulatory compliance requirements 

are 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 the 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 556); ‘‘Revisions to Prohibitions 

and Restrictions on Proprietary Trading and Certain 

Interests in and Relationships With, Hedge Funds 

and Private Equity Funds’’ (84 FR 61974). 

experience, as well as the information 

publicly available, from these sources, if 

they choose to access it. 

Proposed § 201.100(e)—Small live 

poultry dealer financial disclosures— 

would exempt live poultry dealers who, 

in conjunction with any or all of the 

parent or 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). Eightynine live poultry dealers file annual 

reports with AMS, and that number 

includes non-integrated processors and 

integrators who do not use the contract 

production model. According to AMS 

data, of that number, 47 live poultry 

dealers could be exempt under certain 

circumstances from the requirement to 

provide the Disclosure Document 

because they slaughter fewer than 2 

million pounds of poultry weekly or 104 

million pounds annually. 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 is proposing 

this exemption in order to ease the 

burden on smaller live poultry dealers. 

Often smaller operators have a smaller 

pool of growers, and many of those 

growers are using facilities that have 

been in production for many years, and 

are unlikely to be required to make 

changes. AMS believes the risk and 

impact of deception is reduced in this 

context and may not justify the effort 

and expense to develop the Disclosure 

Document required of larger business 

entities. 

AMS is proposing to add new 

§ 201.100(f)—Governance and 

certification, which would require the 

live poultry dealer to establish, 

maintain, and enforce a governance 

framework that is reasonably 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 the 

regulations. We believe a governance 

framework and anti-fraud protections 

would help ensure sufficiently highlevel corporate attention and legal 

accountability. Under proposed 

§ 201.100(f), the framework must 

include audits and testing, as well as 

reviews of an appropriate sampling of 

Live Poultry Dealer Disclosure 

Documents by the principal executive 

officer or officers. The principal 

executive officer, or a person performing 

similar functions, of the live poultry 

dealer’s company would be required to 

certify that the company complies with 

the governance framework requirement 

and that the Disclosure Document is 

accurate and complete. Current civil 

and criminal actions 61 related to price 

fixing in the poultry industry, including 

admissions of guilt,62 suggest the 

potential for a conspiracy of deception 

among live poultry dealers. AMS 

believes that an audit and testing 

requirement, combined with officer 

reviews and certification are 

appropriately tailored to ensure the 

procedures used to produce the 

Disclosure Document and the 

information contained therein are sound 

and accurate.63 The framework retains 

flexibility to enable integrators to design 

a framework appropriate to manage the 

risks relating to the preparation of 

compete and accuracy disclosures. As 

explained earlier, AMS is proposing to 

develop and provide a disclosure form 

with standardized language, which live 

poultry dealers can download and print. 

The proposed form would include a 

certification statement the dealer must 

sign. 

Under proposed § 201.100(g)—Receipt 

by growers—a live poultry dealer would 

be required to include in the Disclosure 

Document a signature page. The 

signature page would be required to 

include this statement: ‘‘If the live 

poultry dealer does not deliver this 

disclosure document within the time 

frame 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 poultry 

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. 

Allegations of such violations may be 

reported to the Packers and Stockyards 

Division of USDA’s Agricultural 

Marketing Service.’’ The live poultry 

dealer would further be required to 

obtain the current or prospective 

grower’s dated signature on the 

signature page as evidence that the 

dealer provided the required documents 

according to specified timeframes. The 

dealer would be required to provide a 

copy of the dated signature page to the 

grower and would be required to retain 

a copy of the dated signature page in the 

dealer’s records for three years 

following expiration, termination, or 

non-renewal of the poultry growing 

arrangement. AMS believes growers 

should be able to rely on the Disclosure 

Document for its intended purpose to 

further inform poultry growers of items 

related to their poultry growing 

arrangement. Growers should be aware 

that false or misleading statements and/ 

or material omissions contained in the 

Disclosure Document may form a basis 

for legal action. AMS has an interest in 

ensuring poultry growers receive the 

Disclosure Document and 

accompanying documents in the 

appropriate timeframe, which would 

afford growers time to review all 

pertinent documents and information 

before they are required to sign binding 

contracts. Requiring live poultry dealers 

to collect and retain proof of compliance 

would ensure compliance with the 

proposed regulation. 

In presenting this information to 

current and prospective growers, the 

disclosure document is expected to 

reduce information asymmetry and the 

risk of deception. AMS believes the 

proposed disclosure document would 

make growers better aware of risks 

related to the poultry growing 

arrangement and furnish growers with 

information that may currently be 

available only to dealers. The disclosure 

document would clarify for growers the 

high degree of control and influence the 

live poultry dealer exerts over critical 

production factors that affect the 

business success of growers’ operations. 

Additionally, it would help prospective 

growers assess the degree to which their 

own skill and effort may or may not 

influence their pay. 

AMS invites comments on various 

aspects of the proposal to require live 

poultry dealers to disclose specific 

information to prospective and current 

poultry growers in the Disclosure 

Document as described above. Please 

fully explain all views and alternative 

solutions or suggestions, supplying 


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examples and data or other information 

to support those views where possible. 

While comments on any aspect of the 

Disclosure Document are welcome, 

AMS specifically solicits comments on 

the following: 

1. Would the amount and type of 

information required help poultry 

growers make informed business 

decisions and better understand the 

poultry growing arrangement, or 

otherwise better address deception risks 

that growers may face in the poultry 

contracting process and in the operation 

of a poultry growing arrangement? 

2. What items might be added to or 

deleted from the proposed requirements 

to make the Disclosure Document most 

useful? Is any of the required 

information extraneous? Is any material 

information relevant to the poultry 

contracting process, including the terms 

in and risks of poultry growing 

arrangements, missing and should be 

added? Please explain what and why. 

3. What specific challenges or 

burdens might dealers face in collecting 

and disseminating the information to be 

included in the Disclosure Document? 

Would this require dealers to modify 

their business model? What specific 

modifications would be required and 

why? 

4. Do the proposed timelines for 

providing the Disclosure Document 

enable a grower to make an informed 

decision? Do these timelines create 

challenges for dealers or growers? If so, 

please explain why and suggest a more 

appropriate length of time. 

5. Are there additional instances 

where a revision to the Disclosure 

Document would be appropriate? If so, 

please explain. 

6. Is the wording of the proposed 

Disclosure Document and the 

disclosures that may be expected to 

arise under it readily understandable? If 

not, please suggest changes for 

improvement, including means to 

ensure that any disclosures in the 

Disclosure Document are readily 

understandable. 

7. Are there circumstances in which 

the dealer should be required to provide 

the Disclosure Document in a language 

other than English? Are other business 

materials provided in other languages 

already? If so, please describe those 

circumstances and comment on the 

benefits and additional burden of such 

a requirement. 

8. Are the proposed Disclosure 

Document statements regarding a 

poultry grower’s right to read the 

Disclosure Document and to share the 

document and consult with certain 

other entities about the contents useful 

for growers? Or, for example, should 

growers be given additional 

notifications regarding where they can 

find out more about their legal rights 

under the Packers and Stockyards Act, 

such as a USDA summary of or a link 

to those rights? Or, would less 

information be appropriate? Why or 

why not? 

9. Are there additional advisories to 

poultry growers that should be required 

in the Disclosure Document cover 

pages? If so, please explain why and 

suggest appropriate language for such 

notices. 

10. Are there other risks inherent to 

poultry production about which growers 

should be informed prior to making 

major business decisions? If so, please 

explain and suggest appropriate 

language for such advisories. 

11. Are the proposed disclosures 

regarding the financial health and 

integrity of the live poultry dealer 

adequate to enable growers to make 

sound business decisions? Why or why 

not? 

12. Are there certain legal violations 

or other matters which could call into 

question the financial health or integrity 

of the live poultry dealer such that they 

should be disclosed? 

13. Is the proposed disclosure 

regarding the dealer’s policy on sale-offarm circumstances adequate to ensure 

transparency and effective grower 

decision making? 

14. Should we require dealers to 

disclose policies and procedures for 

determining whether disaster or sick 

flocks are caused by the integrator or 

grower and how growers will be 

compensated under each scenario? Or, 

where a dealer maintains policies that 

do not remove sick flocks from the 

tournament, should we require 

additional disclosures regarding sick 

flock risks to the grower? Why or why 

not? 

15. Should we require dealers to 

disclose the contractual grounds for 

termination or suspension of the poultry 

growing arrangement? Why or why not? 

16. Are there any other policies and 

procedures that dealers should be 

required to disclose? For example, 

should we require disclosure of policies 

and procedures around tournament 

groupings, compensation incentives of 

the dealers’ representatives, or how 

growers may appeal or report 

determinations or actions? 

17. Are the proposed disclosures 

relating to grower payment history and 

projections adequate to enable poultry 

growers to make sound business 

decisions, are the proposed metrics 

appropriate, and is the local complex 

the appropriate standard? What, if any, 

other information should be required, 

and why? If so, how should it be 

provided? 

18. Is our estimation of the 

recordkeeping burden related to 

disclosing grower payment history 

appropriate? Why or why not? 

19. Could certain types of financial 

disclosures facilitate harmful 

coordination by integrators? Why or 

why not? If so, how could the risk of 

harmful coordination be mitigated? 

20. What effect, if any, would the 

required financial disclosures have on 

the lending system and on the provision 

of credit to growers? 

21. Would the provision of 

information about grower variable costs 

benefit growers? Why or why not? 

22. Have we listed the appropriate 

items regarding the grower variable 

costs dealers should enumerate and 

disclose to growers? For example, 

should we specify that dealers disclose 

information about costs related to 

compliance with environmental 

regulations, energy, water, and waste 

disposal? Are the timing of housing 

upgrades, including financing costs, 

reasonably predictable enough by 

dealers such that those costs should be 

considered part of grower variable costs 

during the poultry growing 

arrangement? Why or why not? 

23. Is the estimated burden to dealers 

related to providing information about 

grower variable costs justified by the 

value to growers of having the 

information? Why or why not? 

24. What types of information about 

grower variable costs do dealers 

currently collect? Are or how could 

dealers be incentivized to collect any 

information that they do not collect, or 

otherwise obtain such information in a 

reasonable manner? 

25. How else can USDA refine and 

improve the disclosure regime outlined 

in this proposal? For example, would 

additional detail around the scope or 

definition of deception under the 

Packers & Stockyards Act be useful for 

implementing this disclosure regime— 

for example, a definition such as 

‘‘Deception shall mean a material 

representation, omission, or practice 

that is likely to mislead a reasonable 

livestock or poultry producer or 

grower’’? Why or why not? 

26. Is the proposed exemption from 

the Disclosure Document requirements 

for small businesses under certain 

circumstances appropriate? What risks 

or benefits are there in providing such 

exemptions? Are there other 

approaches—such as different 

thresholds—we should consider that 

could be appropriately tailored to small 

live poultry dealers? 


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27. Is the proposed governance 

structure appropriate and sufficient for 

ensuring the accuracy of information 

provided in the Disclosure Document? 

Why or why not? 

28. Is the proposed governance 

structure appropriate for dealers? Please 

explain the burden and how it could be 

mitigated while providing sufficient 

accountability. 

29. Are there other ways AMS could 

sufficiently ensure the completeness 

and accuracy of the Disclosure 

Document, and if so, should these 

replace or be added to any of the 

proposed provisions? 

30. Should AMS specify the format 

(e.g., electronic or machine-readable) in 

which disclosure records should be 

maintained? Why or why not? 

31. Should AMS collect disclosure 

data, and if so, how might we use such 

data to enhance compliance and 

accuracy and monitor for possibly 

deceptive practices? 

32. As proposed, the Disclosure 

Document requirement would apply to 

live poultry dealers in all segments of 

the poultry production industry. How 

appropriate are the proposed 

requirements for all types of poultry 

production? Should the requirement to 

provide the Disclosure Document be 

limited in application to broiler and 

turkey production, or is it appropriate to 

apply it to other types of poultry? 

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. As mentioned earlier in this 

document, AMS is proposing to 

redesignate current § 201.100(c) as 

§ 201.100(i). Under this proposed rule, 

AMS would further revise new 

paragraph (i) by requiring the live 

poultry dealer to specify the minimum 

number of placements to be delivered to 

the poultry grower’s farm annually in 

each year of the contract, and the 

minimum stocking density of each of 

those placements. As explained earlier, 

the minimum number of placements 

and the minimum stocking density of 

each placement under the poultry 

growing arrangement directly impact 

poultry 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 and meet financial obligations. 

AMS believes requiring live poultry 

dealers to include this information in 

poultry growing contracts would 

improve transparency and reduce the 

risk of deceptive inducement in the 

contracting process. As well, providing 

such information may allow lenders and 

insurers to better evaluate the 

desirability of poultry loans they are 

asked to consider. 

AMS does not intend, in this rule, to 

restrict or influence the values provided 

under these mandatory provisions, but 

simply to require their transparent 

inclusion in production contracts. 

Knowing the minimum stocking density 

would allow the grower to predict 

baseline farm weight on a per flock 

basis. Using the baseline farm weight, 

the grower could calculate a baseline 

annual income based on the annual 

minimum number of flocks. We believe 

that requiring live poultry dealers to 

include these two terms in poultry 

growing arrangements would enable 

poultry growers to better estimate 

potential baseline returns from their 

operations and assess the expected 

value of the poultry growing 

arrangements overall, which could in 

turn foster improved debt management 

and cash flow. Having this information 

may also enable growers, as well as their 

lenders (private lending institutions and 

public entities that guarantee loans, 

including FSA), to better estimate and 

manage risks inherent in poultry 

production, including facilitating the 

acquisition of external insurance and 

risk management products. 

Finally, AMS believes improving 

transparency in this regard would assist 

growers in better identifying and 

mitigating deception-related risks, 

including relationship frictions, 

conflicts of interest, and inappropriate 

conduct, including potential retaliation 

or discrimination. A grower’s ability to 

estimate a contract’s expected value and 

appropriately assess its financial 

feasibility is paramount to operational 

planning and risk management, 

including managing expectations and 

avoiding poor business decisions. 

Further, establishing a baseline against 

which to compare the integrator’s 

performance under the contract would 

help growers identify deviations from 

contractual expectations. The rationale 

for such deviations might be contested. 

However, added transparency would 

reduce the risk that adverse actions by 

integrators against growers could be 

hidden and growers deceived about 

whether integrators are fulfilling their 

contractual obligations. Clearer 

contractual guarantees in particular 

would counter the ability for integrators 

to strategically reduce supply by 

limiting placements or cutting stocking 

densities and negatively impacting the 

earnings of growers without the growers 

being able to measure, in a reliable and 

effective manner, the harm they have in 

fact suffered. Transparency also would 

discourage the integrator from engaging 

in discriminatory or retaliatory conduct 

against growers because the adverse 

actions would no longer be hidden. 

Fortunately, as noted above, a more 

transparent baseline may provide a 

common floor against which both 

integrator and grower can work together 

to manage and mitigate meaningful 

market risks. 

The remainder of redesignated 

§ 201.100(i) would remain unchanged. 

As well, the text of redesignated 

paragraphs (j), (k), (l), and (m) of 

§ 201.100 (currently § 201.100(d), (e), 

(g), and (h), respectively), would remain 

otherwise unchanged under this 

proposed rule. 

AMS solicits comments on the 

proposal to require a live poultry dealer 

to specify in a poultry growing 

arrangement the minimum number of 

flocks to be placed with the grower each 

year under the contract and to specify 

the minimum stocking density of each 

flock. Please fully explain all views and 

alternative solutions or suggestions, 

supplying examples and data or other 

information to support those views 

where possible. While comments on any 

aspect of the revisions to contract terms 

are welcome, AMS specifically solicits 

comments on the following: 

1. Do the proposed requirements to 

specify an annual minimum number of 

flocks and a minimum stocking density 

for each flock under the poultry growing 

arrangement adequately address the 

need for transparency to avoid 

deception in poultry growing 

arrangements? Why or why not? 

2. Are there alternative solutions we 

should consider? For example, in 

relation to the guaranteed minimum 

number of flocks per year, would it be 

more useful to growers and simpler for 

integrators to express that value as a 

guaranteed number, or range, of days 

between flocks? Why or why not? 

D. Poultry Grower Ranking Systems 

To address concerns identified in the 

section on Poultry Grower Ranking 

Systems earlier in this document, AMS 

proposes to add a new § 201.214— 

Transparency in poultry grower ranking 

pay systems. The new section would 

specify the recordkeeping and 

disclosure requirements for live poultry 

dealers when they group or rank poultry 

growers delivering poultry to the dealer 

during a specified period for the 


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purpose of determining payment to 

poultry growers. Conforming changes 

would be made to § 201.2 to add 

definitions for terms used in new 

§ 201.214. 

Currently, live poultry dealers are 

required under the regulations at 9 CFR 

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. As explained earlier, under 

this proposed rule, that paragraph 

would be redesignated § 201.100(j), 

retaining the requirement to provide 

settlement sheets. AMS proposes to add 

a requirement in new § 201.214(a)— 

Poultry grower ranking system 

records—that would require a live 

poultry dealer 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 would be required to 

maintain those records for five years. 

Maintaining records allows USDA or 

any other party with the proper legal 

authority to collect them for review in 

the course of an investigation or legal 

action. 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, would be added to § 201.2. The 

term inputs, would also be added to 

§ 201.2 and would be 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 

proposed definition would further 

provide that such inputs may include, 

but are not limited to, animals, feed, 

veterinary services, medicines, labor, 

utilities, and fuel. 

Proposed § 201.214(b) would require a 

live poultry dealer to provide certain 

information about the flock placed with 

the poultry grower within 24 hours of 

the placement on the grower’s farm. 

Specifically, the dealer would be 

required to provide the flock’s stocking 

density, expressed as the number of 

poultry per facility square foot; the 

ratios of breeds of the flock 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 

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 poultry 

grower may adjust management 

practices in response to potential 

impacts of inputs on flock performance. 

This requirement is intended to equip 

the poultry grower with basic, accurate 

information at the outset of each 

growout period about the placement 

that may inform the grower’s 

management decisions during growout. 

Growers armed with this information 

may be better able to efficiently allocate 

resources during flock growout and 

maximize their individual profitability. 

As conforming changes, AMS 

proposes to add the following terms and 

their definitions to § 201.2. Breeder 

facility identifier would be defined to 

mean the identification a live poultry 

dealer assigns to distinguish among 

breeder facilities supplying eggs for the 

poultry placed in poultry growout 

operations. These identifiers should be 

permanent, remaining the same from 

one growout period to the next, so that 

growers can observe patterns, if any, 

related to the performance of flocks 

originating with different breeders. Live 

poultry dealers may assign alpha or 

numeric or some other identifier to each 

farm to keep the identity of individual 

breeder facilities private. Breeder flock 

age would be defined to mean the age 

of the egg-laying flock that is the source 

of poultry placed on the poultry 

grower’s farm. 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. 

