Regulation of the Poultry Industry Under the Packers and Stockyards Act

GAO studied the poultry industry and the regulation of the industry by the Department of Agriculture (USDA), focusing on: (1) industry structure; (2) differences between regulation of the poultry and the livestock industries; and (3) issues and concerns affecting regulation of the poultry industry.

GAO found that the poultry industry has changed from one of small independent producers into a highly integrated industry in which producers grow poultry under contracts with processors. Poultry consumers have benefited from this integration because of increased production, decreased real prices, and consistent quality. The poultry industry is regulated by USDA, Packers and Stockyards Administration. The Administration regulates the industry by ensuring that contracts between producers and processors are complied with. Regulation of the poultry industry differs from regulation of the livestock industry in that USDA has no authority to issue cease and desist orders in poultry cases. USDA must report violations in poultry cases to the Department of Justice for possible prosecution. Problems facing the poultry industry include: (1) poultry growers not being paid by processors that declare bankruptcy; and (2) the recent outbreak of avian flu, which caused over 10 million birds to be destroyed as of February, 1984. GAO found varying opinions among poultry producers and processors as to whether these problems mandate legislative changes in USDA regulatory authority over the poultry industry.