The U.S. Department of Agriculture said Tuesday it will abandon portions of a sweeping antitrust rule proposed for meat companies if Congress does not provide money for enforcement.
A Congressional committee voted late Monday to strip funding for the measures in a spending bill the full Congress is expected to approve by the end of this week.
The reforms would have changed how poultry companies pay chicken farmers and made it easier for ranchers to sue meat packers over antitrust violations. The USDA proposed the reforms in response to an order in the 2008 farm bill that it beef up its antitrust rules. But the agency went much further than Congress had asked.
USDA spokeswoman Courtney Rowe told The Associated Press that if the bill passes, the USDA will be forced to abandon the reforms.
The antitrust overhaul has been a cornerstone of the Obama administration's efforts to curb the power of the nation's biggest meat companies. It was welcomed by many small farmers who say the changes would give them more bargaining power when selling their animals.
But the meat industry has lobbied heavily against the changes, claiming they would hinder their operations and raise meat prices. Meat industry groups praised Congress for blocking funding for enforcement.
"For more than a year, Congress has expressed its frustration with the ... USDA's failure to stay within the framework of the Farm Bill. This funding measure is a reflection of Congress' bipartisan position," J. Patrick Boyle, president of the American Meat Institute, said in a statement.
The bill is a major defeat for farmer activist groups that have lobbied for years to pass tougher regulations on the nation's biggest meat companies, including Virginia-based pork producer Smithfield Foods Inc. and Brazilian cattle and chicken producer JBS SA, whose U.S. headquarters are in Colorado.
"This is just another example of how corporate influence has eliminated opportunities for independent livestock producers in the United States," said Bill Bullard, chief executive of R-CALF USA, a group that represents small to mid-sized cattle producers.
A key part of the rule would have made it easier for farmers to sue meat companies under a 1921 law called the Packers and Stockyards Act.
Farmers must currently prove that a meat company has harmed competition in the entire meat industry to win a case under the law. The new rule would have lowered that bar, requiring only that farmers prove a company's actions harmed them personally. Meat companies and their lobbyists said the provision would have opened the door to a flood of unwarranted lawsuits.
Congress also barred the USDA from changing the so-called "tournament system" that chicken companies use to pay their farmers. Poultry companies rank chicken farmers against each other based on how efficiently they can raise birds using the feed the companies provide. The companies penalize less efficient farmers by paying them less money.
The USDA rule would have banned that practice by forcing companies like Arkansas-based Tyson Foods Inc. to offer a base price for chickens with incentives for better performers.
The USDA proposed the antitrust rule last June and was preparing to release a final version of the rule within months.
Congress left funding for some parts untouched, and USDA is still moving forward with sections were directly mandated by the 2008 farm bill. Those provisions include a limit on how much money poultry companies can ask farmers to invest in equipment for their farms and require companies to give farmer at least 90 days notice before suspending delivery of chickens.