Under proposed § 201.214(c)— 

Settlement documents—a live poultry 

dealer employing a poultry grower 

ranking system to calculate settlement 

payments for poultry growers would be 

required to provide every grower within 

the tournament ranking system 

settlement documents that show certain 

information about each grower’s ranking 

within the system, as well as the inputs 

each poultry grower received, for each 

growout period. Proposed 

§ 201.214(c)(1) would reflect language in 

current § 201.100(f) that requires the 

live poultry dealer to provide each 

poultry grower a copy of a grouping or 

ranking sheet that shows the grower’s 

precise position in the grouping or 

ranking for that growout period. 

Additionally, the live poultry dealer 

would be required to show the housing 

specifications and the actual figures 

upon which the grouping or ranking is 

based for each grower grouped or 

ranked in the system during the 

specified growout period. 

Under proposed § 201.214(c)(2), live 

poultry dealers would be required to 

make visible to all grower participants 

in the poultry grower ranking system 

the distribution of dealer-controlled 

inputs provided to all participants. 

Specifically, live poultry dealer would 

be required to disclose the stocking 

density at each grower’s placement, 

expressed as the number of poultry per 

facility square foot. The dealer would be 

required to disclose the ratios of the 

breeds of poultry and the ratios of male 

and female poultry, if poultry are sexed, 

placed at each poultry grower’s farm. 

The live poultry dealer would be 

required to indicate with the use of 

breeder facility identifiers the source of 

poultry placed at each poultry grower’s 

facility. The dealer would be required to 

disclose the age of the egg laying 

breeder flock from which each poultry 

grower’s placement is produced. The 

dealer would also be required to report 

the number of feed disruptions of 12 

hours or more each grower experienced 

during the growout period. Finally, the 

live poultry dealer would be required to 

identify any growers’ flocks that 

received any other inputs (such as 

medication) delivered or administered 

to the poultry on the participating 

growers’ facilities 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 have complained to USDA that 

the limited information they get does 

not allow them to effectively evaluate 

their performance compared to others 

because they don’t 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. 

AMS believes the settlement 

information provided under proposed 

§ 201.214 would enable growers to make 

factual comparisons about their 

performance relative to other growers’ 

performance within the poultry grower 

ranking system. As well, growers may 

begin to recognize patterns. For 

instance, a poultry grower might 

observe that those growers who 

experienced one or more lengthy feed 

disruptions ranked lower than growers 

without feed disruptions. Based on that 

observation, the grower might determine 


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to place feed orders with the live 

poultry dealer earlier than they have in 

the past to ensure future flocks have 

consistent feed supplies. Or perhaps 

growers may identify patterns in 

performance in relation to housing 

specifications, and make evaluations 

regarding the relative impact of skills 

and effort versus housing design and 

adjust their business strategies 

accordingly. Such evaluations and 

patterns would reduce deception risks 

such as those associated with misplaced 

efforts by growers or over- or 

underinvestment by growers in attempts 

to operate successfully within the 

tournament system as designed and 

managed by the integrator. 

The disclosures in proposed § 201.214 

could potentially affect the poultry 

grower’s business decisions in various 

ways. For instance, poultry growers 

currently may have limited access to 

information about the poultry breeds, 

breeder stock age, stocking density, type 

and administration of veterinary 

medicines, and transportation or other 

integrator inputs provided to themselves 

and other growers in their tournament 

group. With disclosures under the 

proposed rule, growers may be able to 

adjust management practices to 

optimize growout performance if they 

know the poultry’s breed or have 

information about the age and health of 

the breeder flock for their own 

placements. Additionally, if they have 

information about feed disruptions, 

different stocking densities, veterinary 

treatments, and other different inputs 

among all growers in the settlement 

group, poultry growers in tournament 

systems may be better able to recognize 

performance patterns and reallocate 

their resources to optimize their own 

growout performance. Poultry growers 

would still receive settlement sheets as 

currently provided under § 201.100(d), 

which helps growers verify accuracy of 

payments, but they would have the 

added advantage of being able to 

measure and manage risks and detect 

possible retaliation or discrimination. 

AMS invites comments on the 

proposed addition of new § 201.214 to 

the regulations and on the proposed 

requirements to provide poultry growers 

in tournament systems with information 

about inputs both at the time of 

placement and at settlement. Please 

fully explain all views and alternative 

solutions or suggestions, supplying 

examples and data or other information 

to support those views where possible. 

While comments on any aspect of the 

proposed new section are welcome, 

AMS specifically solicits comments on 

the following: 

1. Is the proposed period for 

maintaining records relating to the 

distribution of inputs to tournament 

participants appropriate? 

2. How long such records should be 

maintained and why? 

3. What burdens does this 

recordkeeping create for dealers? 

4. How well does the proposed 

requirement to supply input 

information about each placement to 

growers at the time of placement 

respond to grower requests for such 

information? 

5. Is the type or amount of 

information required appropriate, or 

should certain items be added to or 

deleted from the list, or otherwise 

modified? More particularly, should 

information about the contents and 

origin (or mix) of the feed supplied or 

the provision of veterinary services be 

disclosed to all tournament participants 

or not? Why or why not? 

6. Is the required information useful 

to a grower’s operations or not, 

including in managing risks and 

otherwise in preventing deception? Why 

or why not? 

7. What benefits or costs may be 

associated with this requirement, and 

would those benefits or costs be 

justified? 

8. What specific burdens or 

challenges might dealers encounter in 

collecting information for placement 

disclosures? 

9. Would the requirement to provide 

placement disclosures affect dealers’ 

business practices? If so, how? 

10. How well does the requirement to 

provide input distribution information, 

along with settlement payment 

information, for all members of the 

tournament respond to grower requests 

to improve transparency, address 

information asymmetry, and reduce the 

chance of deception in the tournament 

payment system? 

11. Does the requirement to disclose 

the housing specifications along with 

settlement payment information 

improve transparency, address 

information asymmetry, and reduce the 

chance of deception in the tournament 

payment system? Why or why not? 

12. Would the proposed settlement 

information help growers evaluate and 

improve, if necessary, their 

performance, make informed business 

decisions, or mitigate risks? Why or why 

not? 

13. Is there other information or 

another way of presenting the 

information that would be better? 

14. Do growers face any obstacles to 

sharing or discussing placement or 

settlement information with others that 

should be addressed; if so, what are 

those obstacles and how should they be 

addressed? Should rights to discuss the 

terms of poultry growing arrangement 

offer apply to all the disclosures 

proposed by this rule? Why or why not? 

15. What specific burdens or 

challenges would dealers encounter in 

implementing the settlement disclosure, 

and what strategies might help mitigate 

those burdens or challenges? 

16. How would the proposed changes 

to settlement disclosures affect dealers’ 

business practices? 

17. Under existing regulation 

201.100(f), live poultry dealers are not 

required to disclose the names of other 

growers on ranking sheets. Under 

201.214 of this proposal live poultry 

dealers would disclose a breeder farm 

identifier in the settlement disclosures 

but would not be required to disclose 

the name of breeder farms. Should we 

reevaluate our position on this issue? 

Why or why not? 

18. Currently, dealers are not required 

to disclose the names of all competing 

growers on ranking sheets. Should we 

require dealers to disclose the names of 

all competing growers in settlement 

documents? Why or why not? 

19. Are there other ways of expressing 

grower identity information that would 

be useful to growers and balance 

privacy and confidentially concerns? 

20. We propose to require dealers to 

disclose the number of feed disruptions 

each poultry grower endured during the 

growout period, where the grower was 

completely out of feed for 12 hours or 

more. Is this an appropriate length of 

disruption to trigger reporting? Should 

we require a shorter time, such as 6 

hours? Please explain your views. 

VI. Regulatory Analyses 

A. Executive Order 12988—Civil Justice 

Reform 

This proposed rule has been reviewed 

under Executive Order 12988—Civil 

Justice Reform. This proposed rule is 

not intended to have retroactive effect. 

This proposed rule would 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 proposed 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. 


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B. Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

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. 

This proposed rule may impact 

individual members of Indian tribes that 

operate as live poultry dealers or 

poultry growers; however, it would not 

have a direct effect on tribes or the 

relationship or distribution of power 

and responsibilities between the Federal 

Government and Indian tribes. 

Therefore, consultation under Executive 

Order 13175 is not required at this time. 

If a Tribe requests consultation, AMS 

will work with OTR to ensure 

meaningful consultation is provided 

where changes, additions, and 

modifications identified herein are not 

expressly mandated by Congress. AMS 

will also extend outreach to ensure tribe 

members are aware of the requirements 

and benefits under this proposed rule 

once final. 

C. Civil Rights Impact Analysis 

AMS has considered the potential 

civil rights implications of this 

proposed rule on members of protected 

groups to ensure that no person or group 

would 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. This rule 

does not contain any requirements 

related to eligibility, benefits, or services 

that would 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 proposed 

regulation would 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. The 

proposed regulations would provide 

benefits to all poultry growers. AMS 

will institute enhance efforts to notify 

the groups found to be more 

significantly 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. 

D. Paperwork Reduction Act 

In accordance with the Paperwork 

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

Chapter 35), AMS has requested OMB 

approval of new information collection 

and recordkeeping requirements related 

to this proposed rule. AMS invites 

comments on this new information 

collection. All comments received on 

this information collection will be 

summarized and included in the final 

request for OMB approval. Below is 

summary information on the burdens of 

these new information collection and 

recordkeeping requirements. Additional 

detail can be found in the Regulatory 

Impact Analysis (RIA). Comments on 

this section or the details in the RIA will 

be considered in the final rule analysis. 

Title: Transparency in Poultry Grower 

Contracting and Tournaments. 

OMB Number: 0581–NEW. 

Expiration Date of Approval: This is 

a NEW collection. 

Type of Request: Approval of a New 

Information Collection. 

Abstract: The information collection 

requirements in this request are 

essential to improve transparency and 

forestall deception in the use of poultry 

growing arrangements, in accordance 

with the purposes of the Packers and 

Stockyards Act, 1921. Proposed 

revisions to the Packers and Stockyards 

regulations would require live poultry 

dealers to provide certain disclosures to 

poultry growers in advance of entering 

into production contracts. Under the 

proposal, dealers would have the option 

of using the Live Poultry Dealer 

Disclosure Form provided by AMS to 

meet the requirements for the cover 

page that must accompany additional 

dealer-generated disclosure documents 

as required. Alternatively, dealers could 

develop their own cover page to meet 

the requirement, as long as all the 

required information is included. 

Poultry growers could use the 

disclosure information to evaluate the 

accuracy of proposed contracts and 

make informed business decisions 

regarding financial investments related 

to poultry production. 

The proposed rule would also require 

live poultry dealers who group and rank 

poultry growers for settlement purposes 

to disclose essential information to 

poultry growers about the flocks placed 

with individual growers at the time of 

placement. Dealers would also be 

required to disclose information about 

the flocks and associated production 

inputs delivered to all growers in the 

settlement group, as well as each 

grower’s ranking within the group, at 

the time of settlement. The estimates 

provided below apply only to live 

poultry dealers who would be required 

to provide the information to growers. 

Poultry growers would not be required 

to provide information, but would be 

able to use the information provided by 

live poultry dealers to improve flock 

management practices and evaluate 

grower treatment under poultry grower 

ranking systems. 

Live Poultry Dealer Disclosure 

Document 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 0.87 hours per 

response (first year), 0.26 hours 

thereafter. 

Respondents: Live poultry dealers. 

Estimated Number of Respondents: 

89. 

Estimated Number of Responses: 

23,047. 

Estimated Number of Responses per 

Respondent: 259. 

Estimated Total Annual Burden on 

Respondents: 19,993 hours first year, 

6,066 thereafter. 

Poultry Grower Ranking System Records 

Estimate of Burden: Public reporting 

burden for the collection of information 

is estimated to average 0.29 hours per 

response (first year), 0.10 hours 

thereafter. 

Respondents: Live poultry dealers. 

Estimated Number of Respondents: 

89. 

Estimated Number of Responses: 

32,011. 

Estimated Number of Responses per 

Respondent: 360. 

Estimated Total Annual Burden on 

Respondents: 9,253 hours first year, 

3,201 thereafter. 

Comments: Comments are invited on: 

(1) Whether the proposed collection of 

the information is necessary for the 

proper performance of the functions of 

the agency, including whether the 

information will have practical utility; 

(2) the accuracy of the agency’s estimate 

of the burden of the proposed collection 

of information; (3) ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and (4) 

ways to minimize the burden of the 

collection of information on those who 


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are to respond; including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology. 

AMS estimates each of 89 live poultry 

dealers would develop an average of 259 

Live Poultry Dealer Disclosure 

Documents for poultry growers relating 

to new, renewed, revised, or updated 

poultry growing arrangements, as 

required under proposed § 201.100. 

AMS arrived at its estimate of 259 

developed Disclosure Documents per 

live poultry dealer from AMS records 

which show 89 live poultry dealers filed 

annual reports with AMS, and their 

reports indicate that they had 23,047 

growing contracts with poultry growers 

during their fiscal year 2020. AMS 

divided the 23,047 growing contracts by 

the 89 live poultry dealers to arrive at 

259 Disclosure Documents per live 

poultry dealer. Dealers with current 

contracts with poultry growers would 

not be required to provide the 

Disclosure Document to those growers 

unless the dealer is proposing 

modifications to the poultry housing 

specifications under the contract. AMS 

estimates first year development, 

production, and distribution of the 

Disclosure Documents, including 

management, legal, administrative, and 

information technology time, would 

require an average 0.87 hours each, 

while ongoing annual production and 

distribution of each Disclosure 

Document would take 0.26 hours. AMS 

arrived at the estimates of the number 

of hours on an annual basis to set up, 

produce, distribute, and maintain each 

Disclosure Document by dividing the 

annual number of responses for all live 

poultry dealers (23,047) by the number 

of hours to set up, produce, and 

distribute the disclosures (19,993 first 

year hours and 6,066 ongoing hours). 

AMS estimated the number of hours for 

all live poultry dealers to develop, 

produce, distribute, and maintain each 

Disclosure Document from the number 

of hours estimated and the expected 

cost estimates in Tables 1 and 2 in 

Appendix 1. 

AMS estimates 89 live poultry dealers 

would each provide placement and 

settlement records to an average of 360 

poultry growers under tournament 

ranking systems, as required under 

proposed § 201.214. AMS estimated the 

annual number of placement and 

settlement records by multiplying the 

number of slaughter plants in AMS 

records from the reports that live 

poultry dealers file with AMS (228) 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 (32,011) by the number of live 

poultry dealers (89) to arrive at its 

estimate of 360 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 proposed § 201.214, including 

management, legal, administrative, and 

information technology time, would 

require approximately 0.29 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 to set up, produce, and 

distribute, and maintain each Disclosure 

Document on an annual basis by 

dividing the annual number of 

responses for all live poultry dealers 

(32,011) by the annual number of hours 

to set up, produce, distribute, and 

maintain the placement and settlement 

disclosures (19,993 first year hours and 

6,066 ongoing hours). AMS estimated 

the number of hours for all live poultry 

dealers to develop, produce, and 

distribute each placement and 

settlement Disclosure Document from 

the number of hours estimated and the 

expected cost estimates in Tables 1 and 

2 in Appendix 1. 

Under proposed § 201.100(f), live 

poultry dealers would be required to 

certify as to the accuracy of the 

Disclosure Document and would be 

required to maintain records relating to 

the Disclosure Document for three years 

following expiration of the poultry 

growing arrangement. Under proposed 

§ 201.214, live poultry dealers would be 

required to maintain records related to 

poultry grower tournament placements 

and settlement for five years. 

The required disclosures under 

proposed 201.100 would 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 proposal, 

live poultry dealers would be required 

to provide the Live Poultry Dealer 

Disclosure Document, which includes 

specified information and boilerplate 

grower notifications. AMS would make 

available a form—the Live Poultry 

Dealer Disclosure Form—dealers could 

download from the AMS website as the 

cover pages for Disclosure Document, or 

they could create their own cover pages, 

as long as all the required information 

is included. Live poultry dealers would 

be required to obtain grower signatures 

as evidence of compliance with the 

disclosure requirements, and would be 

required to retain the signature page for 

three years following contract 

expiration. 

Proposed § 201.214 would also 

require live poultry dealers who group 

or rank poultry growers for settlement 

purposes to disclose information about 

each flock of poultry placed with 

growers for growout at the time of 

placement. Additionally, dealers would 

be required to provide to each poultry 

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 

could use placement disclosures to 

inform flock management decisions 

during growout, and could use 

settlement disclosures to evaluate their 

growout performance, potentially 

improve future performance, and 

evaluate whether group members are 

treated fairly. Live poultry dealers 

would be required to maintain records 

related to these disclosures for five years 

following settlement. 

Costs of Proposed §§ 201.100 and 

201.214 

The combined costs to live poultry 

dealers for compliance with the 

reporting and recordkeeping 

requirements of proposed §§ 201.100 

and 201.214 are expected to be 

$2,436,964 in the first year, and 

$733,609 in subsequent years. The total 

hours estimated for the live poultry 

dealers to create, produce, distribute, 

and maintain these documents are 

29,246 in the first year, and 9,267 in 

subsequent years. Complete details 

showing how AMS arrived at these cost 

estimates appear in Tables 1 and 2 in 

Appendix 1. 

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 Orders 12866 and 13563 

AMS is issuing this proposed rule in 

conformance with Executive Orders 

12866—Regulatory Planning and 

Review and 13563—Improving 

Regulation and Regulatory Review, 

which direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 


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64For a discussion of the difficulty in adapting of 

broiler grow houses for other purposes, see Vukina 

and Leegomonchai 2006, Op. Cit. 

65 Knoeber, C.R. and W.N. Thurman. 1995. ‘‘Don’t 

Count Your Chicken. . . : Risk and Risk Shifting in 

the Broiler Industry.’’ American Journal of 

Agricultural Economics 77, 486–496. 

66This research is regularly cited and reaffirmed 

in the current economics literature including 

Tsoulouhas and Vukina (2001) and McDonald 

(2014) that we cite elsewhere. 

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. 

In the development of this proposed 

rule, AMS considered several 

alternatives, which are described in the 

Regulatory Impact Analysis, below. 

The proposed 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. We request comment on 

potential environmental, public health, 

or safety impacts of the proposed rule as 

well as data sources and approaches to 

measure their economic implications. 

This proposed rule has been 

determined to be significant for the 

purposes of Executive Order 12866 and, 

therefore has been reviewed by OMB. 

