One of the U.S.’s top antitrust regulators is backing the Biden administration’s efforts to change the way chicken companies pay farmers, a move that could potentially reshape the industry, Bloomberg News reported. Federal Trade Commission Chair Lina Khan praised USDA regulations that would protect poultry growers paid via the controversial “tournament system,” which pits farmers against each other in a zero-sum game for a pool of money. Her statement issued Thursday adds momentum to the government’s efforts to limit companies from using the payment method. She also publicly urged the department to do more. The proposed regulations are “an important first step,” said Khan, who’s a prominent voice on competition issues even as the FTC doesn’t have jurisdiction over farm sales. More rules restricting “deceptive, unfair, and discriminatory contract terms and business practices is needed.” Antitrust in the meat industry has been in focus recently because prices for beef, chicken and pork have been soaring and are a major contributor to the worst U.S. inflation in four decades. Meatpackers have netted record profits while farmers have missed out on winnings. The Justice Department last month made abandonment of the the compensation system a condition for proceeding with the Wayne-Sanderson Farms merger, which combined the country’s third- and sixth-largest chicken producers. Most processors including Tyson Foods Inc. and Pilgrim’s Pride Corp. compensate farmers via the tournament system, which rewards farmers that end up with the biggest birds. That’s even though companies control and own everything from feed to the animals themselves, and farmers only provide housing and labor. Critics say that the tournament system rankings are often opaque, open to abuse, and subject to factors more in control of the processor. The system has come under fire especially over the last decade as more stories of poultry farmers forced into bankruptcy due to method have come into public view. Khan wrote a lengthy article a decade ago detailing abuses of farmers by large chicken processors. In her comments on the proposed USDA rule, she noted many chicken farmers have little choice in processors to work for in their areas, citing 2012 research finding half of U.S. chicken farmers can contract with only one or two poultry processors.