Details on the estimated costs of this 

proposed rule can be found in the rule’s 

economic analysis. 

AMS is proposing to amend 9 CFR 

part 201 by adding new definitions to 

§ 201.2, adding contract and disclosure 

requirements for live poultry dealers in 

§ 201.100, and adding new § 201.214 

regarding live poultry dealer 

responsibilities when they use poultry 

grower ranking systems to settle 

payments for poultry growers. Based on 

its familiarity with the industry, AMS’s 

Packers and Stockyards Division (PSD) 

prepared an economic analysis of the 

proposed rule as part of the regulatory 

process. The economic analysis 

includes a cost-benefit analysis of the 

proposed rule. PSD then discusses the 

impact on small businesses. 

G. Regulatory Impact Analysis 

As a required part of the regulatory 

process, AMS prepared an economic 

analysis of the costs and benefits of the 

proposed §§ 201.100 and 201.214. 

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 integrators 

of negotiation with individual growers 

over the purchase of individual flocks of 

poultry and relieve integrators 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 Agricultural Census reported that 

96.3 percent of broilers and 69.5 percent 

of turkeys were raised and delivered 

under production contracts in 2017. 

Live poultry dealers place chicks in 

barns 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 housing. The investment is 

substantial. As discussed above, it may 

take $350,000 to $400,000 or more to 

build one grow house, and most farms 

have multiple houses. 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.64 Because 

the integrators control most aspects of a 

grower’s production, growers are 

dependent upon the actions of the 

integrators to recoup the grower’s 

substantial and specific investment. 

This puts growers in a particularly 

precarious position where market 

concentration has led to there being 

only a small number of integrators with 

whom to do business—as is the case in 

almost all geographic markets. 

The vertical integration of the 

industry leads to many risks borne by 

contract poultry growers. Some of these 

risks are discussed above. Notably, 

because of the large investment required 

of poultry growers, the financial risk of 

protecting that investment is 

substantial. Because integrators 

maintain such heavy influence over 

many 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 integrator control over specific 

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 that are placed. 

Integrators control the scheduling of 

feed deliveries, which also can impact 

feed conversion and thus grower pay. 

Also, production variables such as target 

weights of birds and the growout 

periods of birds are determined by the 

integrator, further adding to the risks 

borne by contract poultry growers. 

Because integrators control most aspects 

of grower performance and 

compensation, that control could be 

used as a means of retaliation or 

discrimination. If, for example, a grower 

has made complaints against the 

integrator, the integrator may provide 

fewer or poorer quality inputs, resulting 

in lower pay. 

Integrators 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 

integrator. With integrators 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 them to 

shift that variation in input costs and 

output prices, which comprises up to 84 

percent of the variation in returns to 

broiler production.65 66

The most common form of a poultry 

growing contract is a ‘‘relative 

performance’’ contract, also known as a 

‘‘tournament’’ contract in the industry. 

Under tournament contracts, the 

integrator assigns each grower to a 

settlement pool, which consists of all 

the growers given flocks that the 

integrator processed in a given week. 

The integrator 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 integrator collects the 

finished birds 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 (less 

feed and chick costs), and a payment or 

deduction based on the average 


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67See, for example, Tsoulouhas, Theofanis and 

Tomislav Vukina. ‘‘Regulating Broiler Contracts: 

Tournaments Versus Fixed Performance 

Standards’’. American Journal of Agricultural 

Economics 83 (2001): 1062–1073. 

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. Tournament contracts can have 

advantages and disadvantages for both 

integrators and poultry growers. 

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 also 

helps 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.67 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. 

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 

pandemic, growers experienced reduced 

compensation to the extent that they 

received fewer or less dense placements 

from the integrators. 

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. And tournaments 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. 

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 

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. 

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 integrator with whom he 

or she contracts. Information that would 

be provided pursuant to this rule would 

address this issue. Also, growers do not 

currently receive information that 

allows them to understand the impact of 

many integrator decisions made during 

the growout period that may affect 

grower incomes. For example, 

integrators 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. 

Integrators benefit from tournaments 

systems, because they provide 

integrators more control and certainty of 

the total pay to all the growers in a 

settlement group. They also benefit from 

a system that 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 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. 

Growers may lack negotiating leverage 

with integrators 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 integrators that 

broiler growers have in their local areas 

by percent of total farms (number of 

growers), total birds produced (number 

of birds), and by total production 

(pounds of birds produced). 


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68MacDonald. (June 2014) Op. Cit. 

69MacDonald. (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.) 

70All 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. 

71Steven Y. Wu and James MacDonald, 

‘‘Economics of Agricultural Contract Grower 

Protection Legislation,’’ Choices, Third Quarter, 

2015, pp 1–6. 

72MacDonald (June 2014) Op. Cit. 

TABLE 1—INTEGRATOR CHOICE FOR BROILER GROWERS 68

Integrators in grower’s area69 Farms 

(percent of total) 

Birds 

(percent of total) 

Production 

(percent of total) 

Can change to 

another integrator 

(percent of farms) 

Number 

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 

The data in the table show that 52 

percent of broiler growers (Farms), 

accounting for 56 percent of total 

production and 55 percent of birds 

produced, report having only one or two 

integrators in their local areas. This 

limited integrator competition may 

accentuate the contract risks. Even 

where multiple growers are present, 

there are high costs to switching, owing 

to the differences in technical 

specifications that integrators require. 

To switch, the growers likely would 

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 average number of contracts for the 

live poultry dealers filing annual 

reports 70 with AMS in 2020 was 251. 

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. Due to a lack of scales and 

tools to evaluate feed quality, a grower 

may not be able to weigh, measure or 

evaluate the inputs it received such as 

chicks and feed, and it 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 it contracts, 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 its 

contractors about performance, costs, 

and expenditures. 

There are concerns that compensation 

based on relative performance when 

growers are not in control of many of 

the inputs of production creates 

opportunities for manipulation by 

integrators. 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, the 

core concepts of which were discussed 

in the preamble, 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.71

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.72 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, discussed in the preamble, 

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 (that is, they 

have 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 

are tied to production to pay off lenders 

and have few, if any, alternative 

integrators with whom they can 

contract. This fear can lead to 

underinvestment in the capital 

necessary to grow broilers. 

This fear is amplified by a historical 

lack of transparency and incomplete 

contracts in poultry contracting. It is 

particularly difficult for a grower 

making investment or contract decisions 

to develop a clear estimate of their 

expected returns because there are a 

number of important variables that are 

either not in the contract or difficult or 

impossible for a grower not already 

working with a particular integrator to 

evaluate. Besides not knowing the 

number of flocks and required capital 

upgrades as discussed above, it may also 

be difficult or impossible for a potential 

grower to determine how much their 

compensation is likely to vary based on 

the outcome of adjustments to 

compensation pursuant to the outcome 

of a tournament system and to capital 

improvements of peer growers. Making 

information that allows growers 

considering capital investments more 

readily available and easier to 

understand at the time important 

business decisions are made could help 

reduce the risks and level of concern 

related to hold-up and lead to better 

business decisions. 

The current market structure and 

practices lead to a range of harms and 

risks to growers and to market 


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35006 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

73As recently as April 2022, retaliation against 

potential witnesses was raised in both House and 

Senate hearings on livestock market competition. 

Retaliation was also asserted to have followed the 

2010 listening sessions regarding poultry and has 

been repeatedly raised by growers around the need 

for USDA Packers and Stockyards Act rulemakings. 

Fear of retaliation has even been asserted as 

adversely affecting data collection by USDA in the 

poultry markets and the ability for growers to work 

with the Extension service. 

efficiency. Data and information 

available to AMS regarding the 

marketplace is imperfect and 

incomplete, which may in part reflect 

the structure of the market itself, as well 

as concerns regarding retaliation against 

growers and others for attempting to 

raise concerns.73 However, as set out in 

detail in section II of the preamble, AMS 

notes a number of market impacts that 

underscore our concerns. While grower 

investment in assets, including housing 

and equipment, is substantial and 

growing, they are recruited to, or 

upgrade, poultry growing in reliance, 

substantially, on financial analyses and 

promises from integrators. Moreover, in 

part with the assistance from 

integrators, growers generally finance 

long-term assets against much shorter 

term production contracts, exposing 

them to heightened risks and 

uncertainty around debt repayment and 

the recoupment of their investments. 

Production contracts lack completeness 

around key terms needed to value those 

contracts, and operationally, the 

contracts lead to a wide range in grower 

payments. In many cases, returns to 

equity may be low. In particular, many 

growers have only one or two 

integrators in their local area from 

which to choose, limiting their market 

power to demand improved symmetry 

of information or changes to market 

practices. Indeed, decades of grower 

comments to USDA highlight concerns 

regarding persistent deception in 

poultry contracting and the operation of 

the tournament system, as well as 

ongoing fears of retaliation for speaking 

out about it. We also note that 

disclosure is commonly utilized across 

multiple markets, in particular where 

investment and risk exposure is taken 

by a party with substantially less power 

in a market or a transaction, such as 

consumer borrowers or franchisees. 

AMS requests comment on impacts 

from current market practices and 

structures, including qualitative and 

quantitative data. Do impacts vary 

across different parts of the market or 

across different market participants? If 

so, how and why? Please also discuss 

implications for market efficiency, 

competition, supply chain resiliency, 

rural economies, or other general 

economic or community matters. We 

also invite comment on the impacts of 

disclosure when applied in other 

markets, and the relevance of those 

lessons for poultry markets. 

AMS expects proposed §§ 201.100 

and 201.214 to mitigate costs associated 

with asymmetric information by 

requiring live poultry dealers to disclose 

more and potentially valuable 

information to growers. Proposed 

§ 201.100 would require live poultry 

dealers to make disclosures before 

entering into new contracts, renewing 

existing contracts, or requiring growers 

to make additional capital investments. 

Proposed § 201.214 would require live 

poultry dealers to disclose additional 

information at the placement and 

settlement of each flock. 

AMS considered three alternatives to 

the proposed §§ 201.100 and 201.214. 

The first is ‘‘do nothing’’ or the status 

quo. All regulations under the Packers 

and Stockyards Act would remain 

unchanged. It forms the baseline against 

which the second alternative, proposed 

§§ 201.100 and 201.214 will be 

compared. The proposed rule would 

remove 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. Not all the 

disclosure requirements in proposed 

§ 201.100 are new. Many of the 

provisions in the proposed § 201.100 are 

already required in the current 

§ 201.100. Since the cost and benefit 

analysis will be compared to the cost 

and benefits to the status quo, costs and 

benefits estimated here will reflect only 

cost and benefits associated with the 

new requirements in § 201.100. 

AMS considered a third alternative 

similar to proposed §§ 201.100 and 

201.214. The alternative would leave all 

of the requirements in proposed 

§§ 201.100 and 201.214 the same, but 

entirely exempt live poultry dealers that 

process less than 2 million lbs. 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 poultry growers would 

still receive the disclosures. AMS then 

estimates and compares the costs and 

benefits of the alternatives and selects 

proposed §§ 201.100 and 201.214 as the 

preferred alternative. 

Discussion of the Benefits of the 

Proposed Regulations 

The primary purpose of the proposed 

rule is to make information available to 

growers when that information would 

be most important in decision-making. 

Currently, most 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 integrators to demand, 

among other things, transparency and 

completeness in contracts. A benefit of 

this proposed regulation would be 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 proposed 

regulation would still retain the rights of 

poultry growers to discuss the terms of 

the poultry growing arrangement and 

the Live Poultry Dealer Disclosure 

Document with each other, advisors, 

and governmental agencies even if the 

poultry growing arrangement contains a 

confidentiality provision. This should 

facilitate better information sharing, 

decision making, and management of 

risk. 

Better information on integrator 

commitments should reduce hold-up 

concerns that may stifle investment. 

Better information and transparency on 

placements and settlements could 

reduce grower concerns over integrator 

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 

growers with concrete information they 

can use to support, individually or 

collectively, any grievances they might 

have with a particular integrator. At the 

same time, this proposed regulation 

provides growers a measure of 

protection against risks of retaliation or 

discrimination that may arise from 

disputes with integrators during the 

course of the poultry growing 

arrangement. 

The proposed § 201.100 lays out the 

information that an integrator would be 

required to provide to growers 

contemplating a relationship with that 

integrator. The disclosure of information 

would be required whenever an 

integrator seeks to renew, revise, or 

replace an existing poultry growing 

arrangement. In addition, such 

disclosure would be required for any 

new contract as well as whenever an 

integrator is requiring an original capital 

investment or a change to existing 

housing specifications that would 


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74For 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. 

require an additional capital 

investment. These are the times when 

the information would be most useful in 

informing growers of the potential 

implications of entering into a contract 

with the integrator or contemplating 

additional investment in capital stock. 

This information should allow potential 

growers to make more informed and 

financially sustainable business 

decisions. 

When a live poultry dealer requires 

capital investment, the dealer would be 

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 would 

allow more informed investment 

decisions and help potential lenders 

accurately assess risk. 

The Disclosure Document would 

provide information on the length of the 

contract, number of guaranteed 

placements, stocking density, and 

notification of certain risks inherent in 

the agreement. All this information 

should help in evaluating the longerterm viability of the investment and 

reduce hold-up fears. 

Grower awareness of minimum flock 

placements and minimum stocking 

densities would enable 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, including 

potentially the acquisition of external 

insurance and risk management 

products. 

In addition to information about the 

specific terms of the contract, 

information would be provided that 

informs growers about the integrator’s 

financial history and history of 

grievances with growers with whom 

they have contracted. This information 

too should improve the ability of the 

grower to evaluate its decision and the 

potential for hold-up related concerns. 

The Disclosure Document would 

include information on the level and 

distribution of payments made to 

growers under contract to the integrator. 

It describes past and expected future 

annual returns for similarly situated 

growers based on the complex and the 

integrator’s other complexes on the 

particular housing specifications. This 

would make it much easier for potential 

growers to estimate their revenues from 

the contract because it presents returns 

at various levels of performance, as not 

all growers perform equally relative to 

the fixed cost of entry. The Disclosure 

Document would also provide insights 

into the variability of cash flow within 

any given year to enable the grower to 

improve business decision-making 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 of contract poultry 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 

would dramatically reduce information 

asymmetry and the risk of fraud and 

deception. As a result, prospective 

growers and those contemplating 

additional capital investments would 

have more confidence in the integrity of 

the information and consequently in 

their ability to make sound decisions. 

A live poultry dealer would be 

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 get assistance 

in evaluating the agreement. 

The proposed § 201.214 would 

require additional ongoing disclosure of 

information related to poultry grower 

ranking pay systems (‘‘tournaments’’). 

This information would be 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 would 

improve 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 the 

inability of growers to verify the 

accuracy of payments, the inability to 

measure and manage risks, and the 

inability to detect possible 

discrimination or retaliation for 

disputes arising under the poultry 

growing arrangement. The provision of 

additional transparency around 

tournament systems in this proposed 

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, would 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. 

Growers who participate in numerous 

tournaments over time would benefit 

from the added information they would 

receive at the time of placement and 

settlement, as they would gain valuable 

experience and knowledge useful in 

maximizing their growout performance. 

Because integrator-provided inputs may 

vary from flock-to-flock, grower 

knowledge may be enhanced and 

grower management practices and skills 

improved with access to input 

distribution information, particularly at 

the stage when the input is provided. 

The increased information in the 

settlement and placement disclosures 

would allow growers to assess the 

impacts of input variability on revenues 

over time, which would 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.74

Subsequently, the literature on these 

topics is insufficient to allow AMS to 

fully estimate the magnitude of the 

inefficiencies corrected by the proposed 

rule, nor the degree to which the 

proposed disclosure requirements and 

additional grower protections would 

address them. Though AMS is unable to 

completely quantify the benefits of the 

regulations, this analysis has explained 

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 §§ 201.100 and 201.214 of the 

proposal would provide information 

that should be useful to growers in 

making more informed decisions and 

reducing grower concerns resulting from 

lack of access to information. 

AMS will estimate the industry 

benefits in two parts, one quantified and 

the other non-quantified. For the 

quantitative part, AMS will provide a 

minimum value of the benefit to poultry 

growers from the additional information 

in the disclosures required under 


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35008 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

75A risk averse grower prefers revenue streams 

with low uncertainty to revenue streams with high 

uncertainty when both have the same mean return. 

76 In the context of this analysis, ‘‘non-quantified’’ 

is defined to include measures which are 

quantitative in principle but in value which cannot 

be estimated at present. 

77See U.S. Bureau of Labor Statistics, May 2020 

National Occupational Employment and Wage 

Estimates, May 2020. https://www.bls.gov/oes/ 

current/oes_nat.htm#00-0000. 

§§ 201.100 and 201.214 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.75 AMS 

quantifies the benefit to growers from 

the reduction in revenue risk by 

estimating the Risk Premium (RP) to 

contract poultry 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, proposed §§ 201.100 and 

201.214 have additional, other nonquantified benefits to growers and live 

poultry dealers, referred to as BO.76 The 

other benefits would arise from a 

reduction in risk of retaliation by 

allowing growers to share 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 

poultry 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 requests comment on 

important categories of costs or benefits 

that may have been left out of this 

analysis and on means of estimating 

their magnitude. 

AMS expects that the effects on the 

industry from the proposed 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 

Proposed Regulations 

AMS estimates cost and benefits for 

two alternatives. The first is the 

proposed §§ 201.100 and 201.214, 

which is the preferred alternative. The 

second alternative is the same as 

proposed §§ 201.100 and 201.214 with a 

complete exemption for live poultry 

dealers 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 proposed 

§§ 201.100 and 201.214 primarily 

consist of the time required to gather the 

information and distribute it among the 

growers. The costs of the proposed rules 

would fall on live poultry dealers as 

they collect and disseminate the 

required information, and on poultry 

growers based on the value of the time 

they put into reviewing the disclosures. 

Though poultry 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 

growers must review the information in 

order to realize the benefits. This may 

result in a more efficient allocation of 

capital to the poultry growing industry. 

There are 89 live poultry dealers that 

file annual reports with AMS, and their 

reports indicate that they had 23,047 

contracts with poultry growers during 

their fiscal year 2020. 

AMS expects the direct costs and 

benefits would be very small relative to 

overall production costs and would not 

measurably alter the poultry supply. 

AMS also expects that neither live 

poultry dealers nor poultry growers 

would measurably change any 

production practices that would impact 

the overall supply of poultry. 

Expected costs are estimated as the 

value of the time required to produce 

and distribute the disclosures required 

by §§ 201.100 and 201.214 as well as the 

time required to create and maintain 

any necessary additional records. AMS 

believes most live poultry dealers 

already keep nearly all of the required 

records. Therefore, the added costs of 

creating the records are expected to be 

relatively small. AMS also estimates the 

amount of time that 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 Packers and Stockyards Act. 

Estimates for the value of the time are 

U.S. Bureau of Labor Statistics 

Occupational Employment and Wage 

Statistics estimated released May 

2020.77

Costs of Proposed § 201.100 

Proposed § 201.100 lists a number of 

disclosure and record keeping 

requirements for live poultry dealers, 

but not all of them are new. Many of the 

requirements are included in current 

§ 201.100. Only the new requirements 

would create additional costs above the 

status quo. 

The new provisions in proposed 

§ 201.100 would 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 lbs. of poultry per week 

would 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 dealer must provide a copy 

of the growing agreement, the housing 

specifications, a letter of intent, and the 

new Disclosure Document. 

The Disclosure Document would 

require live poultry dealers to disclose 

summaries of litigation with any poultry 

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 would be 

required to disclose growers’ variable 

costs if it collects the information. Live 

poultry dealers would be required to 

audit the information to ensure accuracy 


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78Average hourly wage rates used to estimate 

dealer costs include a 41.56% markup for benefits 

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

$113.80, Administrative—$39.69, and Information 

Technology—$82.50. 

79The one-time set-up costs are not equal to the 

first-year costs of proposed § 201.100 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 or revised. 

80Live poultry dealers processing an average of 

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

reported a combined 22,312 poultry contracts in 

their annual reports to AMS. 

81 1 hour to review each disclosure × $70.94 per 

hour × 22,312 contracts × 74.71 percent of the 

contracts renewed in the first year = $1,182,607. 

82 1⁄12 hour to review each disclosure × $70.94 per 

hour × 22,312 contracts × 74.71 percent of the 

contracts renewed in the first year = $1,182,607. 

83 1 hour to review each disclosure × $70.94 per 

hour × 22,312 contracts × 5 percent of the contracts 

renewed per year = $79,136 per year. 

84Live poultry dealers reported a combined total 

of 23,047 contracts for their fiscal year 2020. 

Smaller live poultry dealers would not be exempt 

from reporting requirements in § 201.100 (a)(2) or 

(3). 

85 1 hour to review each disclosure × $70.94 per 

hour × 23,047 contracts × 5 percent of growers that 

are new entrants = $81,743. 

86 1 hour to review each disclosure × $70.94 per 

hour × 23,047 contracts × 5 percent of growers that 

require significant housing upgrades = $81,743. 

87The average hourly wage rate used to estimate 

poultry grower costs includes a 41.56% markup for 

benefits and is as follows: Management—$70.94. 

and obtain and file signed receipts 

certifying that the live poultry dealer 

provided the required Disclosure 

Document. 

The Disclosure Document would 

require two separate financial 

disclosures to growers. The first 

disclosure would be a table showing 

average annual gross payments to 

poultry growers for the previous 

calendar year. The table should 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 would be a set of 

tables showing average annual gross 

payments per farm facility square foot in 

each quintile to poultry growers for each 

of the five previous years, organized by 

housing specification at each complex. 

AMS estimates the aggregate one-time 

costs of setting up the Disclosure 

Document would require 6,786 

management hours, 3,115 legal hours, 

2,042 administrative hours, and 1,984 

information technology hours costing 

$1,231,679 in the first year for live 

poultry dealers to initially set up the 

Disclosure Document.78 79 A more 

detailed explanation of the one-time 

first-year costs associated with § 201.100 

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 

3,230 management hours, 534 legal 

hours, 1,121 administrative hours, and 

1,181 information technology hours to 

produce and distribute to growers the 

gross payment disclosure information 

annually for an aggregate annual cost of 

$503,771. AMS expects the total cost of 

producing the annual gross payment 

disclosure information to consist of 

$1,231,679 in the first year to set up the 

systems and controls, plus $503,771 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 proposed 

§ 201.100 are expected to be $1,735,450 

and then $503,771 annually on an 

ongoing basis. A more detailed 

explanation of the ongoing costs 

associated with § 201.100 is in Table 2 

in Appendix 1. 

With the exception of signing a 

receipt, the proposed rule would not 

impose any requirement on poultry 

growers to review the information 

provided by live poultry dealers, but to 

benefit from the Disclosure Document, 

growers would need to review the 

information provided. Based on AMS 

subject matter experts, poultry growers 

would spend the most time reviewing 

the Disclosure Document the first time 

they review them in order to understand 

the information and then spend less 

time reviewing subsequent disclosures. 

For § 201.100 (a)(1), AMS expects that 

growers would 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 

2,000,000 pounds of poultry weekly 

would be exempt from the reporting 

requirements, but large live poultry 

dealers would be required to provide 

disclosures to growers for each of 

22,312 80 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 a wage of $70.94, AMS 

expects the requirements associated 

with § 201.100 (a)(1) will cost about 

$1,182,607 81 in the aggregate in the first 

year. After the first year, as 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 $98,551 82 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. At for a yearly cost of $79,136.83

Section 201.100 (a)(2) and (3) would 

only apply to growers that are new 

entrants and to growers making 

significant upgrades to poultry. AMS 

expects that each of these groups of 

growers will account for 5 percent of the 

23,047 84 contracts live poultry dealers 

reported in their annual reports to AMS. 

If growers, require one hour at $70.94 

per hour, growers’ aggregate costs would 

be $81,714 85 for reviewing documents 

required in § 201.100 (a)(2) and an 

additional $81,714 86 for reviewing 

documents required in § 201.100 (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 

proposed § 201.100 to be $1,588,714 in 

the initial year, $341,172 through year 

five, and then $262,036 in each 

succeeding year.87 The costs would 

decline after year five because AMS 

expects that all contracts would 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 poultry growers in 

the United States in 2017. 

The ten-year total costs of proposed 

§ 201.100 to all 89 live poultry dealers 

are estimated to be $6,269,387 and the 

present value (PV) of the ten-year total 

costs to be $5,493,072 discounted at a 3 

percent rate and $4,689,377 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 $643,956 

and $667,662 discounted at a 7 percent 

rate. 

The ten-year aggregate total costs of 

proposed § 201.100 to poultry growers 

are estimated to be $4,263,582 and the 

present value of the ten-year total costs 

to be $3,808,846 discounted at a 3 

percent rate and $3,330,831 at a 7 

percent rate. The annualized costs of the 

PV of ten-year costs to poultry growers 

discounted at a 3 percent rate are 

expected to be $446,513 and $474,235 

discounted at a 7 percent rate. 

The ten-year aggregate total costs of 

proposed § 201.100 to live poultry 

dealers and poultry growers are 

estimated to be $10,532,969 and the 

present value of the ten-year total costs 


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88 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. 

89 1⁄6 hours × $70.94 per hour × 16,924 poultry 

growers × 80 percent of poultry raised in 

tournament systems = $156,286. 

90 1⁄12 hours × $70.94 per hour × 16,924 poultry 

growers × 3.5 additional flocks in the first year × 

80 percent of poultry raised in tournament systems 

= $273,500. 

91 1⁄12 hours × $70.94 per hour × 16,924 poultry 

growers × 4.5 flocks per year × 80 percent of poultry 

raised in tournament systems = $351,000 per year. 

92 1⁄6 hours × $70.94 per hour × 16,924 poultry 

growers × 80 percent of poultry raised in 

tournament systems = $156,286. 

93 1⁄12 hours × $70.94 per hour × 16,924 poultry 

growers × 3.5 additional flocks in the first year × 

80 percent of poultry raised in tournament systems 

= $273,500. 

94 1⁄12 hours × $70.94 per hour × 16,924 poultry 

growers × 4.5 flocks per year × 80 percent of poultry 

raised in tournament systems = $351,000 per year. 

to be $9,301,918 discounted at a 3 

percent rate and $8,020,209 at a 7 

percent rate. The annualized costs of the 

PV of ten-year costs to live poultry 

dealers and poultry growers discounted 

at a 3 percent rate are expected to be 

$1,090,469 and $1,141,897 discounted 

at a 7 percent rate. aggregate 

Costs of Proposed § 201.214 

Disclosures that would be required in 

proposed § 201.214 are associated with 

tournament or relative performance 

contracts. At the time of placement, 

proposed § 201.214 would require 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 

would 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 must also be 

disclosed at settlement. 

AMS estimates that the live poultry 

dealers’ one-time aggregate costs of 

developing the placement and 

settlement disclosure documents would 

require 1,335 management hours, 979 

administrative hours, and 3,738 

information technology hours costing 

$471,675 in the first year to initially set 

up the disclosure documents required 

by § 201.214.88 A more detailed 

explanation of the one-time first-year 

costs associated with proposed 

§ 201.100 is in Table 3 in Appendix 1. 

AMS expects the § 201.214 disclosure 

documents would require an additional 

3,201 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 

$229,838. A more detailed explanation 

of the ongoing costs associated with 

proposed § 201.214 is in Table 4 in 

Appendix 1. 

AMS expects the aggregate cost of 

producing the proposed § 201.214 preflock placement and settlement 

disclosure documents to consist of 

$471,675, in the first year to set up the 

systems and controls, plus $229,838 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 proposed § 201.214 

are expected to be $701,513 and then 

$229,838 annually on an ongoing basis. 

Proposed § 201.214 (a) concerns 

disclosures of inputs to growers in 

tournament settlement systems. Live 

poultry dealers would be required to 

disclose information about inputs, such 

as feed, medication, chick, etc. for each 

flock placed with a grower. AMS 

expects that for the first time a grower 

receives the disclosure document, he or 

she would require about 10 minutes to 

review each of the disclosure 

documents. At $70.94 per hour, the first 

disclosure document would cost 

growers $156,286.89 After the reviewing 

the documents the first time, AMS 

expects that growers would need only 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 in the 

aggregate an additional $273,500 90 for 

the remaining 3.5 flocks in the first year 

and $351,000 91 for the 4.5 flocks in 

each successive year. 

Proposed § 201.214 (c) concerns 

disclosures of about the group of 

growers in settlement groups in 

tournament settlement systems. Live 

poultry dealers would be 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 

proposed § 201.214 (c) will be identical 

to the costs of reviewing the disclosures 

required in proposed § 201.214 (a). 

Aggregate costs would be $156,286 92 for 

the disclosures reviewed. AMS expects 

that reviewing the disclosure documents 

would cost an additional $273,500 93 for 

the remaining 3.5 flocks in the first year 

and $351,000 94 for the 4.5 flocks in 

each successive year. 

AMS estimates growers’ aggregate 

costs for reviewing disclosures 

associated with proposed § 201.214 to 

be $859,571 in the first year and 

$703,285 in each subsequent year. AMS 

expects that poultry growers would 

spend the most time reviewing the 

placement and settlement disclosures 

the first time in order to understand the 

information and then spend less time 

for each subsequent review. 

The ten-year aggregate total costs of 

proposed § 201.214 to live poultry 

dealers are estimated to be $2,770,055 

and the present value of the ten-year 

total costs to be $2,418,502 discounted 

at a 3 percent rate and $2,055,104 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 $283,522 and 

$292,601 discounted at a 7 percent rate. 

The ten-year aggregated total costs of 

proposed § 201.214 to poultry growers 

are estimated to be $7,189,136 and the 

present value of the ten-year total costs 

to be $6,150,898 discounted at a 3 

percent rate and $5,085,641 at a 7 

percent rate. The annualized costs of the 

PV of ten-year costs to poultry growers 

discounted at a 3 percent rate are 

expected to be $721,073 and $724,081 

discounted at a 7 percent rate. 

The costs from proposed § 201.214 

would be higher for poultry growers 

than for live poultry dealers. There are 

two reasons for this. First, there are only 

89 live poultry dealers while there 

16,524 poultry 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 poultry 

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 

poultry growers who would receive and 

review the placement and settlement 

disclosure with each flock every year, 

which explains the higher cost relative 

to live poultry dealers. The relative 

higher cost to the poultry growers 

would be compensated for 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 

proposed § 201.214 to live poultry 

dealers and poultry growers are 

estimated to be $9,959,191 and the 

present value of the ten-year total costs 

to be $8,569,399 discounted at a 3 

percent rate and $7,140,745 at a 7 

percent rate. The annualized aggregate 

costs of the PV of ten-year costs to live 

poultry dealers and poultry growers 

discounted at a 3 percent rate are 

expected to be $1,004,595 and 

$1,016,681 discounted at a 7 percent 

rate. aggregate 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 35011 

95 Knoeber and Thurman (1995) note that 

integrators experience relatively ‘‘small risk-bearing 

costs,’’ and we request comment on: (1) whether 

other analyses, including any using more recent 

data, reach similar conclusions and (b) how to 

quantify ‘‘small’’ for purposes of this regulatory 

impact analysis. 

96A utility function is an economic concept that 

measures an individual’s preferences over a set of 

goods and services. 

97AMS 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. 

Combined Costs of Proposed §§ 201.100 

and 201.214 

Combined costs to live poultry dealers 

for proposed §§ 201.100 and 201.214 are 

expected to be $2,436,964 million in the 

first year, and $733,609 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 proposed 

§§ 201.100 and 201.214. The combined 

costs for non-exempt poultry growers 

are expected to be $2,448,284 in the first 

year, $1,044,457 in years two through 

five, and $965,231 after year five on an 

ongoing basis. 

The ten-year aggregate combined costs 

of proposed §§ 201.100 and 201.214 to 

live poultry dealers are estimated to be 

$9,039,442 and the present value of the 

ten-year total costs to be $7,911,574 

discounted at a 3 percent rate and 

$6,744,481 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 $927,478 and 

$960,262 discounted at a 7 percent rate. 

The ten-year aggregate combined costs 

of proposed §§ 201.100 and 201.214 to 

poultry growers are estimated to be 

$11,452,718 and the present value of the 

ten-year total costs to be $9,959,744 

discounted at a 3 percent rate and 

$8,416,473 at a 7 percent rate. The 

annualized aggregate combined costs of 

the PV of ten-year costs to poultry 

growers discounted at a 3 percent rate 

are expected to be $1,167,586 and 

$1,198,316 discounted at a 7 percent 

rate. The costs to poultry growers from 

proposed §§ 201.100 and 201.214 would 

be higher for poultry growers than live 

poultry dealers for the reasons 

discussed above. 

The ten-year aggregate combined costs 

of proposed §§ 201.100 and 201.214 to 

live poultry dealers and poultry growers 

are estimated to be $20,492,160 and the 

present value of the ten-year aggregate 

combined costs to be $17,871,317 

discounted at a 3 percent rate and 

$15,160,954 at a 7 percent rate. The 

annualized aggregate costs of the PV of 

ten-year costs to live poultry dealers and 

poultry growers discounted at a 3 

percent rate are expected to be 

$2,095,064 and $2,158,579 discounted 

at a 7 percent rate. aggregate 

Additionally, there may be costs 

associated with providing this 

information (such as decreases in 

profitability or increased risks to 

integrators).95 We request comment on 

whether there may be unintended 

adverse consequences of the expanded 

disclosure requirements and what data 

and methods might be available to 

estimate the magnitude of such costs. 

Benefits of Proposed §§ 201.100 and 

201.214 

As discussed above, AMS will 

estimate the industry benefits from 

proposed §§ 201.100 and 201.214 in two 

parts, one quantified and the other nonquantified. For the quantified part, AMS 

will provide a minimum value of the 

combined benefit to poultry growers 

from the additional information in the 

disclosures required under proposed 

§§ 201.100 and 201.214 and will refer to 

this minimum benefit as Gmin. AMS first 

estimates Gmin and then discusses the 

non-quantified benefits of the proposed 

rules. 

AMS estimates Gmin as the combined 

benefits to growers of proposed 

§§ 201.100 and 201.214 from the 

reduction in profit uncertainty. AMS 

expects the majority of the benefits of 

reduced profit uncertainty will result 

from additional information in the 

financial disclosures under proposed 

§ 201.100 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 proposed § 201.214 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 proposed §§ 201.100 

and 201.214 and presents just the total 

combined minimum quantifiable 

benefits of both proposed rules. 

A potential benefit of the contract 

disclosure rules providing increased 

transparency is that doing so could 

lower the uncertainty in a contract 

grower’s revenue stream. According to 

economic principles, a risk averse 

producer will benefit economically from 

a reduction in revenue uncertainty. 

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,96 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 poultry 

growers of a range of reductions in the 

variability of their net revenue.97

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 in wealth 

(IARA). While no evidence exists one 

way or another for how the risk 

preference of poultry contract growers 

changes with wealth, the agricultural 

economics literature generally assumes 

DARA over IARA. 

Grower risk aversion (Risk aversion premium a) 

Reduction in coefficient of variation of net revenue b

1% 2% 5% 10% 

One year value 

CARA, Moderate (20%) ................................................................................... $1,588,000 $3,158,000 $7,758,000 $15,057,000 

CARA, High (40%) ........................................................................................... $3,760,000 $7,480,000 $18,410,000 $35,820,000 

DARA, High/Moderate ..................................................................................... $2,002,000 $3,977,000 $9,751,000 $18,866,000 


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98All benefits estimates assume a moderate (20 

percent) RAP and a 2 percent reduction in 

coefficient of variation of net revenue. 

Grower risk aversion (Risk aversion premium a) 

Reduction in coefficient of variation of net revenue b

1% 2% 5% 10% 

PV over 10 years discounted at 3% 

Moderate (20%) ............................................................................................... $13,545,962 $26,938,381 $66,177,314 $128,439,264 

High (40%) ....................................................................................................... $32,073,563 $63,805,917 $157,041,034 $305,551,866 

PV over 10 years discounted at 7% 

Moderate (20%) ............................................................................................... $11,153,447 $22,180,471 $54,488,946 $105,754,067 

High (40%) ....................................................................................................... $26,408,667 $52,536,390 $129,304,136 $251,584,691 

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 $1.6 million with a 

1 percent reduction in the variability of 

net revenue when moderate risk 

aversion is assumed to $36 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 $11 

million to $306 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 proposed rules 

would lead to a two percent reduction 

in the coefficient of variation in net 

revenue, the benefit estimate is $22 

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). We 

request comment on the additional data/ 

information needed to calculate the risk 

premia using CRRA preferences likely to 

be pertinent to contract poultry growers. 

AMS now discusses the nonquantified benefits of the proposed rules 

that increase the benefits to growers 

above the minimum quantifiable benefit 

of Gmin, which is estimated by RP in the 

above table. 

As discussed above, proposed 

§§ 201.100 and 201.214 have additional, 

other non-quantified benefits to the 

industry, referred to as BO. First, if 

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. We request 

comment that would facilitate both 

quantification of the magnitude of 

benefits of a more optimal allocation of 

capital and labor resources and tracking 

of whether any such efficiency gains 

would be captured by growers, live 

poultry dealers (while also noting the 

as-yet-unquantified costs to dealers, as 

mentioned elsewhere in this analysis), 

or others in society. 

The combined minimum benefits for 

poultry growers, Gmin, from reduced 

revenue uncertainty are expected to be 

$3,158,000 in the first year and on an 

ongoing basis.98 The ten-year total 

minimum benefits of proposed 

§§ 201.100 and 201.214 to poultry 

growers are estimated to be $31,580,000 

and the present value of the ten-year 

total minimum benefits to be 

$29,938,381 discounted at a 3 percent 

rate and $22,180,471 at a 7 percent rate. 

The annualized PV of ten-year 

minimum benefits to poultry growers 

discounted at 3 and 7 percent rates are 

expected to be $3,158,000. The total 

benefits to the industry, BT, from 

proposed §§ 201.100 and 201.214 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 

proposed rules—as is the case for total 

costs, noted above—will be very small 

in relation to the total value of industry 

production. 

Broiler chicken sales in the U.S. for 

2019 were approximately $58.6 billion. 

total quantified cost of proposed 

§§ 201.100 and 201.214 is estimated to 

be greatest in the first year at $4.9 

million, or .00836 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 proposed rule. 

Total Quantified Combined Costs and 

Benefits of Proposed §§ 201.100 and 

201.214 


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99 Ibid. 

100As discussed previously, the one-time set-up 

costs are not equal to the first-year costs of 

proposed § 201.100 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 or revised. 

The cost and benefit estimates of 

proposed §§ 201.100 and 201.214 

presented above appear in the following 

table. 

TABLE 3—ESTIMATED COSTS AND BENEFITS 99 OF PROPOSED §§ 201.100 AND 201.214 

Preferred alternative 

Cost Benefits 

Live poultry 

dealer 

°Dealers 

Poultry 

growers Industry total Individual grower (Gmin) * 

Total industry 

(BT) 

§ 201.100 

First-Year ...................................................................... $1,735,450 $1,588,714 $3,324,164 Gmin Gmin + BO

Ten-Year Total .............................................................. 6,269,387 4,263,582 10,532,969 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 5,493,072 3,808,846 9,301,918 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 4,689,377 3,330,831 8,020,209 Gmin Gmin + BO

Ten-Year Annualized at 3 Percent ............................... 643,956 446,513 1,090,469 Gmin Gmin + BO

Ten-Year Annualized at 7 Percent ............................... 667,662 474,235 1,141,897 Gmin Gmin + BO

§ 201.214 

First-Year ...................................................................... 701,513 859,571 1,561,084 Gmin Gmin + BO

Ten-Year Total .............................................................. 2,770,055 7,189,136 9,959,191 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 2,418,502 6,150,898 8,569,399 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 2,055,104 5,085,641 7,140,745 Gmin Gmin + BO

Ten-Year Annualized at 3 Percent ............................... 283,522 721,073 1,004,595 Gmin Gmin + BO

Ten-Year Annualized at 7 Percent ............................... 292,601 724,081 1,016,681 Gmin Gmin + BO

§§ 201.100 and 201.214 

First-Year ...................................................................... 2,436,964 2,448,284 4,885,248 3,158,000 Gmin + BO

Ten-Year Total .............................................................. 9,039,442 11,452,718 20,492,160 31,580,000 Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 7,911,574 9,959,744 17,871,317 26,938,381 Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 6,744,481 8,416,473 15,160,954 22,180,471 Gmin + BO

Ten-Year Annualized at 3 Percent ............................... 927,478 1,167,586 2,095,064 3,158,000 Gmin + BO

Ten-Year Annualized at 7 Percent ............................... 960,262 1,198,316 2,158,579 3,158,000 Gmin + BO

* AMS estimates Gmin as the combined benefits to growers of proposed §§ 201.100 and 201.214. 

°Estimates do not include unquantified costs of risk increases. 

The quantified costs and minimum 

quantifiable benefits to the industry in 

the first year are $4.885 million and 

$3.158 million, respectively. However, 

the minimum quantifiable benefits 

exceed the quantified costs in the tenyear total, the PVs on the ten-year 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. Thus, 

AMS concludes that the quantified 

benefits to growers from proposed 

§§ 201.100 and 201.214 exceed the 

quantified costs of proposed §§ 201.100 

and 201.214. AMS requests additional 

information (including data and 

quantification methods) that could 

support or refute this conclusion. 

AMS expects that the net benefits to 

the industry from proposed §§ 201.100 

and 201.214 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 proposed rule. It would be the same 

as proposed §§ 201.100 and 201.214, 

with the exception that the alternative 

would exempt live poultry dealers that 

process less than 2 million pounds of 

poultry per week from all provisions of 

the two proposed rules. In the preferred 

alternative, small businesses would be 

exempt from the disclosure 

requirements in proposed 

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

provisions of proposed §§ 201.100 and 

201.214 would still apply. 

The costs associated with this 

alternative are similar, but smaller than 

the preferred option. According to PSD 

records, small live poultry dealers make 

up 52.8 percent of all live poultry 

dealers, but have only 3.2 percent of 

poultry 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 Proposed § 201.100—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 3,801 management hours, 1,470 

attorney hours, 1,124 administrative 

hours, and 1,376 information 

technology hours costing $679,627 in 

the first year for live poultry dealers to 

set up the Disclosure Document.100 A 

more detailed explanation of the onetime first-year costs associated with the 

alternative § 201.100 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 growers renewing or 

revising existing contracts, new growers 

entering into contracts, existing growers 

required to make additional capital 

investments to require 2,100 

management hours, 252 legal hours, 865 

administrative hours, and 954 

information technology hours to 

produce, distribute to growers, and 

maintain the gross payment disclosure 

information annually for an annual cost 

of $337,420. A more detailed 

explanation of the ongoing costs 

associated with the alternative § 201.100 

is in Table 2 in Appendix 3. 


khammond on DSKJM1Z7X2PROD with PROPOSALS3
35014 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

101Live poultry dealers processing an average of 

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

reported a combined 22,312 poultry contracts in 

their annual reports to AMS. 

102 1 hour to review each disclosure × $70.94 per 

hour × 22,312 contracts × 74.71 percent of the 

contracts renewed in the first year = $1,182,607. 

103 1⁄12 hour to review each disclosure × $70.94 

per hour × 22,312 contracts × 74.71 percent of the 

contracts renewed in the first year = $98,551. 

104 1 hour to review each disclosure × $70.94 per 

hour × 22,312 contracts × 5 percent of the contracts 

renewed per year = $79,136 per year. 

105 1 hour to review each disclosure × $70.94 per 

hour × 23,047 contracts × 5 percent of growers that 

are new entrants = $81,743. 

106 1 hour to review each disclosure × $70.94 per 

hour × 23,047 contracts × 5 percent of growers that 

require significant housing upgrades = $81,743. 

107 1⁄6 hours × $70.94 per hour × 16,924 poultry 

growers × 80 percent of poultry raised in 

tournament systems × 47.2 percent of live poultry 

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

week = $73,753. 

108 1⁄12 hours × $70.94 per hour × 16,924 poultry 

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

percent of poultry raised in tournament systems × 

47.2 percent of live poultry dealers that process 

more than 2,000,000 head per week = $129,067. 

109 1⁄12 hours × $70.94 per hour × 16,924 poultry 

growers × 4.5 flocks per year × 80 percent of poultry 

AMS expects the total cost of 

producing the annual gross payment 

disclosure information to consist of 

$679,627 in the first year to set up the 

systems and controls, plus $337,420 in 

costs the first year and annually 

thereafter to compile and distribute the 

disclosure data and documents. Thus, 

the first-year total costs of proposed 

§ 201.100 for live poultry dealers are 

expected to be $1,017,047 for the small 

business exemption alternative and then 

$337,420 annually on an ongoing basis. 

For alternative § 201.100 (a)(1), AMS 

expects that growers would take about 

one 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 2,000,000 

pounds of poultry weekly would be 

exempt from the reporting requirements, 

but large live poultry dealers would be 

required to provide disclosures to 

growers for each of 22,312 101 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 contract, one-year contracts, and 

the portion of the longer-term contracts 

that will expire in the first year. At a 

wage of $70.94, AMS expects the 

requirements associated with § 201.100 

(a)(1) will cost about $1,182,607 102 in 

the first year in the aggregate. After the 

first year, as 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 $98,551 103 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. At for a yearly cost of $79,136.104

Section 201.100 (a)(2) and (3) would 

only apply to growers that are new 

entrants and to growers making 

significant upgrades to poultry. AMS 

expects that each of these groups of 

growers will account for 5 percent of the 

22,312 contracts live poultry dealers 

reported in their annual reports to AMS. 

If growers, require one hour at $70.94 

per hour, growers’ aggregate costs would 

be $79,136 105 for reviewing documents 

required in § 201.100 (a)(2) and an 

additional $79,136 106 for reviewing 

documents required in § 201.100 (a)(3) 

in the first year and in each successive 

year. 

AMS estimates growers’ aggregate 

costs for reviewing the Disclosure 

Document associated with proposed 

§ 201.100 for the small business 

exemption alternative to be $1,578,286 

in the initial year, $335,958 through 

year five, and then $256,822 in each 

succeeding year. 

The ten-year aggregate total costs of 

proposed § 201.100 for the small 

business exemption alternative for the 

to live poultry dealers are estimated to 

be $4,053,825. The present value of the 

ten-year aggregate total costs of 

proposed § 201.100 to live poultry 

dealers are estimated to be $3,538,092 

discounted at a 3 percent rate and 

$3,005,061 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 $414,772 and $427,853 

discounted at a 7 percent rate. 

The ten-year aggregate total costs of 

proposed § 201.100 for the small 

business exemption alternative for 

poultry growers are estimated to be 

$4,206,231. The present value of the 

ten-year total costs of § 201.100 to 

poultry growers are estimated to be 

$3,759,309 discounted at a 3 percent 

rate and $3,289,339 at a 7 percent rate. 

The annualized aggregate costs of the 

PV of ten-year costs to poultry growers 

discounted at a 3 percent rate are 

expected to be $440,706 and $468,328 

discounted at a 7 percent rate. The firstyear aggregate total costs of proposed 

§ 201.100 for the small business 

exemption alternative for poultry 

growers and live poultry dealers are 

estimated to be $2,595,333 and the tenyear aggregate total costs of proposed 

§ 201.100 for the small business 

exemption alternative for live poultry 

dealers and poultry growers are 

estimated to be $8,260,056. The present 

value of the ten-year aggregate total 

costs of § 201.100 to live poultry dealers 

and poultry growers are estimated to be 

$7,297,401 discounted at a 3 percent 

rate and $6,294,400 at a 7 percent rate. 

The annualized costs of the PV of tenyear aggregate costs to live poultry 

dealers and poultry growers discounted 

at a 3 percent rate are expected to be 

$855,478 and $896,181 discounted at a 

7 percent rate. 

Costs of § 201.214—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 630 management hours, 462 

administrative hours, and 1,764 

information technology hours costing 

$222,588 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 

§ 201.214 is in Table 3 in Appendix 3. 

AMS expects the disclosure document 

to require an additional 1,512 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 $108,463. Thus, the 

aggregate first-year costs are estimated 

to be $331,051, 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 § 201.100 

is in Table 4 in Appendix 3. 

For the alternative § 201.214 (a) live 

poultry dealers would be required to 

disclose information about inputs, such 

as feed, medication, chick, etc. for each 

flock placed with a grower. AMS 

expects that for the first time a grower 

receives the disclosure document, he or 

she would require about 10 minutes to 

review each of the disclosure 

documents. At $70.94 per hour, the first 

disclosure document would cost 

growers $73,753 in the aggregate.107

After the reviewing the documents the 

first time, AMS expects that 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 $129,067 108 for the 

remaining 3.5 flocks in the first year and 

$165,944 109 for the 4.5 flocks in each 

successive year. 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 35015 

raised in tournament systems × 47.2 percent of live 

poultry dealers that process more than 2,000,000 

head per week = $165,944 per year. 

110 1⁄6 hours × $70.94 per hour × 16,924 poultry 

growers × 80 percent of poultry raised in 

tournament systems × 47.2 percent of live poultry 

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

week= $73,753. 

111 1⁄12 hours × $70.94 per hour × 16,924 poultry 

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

percent of poultry raised in tournament systems × 

47.2 percent of live poultry dealers that process 

more than 2,000,000 head per week = $129,067. 

112 1⁄12 hours × $70.94 per hour × 16,924 poultry 

growers × 4.5 flocks per year × 80 percent of poultry 

raised in tournament systems × 47.2 percent of live 

poultry dealers that process more than 2,000,000 

head per week = $165,944 per year. 

Alternative § 201.214 (c) concerns 

disclosures of about the group of 

growers in settlement groups in 

tournament settlement systems. Live 

poultry dealers would be 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 

proposed § 201.214 (c) will be identical 

to the costs of reviewing the disclosures 

required in proposed § 201.214 (a). 

Aggregate costs would be $73,753.110 for 

the disclosures reviewed. AMS expects 

that reviewing the disclosure documents 

would cost, in the aggregate, an 

additional $129,067 111 for the 

remaining 3.5 flocks in the first year and 

$165,944 112 for the 4.5 flocks in each 

successive year. 

AMS estimates growers’ aggregate 

costs for reviewing and acknowledging 

receipt of disclosures associated with 

proposed § 201.214 under the small 

business exemption alternative to be 

$405,640 in the first year and $331,887 

in each subsequent year. As discussed 

previously, AMS expects that poultry 

growers would spend the most time 

reviewing the placement and settlement 

disclosures the first time in order to 

understand the information and then 

spend less time for each subsequent 

review. 

The ten-year aggregate total costs of 

proposed § 201.214 under the small 

business exemption alternative for live 

poultry dealers are estimated to be 

$1,307,217. The present value of the 

aggregate ten-year total costs of 

proposed § 201.214 to live poultry 

dealers are estimated to be $1,141,315 

discounted at a 3 percent rate and 

$969,824 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 $133,797 and $138,081 

discounted at a 7 percent rate. 

The ten-year aggregate total costs of 

proposed § 201.214 for the small 

business exemption alternative for 

poultry growers are estimated to be 

$3,392,626. The present value of the 

aggregate ten-year total costs of 

proposed § 201.214 to poultry growers 

are estimated to be $2,902,671 

discounted at a 3 percent rate and 

$2,399,966 at a 7 percent rate. The 

annualized aggregate costs of the PV of 

ten-year costs to poultry growers 

discounted at a 3 percent rate are 

expected to be $340,282, and $341,701 

discounted at a 7 percent rate. 

The first-year aggregate total costs of 

proposed § 201.214 under the small 

business exemption alternative for live 

poultry dealers and poultry growers are 

estimated to be $736,691 and the tenyear aggregate total costs are estimated 

to be $4,699,843. The present value of 

the ten-year aggregate total costs of 

proposed § 201.214 to live poultry 

dealers and poultry growers are 

estimated to be $4,043,986 discounted 

at a 3 percent rate and $3,369,790 at a 

7 percent rate. The aggregate annualized 

costs of the PV of ten-year costs to live 

poultry dealers and poultry growers 

discounted at a 3 percent rate are 

expected to be $474,079 and $479,782 

discounted at a 7 percent rate. 

Combined Costs of Proposed §§ 201.100 

and 201.214—Small Business 

Exemption Alternative 

Aggregate combined costs to live 

poultry dealers for proposed §§ 201.100 

and 201.214 for the small business 

exemption alternative are expected to be 

$1,348,098 million in the first year, and 

$445,883 in subsequent years. The 

combined costs for poultry growers are 

expected to be $1,983,926 in the first 

year, $667,846 in years two through 

five, and $588,710 after year five on an 

ongoing basis. 

The aggregate ten-year combined 

quantified costs of proposed §§ 201.100 

and 201.214 for the small business 

exemption alternative for live poultry 

dealers are estimated to be $5,361,042 

and the present value of the ten-year 

combined costs $4,679,407 discounted 

at a 3 percent rate and $3,974,885 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 $548,569 

and $565,934 discounted at a 7 percent 

rate. 

The aggregate ten-year combined costs 

of proposed §§ 201.100 and 201.214 for 

the small business exemption 

alternative for poultry growers are 

estimated to be $7,598,857 and the 

present value of the ten-year combined 

costs are estimated to be $6,661,980 

discounted at a 3 percent rate and 

$5,689,305 at a 7 percent rate. The 

aggregate annualized costs of the PV of 

ten-year costs to poultry growers 

discounted at a 3 percent rate are 

expected to be $780,987 and $810,029 

discounted at a 7 percent rate. As under 

the preferred alternative, the costs to 

poultry growers from proposed 

§§ 201.100 and 201.214 under the small 

business exemption alternative would 

be higher for poultry growers than live 

poultry dealers for the reasons 

discussed above. 

The first-year aggregate combined 

costs of proposed §§ 201.100 and 

201.214 under the small business 

exemption alternative for live poultry 

dealers and poultry growers are 

estimated to be $3,332,024 and 

$1,113,728 in years two through five 

and $1,034,592 in years six and beyond. 

The aggregate ten-year combined costs 

of proposed §§ 201.100 and 201.214 for 

the small business exemption 

alternative for live poultry dealers and 

poultry growers are estimated to be 

$12,959,899 and the present value of the 

ten-year combined costs are estimated to 

be $11,341,387 discounted at a 3 

percent rate and $9,664,190 at a 7 

percent rate. The aggregate annualized 

costs of the PV of ten-year costs to live 

poultry dealers and poultry growers 

discounted at a 3 percent rate are 

expected to be $1,329,557 and 

$1,375,963 discounted at a 7 percent 

rate. 

Additionally, there may be costs of 

bearing increased risk that AMS has not 

estimated of increasing transparency in 

poultry grower contracting and 

tournaments, which would have 

different effects on more or less 

diversified integrators. We request 

comment on distinguishing between 

large, highly diversified integrators and 

those that process less volume and are 

less diversified, for purposes of 

quantifying any such costs for these 

participants in the supply chain. Please 

include any comments on whether, and 

if so, how, a localized monopsony or 

oligopsony position of the integrators 

may also affect the ability of the 

integrator to control information, bear or 

manage risks, or shift those risks to 

other parties, and what implications 

that may have on any other costs and 

benefits that may be quantified or 

otherwise considered. 

Combined Benefits of Proposed 

§§ 201.100 and 201.214—Small 

Business Exemption Alternative 

According to PSD records, only 3.2 

percent of poultry growing contracts are 

between small live poultry dealers and 

poultry growers. Thus, 96.8 percent of 

all poultry growers will receive the 

benefits of proposed §§ 201.100 and 

201.214 under the small business 

exemption alternative. To estimate the 


khammond on DSKJM1Z7X2PROD with PROPOSALS3
35016 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

113All benefits estimates assume a moderate (20 

percent) RAP and a 2 percent reduction in 

coefficient of variation of net revenue. 

minimum quantified benefits to poultry 

growers, Gmin, under the small business 

exemption alternative, AMS multiplied 

the minimum quantified benefits under 

the preferred alternative in Table 3 by 

96.8 percent. 

AMS estimates the aggregate 

minimum benefits to growers, Gmin, 

from proposed §§ 201.100 and 201.214 

under the small business exemption 

alternative from reduced profit 

uncertainty to be $3,057,287 in the first 

year and on an ongoing basis.113 The 

ten-year total minimum benefits of 

proposed §§ 201.100 and 201.214 to 

poultry growers are estimated to be 

$30,572,871 and the present value of the 

ten-year total minimum benefits to be 

$26,079,279 discounted at a 3 percent 

rate and $21,473,105 at a 7 percent rate. 

The annualized PV of ten-year 

minimum benefits to poultry growers 

discounted at 3 and 7 percent rates are 

expected to be $3,057,287. 

The total benefits to the industry, BT, 

from proposed §§ 201.100 and 201.214, 

under the small business exemption 

alternative, would be the sum of the 

minimum benefits to all growers, Gmin, 

and the other benefits to the industry 

from growers’ risk reductions 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 

proposed §§ 201.100 and 201.214, 

combined with the other non-quantified 

benefits to growers, to exceed the costs 

of proposed §§ 201.100 and 201.214 

under the small business exemption 

alternative. 

Combined Costs and Benefits of 

Proposed §§ 201.100 and 201.214 

The aggregate cost and benefit 

estimates of proposed §§ 201.100 and 

201.214 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 $3.332 

million and $3.057 million, 

respectively. 

As with the preferred option, AMS 

expects that the net benefits to the 

industry from proposed §§ 201.100 and 

201.214 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—ESTIMATED COSTS AND BENEFITS OF PROPOSED §§ 201.100 AND 201.214—SMALL BUSINESS EXEMPTION

Small business exemption alternative 

Cost Benefits 

Live poultry 

dealer ° 

Poultry 

growers Industry total Individual grower (Gmin)*

Total Industry 

(BT) 

§ 201.100 

First-Year ...................................................................... $1,017,047 $1,578,286 $2,595,333 Gmin Gmin + BO

Ten-Year Total .............................................................. 4,053,825 4,206,231 8,260,056 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 3,538,092 3,759,309 7,297,401 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 3,005,061 3,289,339 6,294,400 Gmin Gmin + BO

Ten-Year Annualized at 3 Percent ............................... 414,772 440,706 855,478 Gmin Gmin + BO

Ten-Year Annualized at 7 Percent ............................... 427,853 468,328 896,181 Gmin Gmin + BO

§ 201.214 

First-Year ...................................................................... 331,051 405,640 736,691 Gmin Gmin + BO

Ten-Year Total .............................................................. 1,307,217 3,392,626 4,699,843 Gmin Gmin + BO

PV of Ten-Year Discounted at 3 Percent ..................... 1,141,315 2,902,671 4,043,986 Gmin Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 969,824 2,399,966 3,369,790 Gmin Gmin + BO

Ten-Year Annualized at 3 Percent ............................... 133,797 340,282 474,079 Gmin Gmin + BO

Ten-Year Annualized at 7 Percent ............................... 138,081 341,701 479,782 Gmin Gmin + BO

§§ 201.100 and 201.214 

First-Year ...................................................................... 1,348,098 1,983,926 3,332,024 3,057,287 Gmin + BO

Ten-Year Total .............................................................. 5,361,042 7,598,857 12,959,899 30,572,871 Gmin + BO

NV of Ten-Year Discounted at 3 Percent .................... 4,679,407 6,661,980 11,341,387 26,079,279 Gmin + BO

PV of Ten-Year Discounted at 7 Percent ..................... 3,974,885 5,689,305 9,664,190 21,473,105 Gmin + BO

Ten-Year Annualized at 3 Percent ............................... 548,569 780,987 1,329,557 3,057,287 Gmin + BO

Ten-Year Annualized at 7 Percent ............................... 565,934 810,029 1,375,963 3,057,287 Gmin + BO

*AMS estimates Gmin as the combined benefits to growers of proposed §§ 201.100 and 201.214. 

°Estimates do not include unquantified cost of risk increases. 

Though the small business exemption 

alternative would reduce costs to the 

industry, this alternative would deny 

the benefits offered by proposed 

§§ 201.100 and 201.214 to poultry 

growers who contract with small live 

poultry dealers. While most poultry 

grown and are contracted with large 

business, there are many small growers 

who would be exempt from the 

proposed rules under the small business 

exemption alternative. Under the small 

business exemption alternative, these 

poultry growers would continue to be 

exposed to the informational 

asymmetries and associated costs 

discussed above. AMS considered all 

three regulatory alternatives and 

believes that the preferred alternative is 

the best alternative as the benefits of the 

regulations will be captured by all 

poultry growers, regardless of the size of 

the live poultry dealer with which they 

contract. 

H. Regulatory Flexibility Analysis 

AMS is proposing amending 

§ 201.100 and adding new § 201.214 to 

the regulations under the Packers and 

Stockyards Act. The proposed amended 

§ 201.100 would require live poultry 


khammond on DSKJM1Z7X2PROD with PROPOSALS3
Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 35017 

114U.S. Small Business Administration. Table of 

Small Business Size Standards Matched to North 

American Industry Classification System Codes. 

effective August 19, 2019. https://www.sba.gov/ 

sites/default/files/2019-08/SBA%20Table%20

of%20Size%20Standards_Effective%20Aug%20

19%2C%202019.pdf. 

115USDA, 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. 

116See U.S. Bureau of Labor Statistics, May 2020 

National Occupational Employment and Wage 

Estimates, May 2020. https://www.bls.gov/oes/ 

current/oes_nat.htm#00-0000. 

dealers to make disclosures before 

entering into new contracts or renewing 

existing contracts. Proposed § 201.214 

would require live poultry dealers to 

disclose information at the settlement of 

each flock. 

Proposed § 201.100 lists a number of 

disclosure and record keeping 

requirements for live poultry dealers, 

but not all of them are new. Many of the 

requirements are included in current 

§ 201.100. Only the new requirements 

would create additional costs above the 

status quo. 

The new provisions in proposed 

§ 201.100 would 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 lbs. of poultry per week 

would 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 dealer must provide a copy 

of the growing agreement, the housing 

specifications, a letter of intent, and the 

new Disclosure Document. 

The Disclosure Document would 

require live poultry dealers to disclose 

summaries of litigation with any poultry 

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 would be 

required to disclose growers’ variable 

costs if it collects the information. Live 

poultry dealers would 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. 

The Disclosure Document would 

require two separate financial 

disclosures to growers. The first 

disclosure would be a table indicating 

average annual gross payments to 

poultry growers for the previous 

calendar year. The table would 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 would be a set of 

tables with the average annual gross 

payments per farm facility square foot in 

each quintile to poultry growers for each 

of the five previous years, organized by 

housing specification at each complex. 

Disclosures that would be required in 

proposed § 201.214 are associated with 

tournament or relative performance 

contracts. At the time of placement, 

proposed § 201.214 would require 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 

would 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 would also be 

disclosed at settlement. 

AMS expects the disclosure 

requirements in §§ 201.100 and 201.214 

would mitigate effects associated with 

asymmetric information between 

poultry growers and live poultry 

dealers. 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. 

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 Small Business Administration 

(SBA) defines small businesses by their 

North American Industry Classification 

System Codes (NAICS).114 SBA 

considers broiler and turkey producers 

small if sales are less than $1,000,000 

per year. Live poultry dealers, NAICS 

311615, are considered small businesses 

if they have fewer than 1,250 

employees. 

AMS maintains data on live poultry 

dealers from the annual reports these 

firms file with PSD. Currently, 89 live 

poultry dealers would be subject to the 

proposed regulation. Fifty-Four of the 

live poultry dealers would be small 

businesses according to the SBA 

standard. In their fiscal year 2020, live 

poultry dealers reported that they had 

23,054 production contracts with 

poultry growers. Small live poultry 

dealers accounted for 1,218 contracts (5 

percent). 

Annual reports from live poultry 

dealers indicate they had 23,054 

contracts, but a poultry grower can have 

more than one contract. The 2017 

Census of Agriculture indicated that 

there were 16,524 poultry growers in the 

United States.115 AMS has no record of 

the number of poultry growers that 

qualify as small businesses but expects 

that nearly all of them are small 

businesses. 

Costs of proposed §§ 201.100 and 

201.214 to live poultry dealers would 

primarily consist of the time required to 

gather the information and distribute it 

among the growers. Proposed §§ 201.100 

and 201.214 would also cost poultry 

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 would be required by proposed 

§§ 201.100 and 201.214 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 Packers 

and Stockyards Act. Estimates for the 

value of the time are U.S. Bureau of 

Labor Statistics Occupational 

Employment and Wage Statistics 

estimated released May 2020.116 AMS 

marked up the wages 41.56 percent to 

account for benefits. 

AMS estimated proposed §§ 201.100 

and 201.214 combined would require a 

one-time first year investment of 3,616 

hours of management time at $93.20 per 

hour costing $337,000, 1,890 hours of 

attorney time at $113.80 per hour 

costing $215,000, 1,270 hours of 

administrative time at $39.69 per hour 

costing $50,000, and 843 hours of 

information technology staff time at 

$82.50 per hour costing $70,000. 


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Aggregate total first-year setup costs are 

expected to be $672,000. AMS expects 

proposed § 201.100 would annually 

require an additional aggregate 1,402 

hours of management time at $93.20 per 

hour costing $131,000, 312 hours of 

attorney time at $113.80 per hour 

costing $35,000, 493 hours of 

administrative time at $39.69 per hour 

costing $20,000, and 312 hours of 

information technology staff hours at 

$82.50 per hour costing $26,000 to keep 

and maintain records and produce and 

distribute the disclosures. Total 

aggregate first-year costs to small live 

poultry dealers for proposed § 201.100 

are expected to be $883,000. After the 

first year AMS expects aggregate cost to 

small live poultry dealers to be $211,000 

annually. 

AMS estimated proposed § 201.214 

would require a one-time first year 

aggregate investment of 810 hours of 

management time at $93.20 per hour 

costing $75,000, 594 hours of 

administrative time at $39.69 per hour 

costing $24,000, and 2,268 hours of 

information technology staff time at 

$82.50 per hour costing $187,000. Total 

aggregate first-year setup costs are 

expected to be $286,000. AMS expects 

proposed § 201.214 would annually 

require an aggregate additional 1,295 

hours distributed evenly across 

management, administrative, and 

information technology staff at $93.30, 

$39.60, and $82.50 per hour, 

respectively, costing $60,000, $26,000, 

and $53,000 respectively to keep and 

maintain records and produce and 

distribute the disclosures. Total 

aggregate first-year costs to small live 

poultry dealers for proposed § 201.214 

are expected to be $426,000. After the 

first year, aggregate costs are expected to 

be $139,000 annually. 

The proposed rule would regulate live 

poultry dealers’ contracts. AMS expects 

that costs per live poultry dealer would 

be correlated with number of contracts. 

All expected costs of proposed 

§ 201.100 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. Proposed § 201.214 only 

concerns relative performance or 

tournament contracts. Smaller live 

poultry dealers that do not have 

tournament contracts will not have any 

of the costs associated with proposed 

§ 201.214, and some live poultry dealers 

have few contracts with poultry growers 

and raise poultry in their own facilities. 

Those dealers will have relatively lower 

costs. 

AMS does not regulate poultry 

growers, and, with the exception of 

signing a receipt, the proposed rule has 

no requirements of poultry growers. To 

benefit from the disclosures, they would 

need to review the information 

provided. Growers are not required to 

review the disclosure information in 

proposed §§ 201.100 and 201.214, and 

growers that do not expect a benefit 

from reviewing the disclosure 

information likely would not review it. 

AMS estimates aggregate growers’ 

costs for reviewing disclosures 

associated with proposed §§ 201.100 

and 201.214 combined to be $608,000 in 

the initial year. After poultry growers 

become familiar with the disclosures, 

they would likely require less time to 

review the documents, and AMS 

expects annual aggregate costs to 

growers would be $445,000 for years 

two through five and $440,000 each year 

thereafter. This amounts to $508 per 

grower in the first year. The table below 

summarizes costs of proposed 

§§ 201.100 and 201.214 to small live 

poultry dealers and small poultry 

growers. 

TABLE 5—ESTIMATED COSTS TO SMALL BUSINESSES OF PROPOSED §§ 201.100 AND 201.214 

Type of cost 

Regulated live 

poultry dealers 

(dollars) 

Unregulated 

growers 

(dollars) 

Total 

(dollars) 

Proposed § 201.100 

First-year Cost ...................................................................................................................... 883,000 86,000 970,000 

First-year Cost per Firm ....................................................................................................... 16,000 99 NA 

NPV of Ten-year Cost Discounted at 3 Percent .................................................................. 2,456,000 205,000 2,661,000 

NPV of Ten-year Cost Discounted at 7 Percent .................................................................. 2,113,000 180,000 2,293,000 

Ten-year Cost Annualized at 3 Percent ............................................................................... 288,000 24,000 312,000 

Ten-year Cost Annualized at 7 Percent ............................................................................... 301,000 26,000 326,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ................................................. 5,300 28 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ................................................. 5,600 29 NA 

123 

217 

Proposed § 201.214 

First-year Cost ...................................................................................................................... 426,000 522,000 947,000 

First-year Cost per Firm ....................................................................................................... 8,000 489 NA 

NPV of Ten-year Cost Discounted at 3 Percent .................................................................. 1,467,000 3,732,000 5,199,000 

NPV of Ten-year Cost Discounted at 7 Percent .................................................................. 1,247,000 3,086,000 4,333,000 

Ten-year Cost Annualized at 3 Percent ............................................................................... 172,000 438,000 610,000 

Ten-year Cost Annualized at 7 Percent ............................................................................... 178,000 439,000 617,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ................................................. 3,200 501 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ................................................. 3,300 503 NA 

Proposed §§ 201.100 and 201.214 

First-year Cost ...................................................................................................................... 1,309,000 608,000 1,917,000 

First-year Cost per Firm ....................................................................................................... 24,000 505 NA 

NPV of Ten-year Cost Discounted at 3 Percent .................................................................. 3,923,000 3,937,000 7,861,000 

NPV of Ten-year Cost Discounted at 7 Percent .................................................................. 3,360,000 3,265,000 6,625,000 

Ten-year Cost Annualized at 3 Percent ............................................................................... 460,000 462,000 922,000 

Ten-year Cost Annualized at 7 Percent ............................................................................... 478,000 465,000 943,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ................................................. 8,500 529 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ................................................. 8,900 532 NA 

387 

662 


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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 

proposed § 201.100 and proposed 

§ 201.214 and total first-year 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 firstyear, they will in the following years as 

well. 

Estimated first-year costs per firm are 

less than 1 percent of average net sales 

in the three largest quartiles. Percentage 

of net sales are about 2.2 percent in the 

smallest quartile. However, average first 

year cost per entity in Table 6 is the 

average cost of all of the small 

businesses. Costs for the live poultry 

dealers in smallest quartile will likely 

be less than the average for small 

businesses. 

Live poultry dealers do not report to 

AMS whether any of their contracts are 

tournament style contracts, but 

evaluating the number contracts that 

live poultry dealers listed in their 

annual reports to AMS, few of the live 

poultry dealers in smallest quartile 

contracted with a sufficient number of 

growers to implement tournament 

contracts. It is unlikely that any of the 

live poultry dealers in the smallest 

quartiles had any tournament contracts. 

It is unlikely that several of the smaller 

live poultry dealers in the second 

quartile had any tournament contracts 

either. AMS encourages comments 

concerning whether small live poultry 

dealers make tournament-style contracts 

with growers, and AMS encourages 

comments concerning a minimum 

number of contracts necessary for a live 

poultry dealer to make tournament 

contracts with growers. 

Since proposed § 201.214 only applies 

to tournament contracts, none of the live 

poultry dealers in the smallest quartile 

are likely to incur any costs from 

proposed § 201.214. Their costs are 

likely only costs associated with 

proposed § 201.100, which, as 

percentage of net sales would be 1.6 

percent. Because the smallest live 

poultry dealers have fewer contracts 

than the other small live poultry 

dealers, their costs associated with 

proposed § 201.100 are also likely less 

than average. 

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

§§ 201.100 AND 201.214 

Quartile Average net sales 

(dollars) 

First year 

costs related 

to § 201.100 

as a percent 

of net sales 

(percent) 

First year 

costs related 

to § 201.214 

as a percent 

of net sales 

(percent) 

Total first year 

costs as a 

percent of net 

sales 

(percent) 

0 to 25 percent .......................................................................................... 1,101,680 1.452 0.726 2.178 

25 to 50 percent ........................................................................................ 7,544,954 0.212 0.106 0.318 

50 to 75 percent ........................................................................................ 33,855,515 0.047 0.024 0.071 

75 to 100 percent ...................................................................................... 160,414,027 0.010 0.005 0.015 

AMS also estimated costs of an 

alternative proposal that would exempt 

most small live poultry dealers from the 

requirements of the proposed 

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 

exempt all but 7 of the firms that qualify 

as small businesses by the SBA 

standard. 

AMS estimated the alternative to 

proposed § 201.100 would require a 

one-time first year aggregate investment 

of 634 hours of management time at 

$93.20 per hour costing $59,000, 245 

hours of attorney time at $113.80 per 

hour costing $28,000, 200 hours of 

administrative time at $39.69 per hour 

costing $8,000, and 163 hours of 

information technology staff time at 

$82.50 per hour costing $13,000. 

Aggregate total first-year setup costs are 

expected to be $108,000. AMS expects 

the alternative proposal for § 201.100 

would annually require an additional 

aggregate 283 hours of management time 

at $93.20 per hour costing $26,000, 42 

hours of attorney time at $113.80 per 

hour costing $5,000, 77 hours of 

administrative time at $39.69 per hour 

costing $3,000, and 56 hours of 

information technology staff hours at 

$82.50 per hour costing $5,000 to keep 

and maintain records and produce and 

distribute the disclosures. Aggregate 

total first-year costs to small live poultry 

dealers for proposed § 201.100 are 

expected to be $147,000. After the first 

year AMS expects aggregate costs to 

small live poultry dealers to be $39,000 

annually. 

AMS estimated proposed alternative 

§ 201.214 would require a one-time first 

year aggregate investment of 630 hours 

of management time at $93.20 per hour 

costing $59,000, 462 hours of 

administrative time at $39.69 per hour 

costing $18,000, and 98 hours of 

information technology staff time at 

$82.50 per hour costing $8,000. 

Aggregate total first-year setup costs are 

expected to be $85,000. AMS expects 

proposed alternative § 201.214 would 

annually require an additional aggregate 

98 hours distributed evenly across 

management, administrative, and 

information technology staff at $93.30, 

$39.60, and $82.50 per hour, 

respectively, costing $3,000, $1,300, and 

$2,700 respectively to keep and 

maintain records and produce and 

distribute the disclosures. Aggregate 

total first-year costs to small live poultry 

dealers for proposed alternative 

§ 201.214 are expected to be $92,000. 

After the first year, costs are expected to 

be $7,000 annually. 

The proposed alternative would have 

a relatively small effect on costs to 

poultry 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 proposed §§ 201.100 

and 201.214 to be $34,000 in the initial 

year. AMS expects annual aggregate 

costs to growers would be $63,000 for 

years two through five and $61,000 each 

year thereafter. Table 7 below 

summarizes aggregate costs of proposed 

alternative §§ 201.100 and 201.214 

combined to small live poultry dealers 

and small poultry growers. 


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35020 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

TABLE 7—ESTIMATED COSTS TO SMALL BUSINESSES OF PROPOSED ALTERNATIVE §§ 201.100 AND 201.214 

Type of cost 

Regulated live 

poultry dealers 

(dollars) 

Unregulated 

growers 

(dollars) 

Total 

(dollars) 

Alternative § 201.100 

First-year Cost ...................................................................................................................... 147,000 34,000 181,000 

First Year-Cost Per Firm ...................................................................................................... 21,000 99 NA 

NPV of Ten-year Cost Discounted at 3 Percent .................................................................. 436,000 81,000 518,000 

NPV of Ten-year Cost Discounted at 7 Percent .................................................................. 374,000 71,000 445,000 

Ten-year Cost Annualized at 3 Percent ............................................................................... 51,000 10,000 61,000 

Ten-year Cost Annualized at 7 Percent ............................................................................... 53,000 10,000 63,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ................................................. 7,300 28 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ................................................. 7,600 29 NA 

24 

42 

Alternative § 201.214 

First-year Cost ...................................................................................................................... 92,000 68,000 160,000 

First Year-Cost Per Firm ...................................................................................................... 8,000 99 NA 

NPV of Ten-year Cost Discounted at 3 Percent .................................................................. 143,000 484,000 627,000 

NPV of Ten-year Cost Discounted at 7 Percent .................................................................. 129,000 400,000 529,000 

Ten-year Cost Annualized at 3 Percent ............................................................................... 17,000 57,000 73,000 

Ten-year Cost Annualized at 7 Percent ............................................................................... 18,000 57,000 75,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ................................................. 2,400 164 NA 

Average Ten-Year Cost per Firm Annualized at 7 Percent ................................................. 2,600 164 NA 

31 

53 

Alternative §§ 201.100 and 201.214 

First-year Cost ...................................................................................................................... 239,000 102,000 341,000 

First Year-Cost Per Firm ...................................................................................................... 24,000 295 NA 

NPV of Ten-year Cost Discounted at 3 Percent .................................................................. 579,000 565,000 1,144,000 

NPV of Ten-year Cost Discounted at 7 Percent .................................................................. 503,000 471,000 974,000 

Ten-year Cost Annualized at 3 Percent ............................................................................... 68,000 66,000 134,000 

Ten-year Cost Annualized at 7 Percent ............................................................................... 72,000 67,000 139,000 

Average Ten-Year Cost per Firm Annualized at 3 Percent ................................................. 9,700 191 ........................

Average Ten-Year Cost per Firm Annualized at 7 Percent ................................................. 10,300 194 NA 

55 

95 

Net sales for small live poultry dealers 

that would be required to make 

disclosure under proposed alternative 

§§ 201.100 and 201.214 averaged $159 

million for their fiscal year 2020. 

Expected first-year cost per live poultry 

dealer would be well below 0.1 percent. 

Clearly, exempting live poultry dealers 

that process less than 2 million pounds 

of poultry per week would reduce cost 

to small live poultry dealers, but the 

benefits of the rule would also be less. 

AMS prefers §§ 201.100 and 201.214 as 

it proposed them because it considers 

the information in the disclosures to be 

important for poultry 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 proposed 

§§ 201.100 and 201.214. Proposed 

§ 201.100 makes several exemptions for 

live poultry dealers producing less than 

2 million pounds of poultry per week. 

Many of the smallest live poultry 

dealers that do not participate in 

tournament style contracts would be 

unaffected by proposed § 201.214. 

Although cost would be smaller with 

the alternative, the costs associated with 

proposed §§ 201.100 and 201.214 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. While 

proposed §§ 201.100 and 201.214 would 

have an effect on a substantial number 

(54) of small businesses, the economic 

impact would be significant for only 

few, if any, live poultry dealers. 

Costs to growers would be limited to 

the time required to review and 

acknowledge receipt of the disclosures. 

AMS expects that proposed §§ 201.100 

and 201.214 would have effects on a 

substantial number of growers however, 

the costs would not be significant for 

any of them. Because AMS does not 

regulate poultry growers, AMS does not 

have information regarding the business 

sizes of poultry growers similar to the 

information it has concerning live 

poultry dealers. AMS invites comments 

concerning the sizes of poultry growing 

businesses and whether the costs 

associated with proposed §§ 201.100 

and 201.214 would have a significant 

effect on any of them. Based on the 

above analyses regarding proposed 

§§ 201.100 and 201.214, this proposed 

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.). While confident 

in this assertion, AMS acknowledges 

that individual businesses may have 

relevant data to supplement our 

analysis. We would encourage small 

stakeholders to submit any relevant data 

during the comment period. 

VII. Request for Comments 

AMS invites comments on this 

proposed rule. Comments must be 

submitted through the e-rulemaking 

portal at www.regulations.gov. 

Comments submitted on or before 

August 8, 2022 will be considered. 

Comments should reference Docket No. 

AMS–FTPP–21–0044 and the date and 

page number of this issue of the Federal 

Register. 

List of Subjects in 9 CFR Part 201 

Confidential business information, 

Reporting and recordkeeping 

requirements, Stockyards, Surety bonds, 

Trade practices. 


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For the reasons set forth in the 

preamble, AMS proposes to amend 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. Revise § 201.2 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. 

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. 

Grower variable costs means 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. 

Growout means the process of raising 

and caring for livestock or poultry in 

anticipation of slaughter. 

Growout period means 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. 

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. 

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. 

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 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. 

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 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 


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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, 

a. Revising the heading and paragraph 

(a); 

b. Redesignating paragraphs (b) 

through (e) as paragraphs (h) through 

(k), respectively; 

c. Removing paragraph (f); 

d. Redesignating paragraphs (g) and 

(h) as paragraphs (l) and (m), 

respectively; 

e. Adding new paragraphs (b) through 

(g); 

f. Revising redesignated paragraph (h) 

introductory paragraph; and 

g. Redesignating paragraphs (i)(2) and 

(3) as paragraphs (i)(3) and (4) and 

adding new paragraph (i)(2). 

The revisions and additions to read as 

follows: 

§ 201.100 Disclosures and records to be 

furnished poultry growers and sellers. 

(a) Obligation to furnish information 

and documents. A live poultry dealer 

must provide the documents described 

in this paragraph (a) to a prospective or 

current poultry grower. 

(1) Except as provided in paragraph 

(e) of this section, when a live poultry 

dealer seeks to renew, revise, or replace 

an existing poultry growing 

arrangement, or to establish a new 

poultry growing arrangement that does 

not contemplate modifications to the 

existing housing specifications, the live 

poultry dealer must provide the 

following documents at least seven days 

before the live poultry dealer executes 

the poultry growing arrangement: 

(i) A true, written copy of the 

renewed, revised, replacement, or new 

poultry growing arrangement; and 

(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 poultry growing arrangement 

with a poultry grower or prospective 

poultry grower that will require an 

original capital investment, the live 

poultry dealer must provide the 

following to the poultry grower or 

prospective poultry grower 

simultaneously with the housing 

specifications: 

(i) A copy of the poultry 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, and 

(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 poultry 

grower or prospective poultry grower to 

make an additional capital investment, 

the live poultry dealer must provide the 

following to the poultry grower or 

prospective poultry grower 

simultaneously with the modified 

housing specifications: 

(i) A copy of the poultry 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, and 

(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 

additional 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 web page address; 

(3) The length of the term of the 

poultry 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: 

(i) The minimum number of 

placements on the poultry grower’s farm 

annually under the terms of the poultry 

growing arrangement, and 

(ii) The minimum stocking density for 

each flock to be placed on the poultry 

grower’s farm under the terms of the 

poultry growing arrangement. 

(6) The applicable of the following 

two statements: 

(i) ‘‘This disclosure document 

summarizes certain provisions of your 

poultry growing arrangement and other 

information. You have the right to read 

this disclosure document and all 

accompanying documents carefully. At 

least seven calendar days before the live 

poultry dealer executes the poultry 

growing arrangement, the poultry 

company is required to provide you 

with: (1) this disclosure document, and 

(2) a copy of the poultry growing 

arrangement.’’ OR 

(ii) ‘‘This disclosure document 

summarizes certain provisions of your 

poultry 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 

poultry 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) This statement: ‘‘Even if the 

poultry growing arrangement contains a 

confidentiality provision, by law you 

still retain the right to discuss the terms 

of the poultry 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 poultry growing 

arrangement.’’ and 

(8) The following sentence 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 six years between the live poultry 

dealer and any poultry grower; 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 35023 

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 six years by the live 

poultry dealer and any parent, 

subsidiary, or related entity of the live 

poultry dealer; and 

(3) A statement that describes the live 

poultry dealer’s policies and procedures 

regarding the potential sale of the 

poultry grower’s facility or assignment 

of the poultry growing arrangement to 

another party, including the 

circumstances under which the live 

poultry dealer will offer the successive 

buyer a poultry growing agreement. 

(d) Financial Disclosures. The live 

poultry dealer must include in the Live 

Poultry Dealer Disclosure Document the 

following information: 

(1) A table showing average annual 

gross payments to poultry growers for 

the previous calendar year for all 

complexes owned or operated by the 

live poultry dealer, organized by 

housing specification, and expressing 

average payments on the basis of U.S. 

dollars per farm facility square foot. 

(2) Tables showing average annual 

gross payments to poultry growers at the 

local complex for each of the five 

previous years. The tables should 

express average payments on the basis 

of U.S. dollars per farm facility square 

foot. The tables should be organized by 

year, housing specification tier (lowest 

to highest), and quintile (lowest to 

highest). The step-by-step process for 

calculating table values is: 

(i) Group growers according to the 

housing specification affiliated with 

their poultry growing arrangement; 

(A) Include all growers under contract 

for a complete calendar year and 

growers under flock-to-flock poultry 

growing arrangements during that year, 

and 

(B) Exclude growers whose housing 

specifications changed during the 

calendar year from the calculation for 

that year. 

(ii) Sum all payments to each grower 

during the calendar year to determine 

each grower’s total annual payments; 

(iii) Divide each grower’s total annual 

payments by the square footage of the 

grower’s farm facility to normalize 

annual payments to reflect dollars per 

farm facility square foot; 

(iv) Sort normalized annual payments 

into quintiles (smallest to largest); and 

(v) Sum all normalized annual 

payments within each quintile and 

divide the result by the number of 

growers in the quintile to determine an 

average annual gross payment to poultry 

growers for that quintile. 

(3) If poultry housing specifications 

for poultry growers under contract with 

the complex are modified such that an 

additional capital investment may be 

required, or if the five-year averages 

provided under paragraph (2) do not 

accurately represent projected grower 

gross annual payments under the terms 

of the applicable poultry growing 

arrangement for any reason, the live 

poultry dealer must provide the 

following additional information: 

(i) Tables providing projections of 

average annual gross payments to 

growers under contract with the 

complex with the same housing 

specifications for the term of the poultry 

growing arrangement at five quintile 

levels expressed as dollars per farm 

facility square foot, and 

(ii) An explanation of why the annual 

gross payment averages for the previous 

five years, as provided under (2), do not 

provide an accurate representation of 

projected future payments, including 

the basic assumptions underlying the 

projections provided under (i) of this 

paragraph. 

(4) A summary of information the live 

poultry dealer collects or maintains 

relating to grower variable costs 

inherent in poultry production. 

(5) Current contact information for the 

State university extension service office 

or the county farm advisor’s office that 

can provide relevant information about 

poultry grower costs and poultry farm 

financial management in the poultry 

grower’s geographic area. 

(e) Small Live Poultry Dealer 

Financial Disclosures. 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 the 

requirements in paragraph (a)(1) of this 

section. 

(f) Governance and Certification. 

(1) The live poultry dealer must 

establish, maintain, and enforce a 

governance framework that is 

reasonably designed to— 

(i) audit the accuracy and 

completeness of the disclosures 

required under (a), which shall include 

audits and testing, and which shall 

include reviews of an appropriate 

sampling of Live Poultry Dealer 

Disclosure Documents by the principal 

executive officer or officers; 

(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, shall 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 poultry 

grower’s signature page that contains 

the following statement: ‘‘If the live 

poultry dealer does not deliver this 

disclosure document within the time 

frame 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 poultry 

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. 

Allegations of such violations may be 

reported to the Packers and Stockyards 

Division of USDA’s Agricultural 

Marketing Service.’’ 

(2) The live poultry dealer must 

obtain the poultry grower’s or 

prospective poultry grower’s dated 

signature on the poultry grower’s 

signature page in paragraph (1) as 

evidence of receipt. The live poultry 

dealer must provide a copy of the dated 

signature page to the poultry grower or 

prospective poultry grower and must 

retain a copy of the dated signature page 

in the dealer’s records for three years 

following expiration, termination, or 

non-renewal of the poultry growing 

arrangement. 

(h) Right to discuss the terms of 

poultry growing arrangement offer. A 

live poultry dealer, notwithstanding any 

confidentiality provision in the poultry 

growing arrangement, may not prohibit 

a poultry grower or prospective poultry 

grower from discussing the terms of a 

poultry growing arrangement offer or 

the accompanying Live Poultry Dealer 

Disclosure Document with: 

* * * * * 

(i) * * * 

(2) The following variables controlled 

by the live poultry dealer: 

(i) The minimum number of 

placements of poultry at the poultry 

grower’s facility annually, and 

(ii) The minimum stocking density for 

each flock placed with the poultry 

grower under the poultry growing 

arrangement. 

* * * * * 


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35024 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

■ 4. In subpart N, add § 201.214 to read 

as follows: 

§ 201.214 Transparency in poultry grower 

ranking pay systems. 

(a) Poultry grower ranking system 

records. If a live poultry dealer uses a 

poultry grower ranking system to 

calculate 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 such records for a period 

of five years. 

(b) Placement Disclosure. Within 24 

hours of flock delivery to a poultry 

grower’s facility, a live poultry dealer 

must provide the following information 

to the 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; and 

(7) Adjustments, if any, that the live 

poultry dealer may make to the 

calculation of the grower’s pay based on 

the inputs in (1) through (6) of this 

paragraph. 

(c) Poultry grower ranking system 

settlement documents. A live poultry 

dealer must provide ranking system 

settlement documents that include the 

following information: 

(1) Grouping, ranking, or comparison 

sheets. The live poultry dealer must 

furnish the poultry grower, at the time 

of settlement, a copy of a grouping or 

ranking sheet that shows the grower’s 

precise position in the grouping, 

ranking, or comparison sheet for that 

period. The grouping or ranking sheet 

need not show the names of other 

growers, but must 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. 

(2) Distribution of inputs. The 

distribution of inputs among 

participants must be reported to all 

poultry grower ranking system 

participants. The grouping or ranking 

sheets required in paragraph (1) must 

disclose the following information 

relating to live poultry dealer-controlled 

inputs provided to each grower 

participant: 

(i) The stocking density for each 

placement; 

(ii) The names and all ratios of breeds 

of the poultry delivered to each poultry 

grower’s facility; 

(iii) If the live poultry dealer has 

determined the sex of the birds, all 

ratios of male and female poultry 

delivered to each poultry grower’s 

facility; 

(iv) All breeder facility identifiers; 

(v) The breeder flock age(s); and 

(vi) The number of feed disruptions 

each poultry 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 

Proposed §§ 201.100 and 201.214 Under 

the Preferred Alternative 

Table 1 below provides the details of the 

estimated one-time, first-year costs of 

providing disclosure documents required in 

proposed § 201.100. 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 Packers and 

Stockyards 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 2020. 

Wage estimates are marked up 41.56 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 

proposed § 201.100. 

TABLE 1—EXPECTED FIRST-YEAR DIRECT COSTS ASSOCIATED WITH PROPOSED § 201.100 

Regulatory requirement 

Number of 

hours required 

for each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Adjustment 

(percent) 

Expected cost 

($) 

201.100(b)(1)–(8) ............................... 1 Manager .............. 93 89 ........................ 8,295 

4 Lawyer ................. 114 89 ........................ 40,513 

201.100(c)(1)–(3) ............................... 10 Manager .............. 93 89 ........................ 82,951 

5 Administrative ...... 40 89 ........................ 17,664 

10 Lawyer ................. 114 89 ........................ 101,282 

201.100(d)(1)(2)(i) .............................. 30 Manager .............. 93 1 42 2 90 105,692 

8 Administrative ...... 40 1 42 2 90 12,003 

22 Information Tech 83 1 42 2 90 68,608 

201.100(d)(1)(2)(ii)–(v) ....................... 30 Manager .............. 93 89 3 5 12,443 

8 Administrative ...... 40 89 3 5 1,413 

22 Information Tech 83 89 3 5 8,077 

201.100(d)(1)(2)(vi) ............................ 30 Manager .............. 93 89 4 5 12,443 

8 Administrative ...... 40 89 4 5 1,413 

22 Information Tech 83 89 4 5 8,077 

201.100(d)(3) ..................................... 20 Manager .............. 93 89 5 5 8,295 

5 Administrative ...... 40 89 5 5 883 

15 Information Tech 83 89 5 5 5,507 

201.100(d)(4) ..................................... 6 Manager .............. 93 89 ........................ 49,770 

2 Administrative ...... 40 89 ........................ 7,065 

201.100(d)(5) ..................................... 0.5 Manager .............. 93 89 ........................ 4,148 

0.5 Administrative ...... 40 89 ........................ 1,766 

201.100(f)(1)(2) .................................. 40 Manager .............. 93 89 ........................ 331,803 


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Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 35025 

TABLE 1—EXPECTED FIRST-YEAR DIRECT COSTS ASSOCIATED WITH PROPOSED § 201.100—Continued 

Regulatory requirement 

Number of 

hours required 

for each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Adjustment 

(percent) 

Expected cost 

($) 

20 Lawyer ................. 114 89 ........................ 202,564 

10 Administrative ...... 40 89 ........................ 35,327 

10 Information Tech 83 89 ........................ 73,426 

201.100(g)(1)(2) ................................. 1 Manager .............. 93 89 ........................ 8,295 

1 Administrative ...... 40 89 ........................ 3,533 

201.100(i)(2) ...................................... 1 Manager .............. 93 89 ........................ 8,295 

1 Lawyer ................. 114 89 ........................ 10,128 

Total Cost ................................... ........................ .............................. ........................ ........................ ........................ 1,231,679 

1 201.100(d)(1)(i) exempts live poultry dealers that process less than 2 million pounds of poultry per week. 

2 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. 3Estimates costs for the 5 percent of the growers that require upgrades to poultry housing. 

4Estimates costs for only the 5 percent of growers that that enter contract for the first time. 

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

Table 2 provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in proposed 

§ 201.100. 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 2020. Wage 

estimates are marked up 41.56 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 

proposed § 201.100 on an ongoing basis. 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH PROPOSED § 201.100 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

201.100(A)(a1) ..................................... 0.08 Evenly distributed 

among management, administrative, and information tech.

1 71.80 22,312 2 74.72 99,750 

201.100(A)(a2) ..................................... 0.08 Evenly distributed 

among management, administrative, and information tech.

1 71.80 23,047 3 5 6,895 

201.100(A)(a3) ..................................... 0.08 Evenly distributed 

among management, administrative, and information tech.

1 71.80 23,047 4 5 6,895 

201.100(b)(1)–(8) ................................. 0.5 Manager ................ 93.20 89 ........................ 4,148 

0.5 Administrative ....... 39.69 89 ........................ 1,766 

201.100(c)(1)–(3) .................................. 1 Manager ................ 93.20 89 ........................ 8,295 

1 Administrative ....... 39.69 89 ........................ 3,533 

1 Lawyer .................. 113.80 89 ........................ 10,128 

201.100(d)(1)(2)(i) ................................ 15 Manager ................ 93.20 5 42 6 90 52,846 

3 Administrative ....... 39.69 5 42 6 90 4,501 

6 Information Tech ... 82.50 5 42 6 90 18,711 

201.100(d)(1)(2)(ii)–(v) ......................... 15 Manager ................ 93.20 89 7 5 6,221 

3 Administrative ....... 39.69 89 7 5 530 

6 Information Tech ... 82.50 89 7 5 2,203 

201.100(d)(1)(2)(vi) ............................... 15 Manager ................ 93.20 89 8 5 6,221 

3 Administrative ....... 39.69 89 8 5 530 

6 Information Tech ... 82.50 89 8 5 2,203 

201.100(d)(3) ........................................ 10 Manager ................ 93.20 89 9 5 4,148 

2 Administrative ....... 39.69 89 9 5 353 

4 Information Tech ... 82.50 89 9 5 1,469 

201.100(d)(4) ........................................ 0.25 Manager ................ 93.20 89 ........................ 2,074 

0.25 Administrative ....... 39.69 89 ........................ 883 

201.100(d)(5) ........................................ 0.25 Manager ................ 93.20 89 ........................ 2,074 

0.25 Administrative ....... 39.69 89 ........................ 883 


khammond on DSKJM1Z7X2PROD with PROPOSALS3
35026 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH PROPOSED § 201.100—Continued 

Regulatory requirement 

Number of 

hours 

required for 

each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

201.100(f)(1)(2) .................................... 20 Manager ................ 93.20 89 ........................ 165,902 

5 Lawyer .................. 113.80 89 ........................ 50,641 

3 Administrative ....... 39.69 89 ........................ 10,598 

4 Information Tech ... 82.50 89 ........................ 29,370 

Total Cost ...................................... .................... ............................... ........................ ........................ ........................ 503,771 

1 $71.80 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff 

at $93.20, $39.69, and $82.50 respectively. 2 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-toflock and single year contracts as well as longer term contracts that are expected to expire within a year. 3Estimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

4Estimates costs for only the 5 percent of growers that that enter contract for the first time. 

5 201.100(d)(1)(i) exempts live poultry dealers that process less than 2 million pounds of poultry per week. 

6 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. 7Estimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

8Estimates costs for only the 5 percent of growers that that enter contract for the first time. 

9Estimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

Table 3 below provides the details of the 

estimated one-time, first-year costs of 

providing disclosure documents required in 

proposed § 201.214. 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 2020. Wage estimates are marked up 

41.56 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, one-time costs for setting-up and 

producing the disclosure documents 

associated with proposed § 201.214. 

TABLE 3—ONE TIME FIRST-YEAR COSTS ASSOCIATED WITH PROPOSED § 201.214 

Regulatory requirement 

Number of 

hours per 

LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Expected cost 

($) 

201.214(a) .................................. 2 Manager ........................................................... 93.20 89 16,590

4 Administrative .................................................. 39.69 89 14,131 

2 Information Technology ................................... 82.50 89 14,685 

201.214(b) .................................. 5 Manager ........................................................... 93.20 89 41,475

2 Administrative .................................................. 39.69 89 7,065 

18 Information Technology ................................... 82.50 89 132,167 

201.214(c) .................................. 8 Manager ........................................................... 93.20 89 66,361

5 Administrative .................................................. 39.69 89 17,664 

22 Information Technology ................................... 82.50 89 161,537 

Total Cost ........................... .................... .......................................................................... ........................ .................... 471,675 

Table 3 below provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in proposed 

§ 201.214. 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 2020. Wage estimates 

are marked up 41.56 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 proposed 

§ 201.214 on an ongoing basis. 

TABLE 4—ONGOING EXPECTED COSTS ASSOCIATED WITH PROPOSED § 201.214 

Regulatory 

requirement Hours Profession Number of plants 

Number of 

tournaments 

per plant 

Weeks in a 

year 

Avg. wage 

($) 

Cost 

($) 

201.214(b) 0.1 Evenly distributed among 

management, administrative, and information tech.

228 1.35 52 1 71.80 114,919 


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117This 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. 

118The 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. 

TABLE 4—ONGOING EXPECTED COSTS ASSOCIATED WITH PROPOSED § 201.214—Continued 

Regulatory 

requirement Hours Profession Number of plants 

Number of 

tournaments 

per plant 

Weeks in a 

year 

Avg. wage 

($) 

Cost 

($) 

201.214(c) 0.1 Evenly distributed among 

management, administrative, and information tech.

228 1.35 52 1 71.80 114,919 

Total 

Cost.

.................... .............................................. ........................ ........................ ........................ ........................ 229,838 

1 $71.80 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff 

at $93.20, $39.69, and $82.50 respectively. 

Appendix 2. Technical Overview of 

Estimates of the Economic Benefits of 

Reduction in Profit Uncertainty to 

Contract 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 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 (RRA) function is a 

relative risk aversion function. 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 

poultry 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 the how risk preferences of 

poultry 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).117

The first step is to construct an empirical 

distribution of poultry grower profit or net 

revenue. Without much loss in generality for 

this exercise, broilers and turkey production 

are aggregated together. The market value of 

contracted share of broilers and turkey in 

2020 was $24.5 billion given NASS data on 

their total value of production and the 96.3 

and 69.5 percent shares, respectively, 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 $2.7 billion for broiler 

and turkey 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.118 Grower 

net revenue is assumed to follow a normal 

distribution. A normal distribution of net 

revenue will approximate the distribution in 


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35028 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

119To 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 one might expect, at 0.25 even with crop 

insurance (Cooper 2010; Belasco, Cooper, and 

Smith, 2019). 

120For estimation, G = 10,000 is used to allow for 

a larger l and reduce the potential for machine error 

in rounding. 

cumulative distribution function of net 

revenue in Figure 1 of Maples et al. (2020) 

with a coefficient of variation of revenue of 

0.16.119 Given this estimate of the coefficient 

of variation of net revenue, and the mean net 

revenue of $1.56 billion for broiler and 

turkey 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 poultry growers per 

the 2017 Agricultural Census. The estimated 

value of l is 9.66E–10, 9.66E–07, and 9.37E– 

07 for G=1, 1,000, and 10,000 equal sized 

growers, respectively, with an RAP of 20 

percent.120 A von Neumann-Morgenstern 

expected utility is estimated over N = 1,000 

draws of wj where EU0 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¥λw) + bw 

where b is greater than zero. Let r(w) be the 

risk aversion coefficient under DARA, i.e., 

r(w) is decreasing in w. Hennessy (ibid.) 

shows that r(w) is a function of l and b as 

Per Hennessy (ibid.), we solve for the 

values of l and b to simultaneously satisfy a 

r(w=0) associated with a RAP of 40 percent 

and a r(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 ................................................................................................................................. 9.37259E–06 2.05321E–05 2.0533761e–05 

β ................................................................................................................................. 0 0 3.9580000e–09 

q[w = 0] ...................................................................................................................... 0.20 0.40 0.40 

q[w = w ̄ ] ..................................................................................................................... 0.20 0.40 0.20 

r[w = 0] ...................................................................................................................... 9.37259E–06 2.05321E–05 2.0529804e–05 

r[w = w ̄ ] ..................................................................................................................... 9.37259E–06 2.05321E–05 9.3707108e–06 

References 

Babcock, B.E. Choi, and E. Feinerman, ‘‘Risk 

and Probability Premiums for CARA 

Utility Functions’’, J. Agri. and 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 US 

farmers, Applied Economics 47:27, 

2899–2912. 

Hurley, T., P. Mitchell, and M. Rice. ‘‘Risk 

and the Value of Bt Corn,’’ Amer. J. Agr. 

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. 


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andEU1 is 
Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 35029 

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 

Proposed §§ 201.100 and 201.214 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 

poultry per week were estimated similarly to 

cost for the proposed §§ 201.100 and 201.214. 

AMS subject matter experts provided 

estimates of the average amount of time that 

would be necessary for each live to comply 

with each new requirements in §§ 201.100 

and 201.214 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 aggregate cost for the 

element. Summing the expected costs for 

element provides the total industry cost. 

Table 1 below provides the details of the 

estimated one-time, first-year costs of 

providing disclosure documents required in 

proposed § 201.100. 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 Packers and 

Stockyards 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 2020. 

The wage estimates are marked up 41.56 

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 proposed § 201.100. 

TABLE 1—EXPECTED FIRST-YEAR DIRECT COSTS ASSOCIATED WITH PROPOSED § 201.100 

Regulatory requirement 

Number of 

hours required 

for each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs 1

Adjustment 

(percent) 

Expected cost 

($) 

201.100(b)(1)–(8) ............................... 1 Manager .............. 93 42 ........................ 3,915 

4 Lawyer ................. 114 42 ........................ 19,118 

201.100(c)(1)–(3) ............................... 10 Manager .............. 93 42 ........................ 39,145 

5 Administrative ...... 40 42 ........................ 8,336 

10 Lawyer ................. 114 42 ........................ 47,796 

201.100(d)(1)(2)(i) .............................. 30 Manager .............. 93 42 2 90 105,692 

8 Administrative ...... 40 42 2 90 12,003 

22 Information Tech 83 42 2 90 68,608 

201.100(d)(1)(2)(ii)–(v) ....................... 60 Manager .............. 93 42 3 5 11,744 

16 Administrative ...... 40 42 3 5 1,334 

44 Information Tech 83 42 3 5 7,624 

201.100(d)(3) ..................................... 20 Manager .............. 93 42 4 5 3,915 

5 Administrative ...... 40 42 4 5 417 

15 Information Tech 83 42 4 5 2,599 

201.100(d)(4) ..................................... 6 Manager .............. 93 42 ........................ 23,487 

2 Administrative ...... 40 42 ........................ 3,334 

201.100(d)(5) ..................................... 0.5 Manager .............. 93 42 ........................ 1,957 

0.5 Administrative ...... 40 42 ........................ 834 

201.100(f)(1)(2) .................................. 40 Manager .............. 93 42 ........................ 156,581 

20 Lawyer ................. 114 42 ........................ 95,592 

10 Administrative ...... 40 42 ........................ 16,671 

10 Information Tech 83 42 ........................ 34,650 

201.100(g)(1)(2) ................................. 1 Manager .............. 93 42 ........................ 3,915 

1 Administrative ...... 40 42 ........................ 1,667 

201.100(i)(2) ...................................... 1 Manager .............. 93 42 ........................ 3,915 

1 Lawyer ................. 114 42 ........................ 4,780 

Total cost .................................... ........................ .............................. ........................ ........................ ........................ 679,627 

1Annual reports filed by live poultry dealers indicated 42 processed an average of more than 2 million pounds of poultry per week. 2 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. 3Estimates costs for the 5 percent of the growers that require upgrades to poultry housing and enter into contracts for the first time. 

4Estimates costs for the 5 percent of the growers that require upgrades to poultry housing. 

Table 2 provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in proposed 

§ 201.100. 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 2020. The 

wage estimates are marked up 41.56 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 


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35030 Federal Register / Vol. 87, No. 110 / Wednesday, June 8, 2022 / Proposed Rules 

the disclosure documents associated with 

proposed § 201.100 on an ongoing basis. 

TABLE 2—EXPECTED ONGOING DIRECT COSTS ASSOCIATED WITH PROPOSED § 201.100 

Regulatory 

requirement 

Number of 

hours required 

for each LPD 

Profession 

Expected 

wage 

($) 

Number of 

LPDs/number 

of contracts 

Adjustment 

(percent) 

Expected cost 

($) 

201.100(A) .............

(a1) ........................

0.08 Evenly distributed among management, administrative, and information tech.

1 71.80 22,312 2 74.72 99,750 

201.100(A)(a2) ....... 0.08 Evenly distributed among management, administrative, and information tech.

1 71.80 22,312 3 5 6,675 

201.100(A)(a3) ....... 0.08 Evenly distributed among management, administrative, and information tech.

1 71.80 22,312 4 5 6,675 

201.100(b) ............. 0.5 Manager ........................................... 93.20 42 ........................ 1,957 

(1)–(8) .................... 0.5 Administrative .................................. 39.69 42 ........................ 834 

201.100(c)(1)–(3) ... 1 Manager ........................................... 93.20 42 ........................ 3,915 

1 Administrative .................................. 39.69 42 ........................ 1,667 

1 Lawyer ............................................. 113.80 42 ........................ 4,780 

201.100(d)(1)(2)(i) 15 Manager ........................................... 93.20 42 5 90 52,846 

3 Administrative .................................. 39.69 42 5 90 4,501 

6 Information Tech. ............................. 82.50 42 5 90 18,711 

201.100(d)(1)(2)(ii)– 

(v).

30 Manager ........................................... 93.20 42 6 5 5,872 

6 Administrative .................................. 39.69 42 6 5 500 

12 Information Tech. ............................. 82.50 42 6 5 2,080 

201.100(d)(3) ......... 10 Manager ........................................... 93.20 42 7 5 1,957 

2 Administrative .................................. 39.69 42 7 5 167 

4 Information Tech. ............................. 82.50 42 7 5 693 

201.100(d)(4) ......... 0.25 Manager ........................................... 93.20 42 ........................ 979 

0.25 Administrative .................................. 39.69 42 ........................ 417 

201.100(d)(5) ......... 0.25 Manager ........................................... 93.20 42 ........................ 979 

0.25 Administrative .................................. 39.69 42 ........................ 417 

201.100(f)(1)(2) ...... 20 Manager ........................................... 93.20 42 ........................ 78,291 

5 Lawyer ............................................. 113.80 42 ........................ 23,898 

3 Administrative .................................. 39.69 42 ........................ 5,001 

4 Information Tech. ............................. 82.50 42 ........................ 13,860 

Total Cost ....... ........................ .......................................................... ........................ ........................ ........................ 337,420 

1 $71.80 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff 

at $93.20, $39.69, and $82.50 respectively. 2 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-toflock and single year contracts as well as longer term contracts that are expected to expire within a year. 3Estimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

4Estimates costs for only the 5 percent of growers that that enter contract for the first time. 

5 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. 6Estimates cost for the 5 percent of the growers that require upgrades to poultry housing and enter into contracts for the first time. 

7Estimates cost for the 5 percent of the growers that require upgrades to poultry housing. 

Table 3 below provides the details of the 

estimated one-time, first-year costs of 

providing disclosure documents required in 

proposed § 201.214. 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 2020. The wage estimates are marked up 

41.56 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, one-time costs for setting-up and 

producing the disclosure documents 

associated with proposed § 201.214. 

TABLE 3—ONE TIME FIRST-YEAR COSTS ASSOCIATED WITH PROPOSED § 201.214 

Regulatory requirement Number of 

hours per LPD Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Expected cost 

($) 

201.214(a) ......................................... 2 Manager ........................................... 93.20 42 7,829 

4 Administrative ................................... 39.69 42 6,668 

2 Information Technology .................... 82.50 42 6,930 

5 Manager ........................................... 93.20 42 19,573 

201.214(b) ......................................... 2 Administrative ................................... 39.69 42 3,334 

18 Information Technology .................... 82.50 42 62,371 


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TABLE 3—ONE TIME FIRST-YEAR COSTS ASSOCIATED WITH PROPOSED § 201.214—Continued 

Regulatory requirement Number of 

hours per LPD Profession 

Expected 

wage 

($) 

Number of 

LPDs 

Expected cost 

($) 

8 Manager ........................................... 93.20 42 31,316 

201.214(c) ......................................... 5 Administrative ................................... 39.69 42 8,336 

22 Information Technology .................... 82.50 42 7,829 

Total Cost .................................. ........................ ........................................................... ........................ ........................ 76,231 

Table 4 below provides the details of the 

estimated ongoing costs of providing 

disclosure documents required in proposed 

§ 201.214. 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 2020. The wage 

estimates are marked up 41.56 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 proposed 

§ 201.214 on an ongoing basis. 

TABLE 4—ONGOING EXPECTED COSTS ASSOCIATED WITH PROPOSED § 201.214 

Regulatory requirement Hours Profession Number of 

plants 

Number of 

tournaments 

per plant 

Weeks in a 

year 

Avg. wage 

($) 

Cost 

($) 

201.214(b) ............. 0.1 Evenly distributed among management, 

administrative, and information tech.

108 1.35 52 1 71.80 54,231 

201.214(c) ............. 0.1 Evenly distributed among management, 

administrative, and information tech.

108 1.35 52 1 71.80 54,231 

Total Cost ....... ........................ ............................................................... ........................ ........................ ........................ ........................ 108,463 

1 $71.80 is the average of the average wages for poultry processing managers, administrative professionals, and information technology staff at $93.20, $39.69, 

and $82.50 respectively. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2022–11997 Filed 6–7–22; 8:45 am] 

BILLING CODE 3410–02–P 


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