United States Department of Agriculture

Protecting fair trade practices, financial integrity, and 

competitive markets for livestock, meat, and poultry

Packers and Stockyards Division

Annual Report 2019

Agricultural Marketing Service
Packers and Stockyards Division Annual Report 2019

TABLE OF CONTENTS

Packers and Stockyards Division Overview � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1

Packers and Stockyards Division Snapshot � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 3

Economic State of the Livestock and Poultry Industries � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 4

Business Practices in the Livestock and Poultry Industries � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10

PSD Investigation and Enforcement Activities � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 23

PSD Program Performance and Efficiency � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 35

Appendix A - Data Sources � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 38

Appendix B - Field Staff and Office Locations � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 39

Contacting PSD � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 40
Packers and Stockyards Division Annual Report 2019

3 Packers and Stockyards Division Snapshot

 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

1

 PACKERS AND STOCKYARDS DIVISION OVERVIEW PACKERS AND STOCKYARDS DIVISION OVERVIEW

REGIONAL EXPERTISE

In addition to its geographic area, each office 

maintains expertise in one or more species 

of livestock or poultry. The Eastern Regional

Office focuses on poultry, the Midwestern 

Regional Office on hogs, and the Western 

Regional Office on cattle and sheep. 

In FY 2019, PSD had 117 employees, which 

included 72 office staff and supervisors in 

headquarters and in the regional offices. 

PSD also had resident employees (resident 

agents, auditors, and market inspectors) 

who report to the regional offices and are 

located throughout the country to provide 

core services nationwide. Each regional office 

has agent supervisors who manage teams of 

agents, marketing specialists, and auditors.

The geographically dispersed resident 

employees enable PSD to maintain close 

contact with the entities PSD regulates as well 

as livestock producers and poultry growers 

(see Appendix B, figure 8).

The Packers and Stockyards Division (PSD) is one of four divisions within the U.S. Department of Agriculture 

(USDA), Agricultural Marketing Service (AMS), Fair Trade Practices Program (FTPP). PSD operates under the 

authority of the Packers and Stockyards Act of 1921 (Act) (7 U.S.C. § 181 et seq.), which makes it unlawful for 

packers, live poultry dealers, market agencies selling or buying on commission, dealers, and swine contractors 

to engage in or use any unfair, unjustly discriminatory, or deceptive practice or device. In fiscal year (FY) 2019, 

PSD’s budget was $23.3 million and it had 117 employees as of the end of the fiscal year. PSD’s three regional 

and two headquarters offices are:

• Eastern Regional Office in Atlanta, Georgia

• Midwestern Regional Office in Des Moines, 

 Iowa

• Western Regional Office in Aurora, 

 Colorado

• Enforcement Branch in Washington, D.C.

• Competition Branch in Washington, D.C.

Each Regional Director manages a geographic area� 

Directors supervise a staff of auditors, marketing 

specialists, resident agents, economists, attorneys, and 

administrative support staff who work from the regional 

office or various field locations throughout the region.

Staff members in the regional offices and field locations 

conduct investigations and regulatory activities� These 

include business audits, weighing verifications, and dayto-day industry monitoring� Their work often takes them 

to the regulated entities' business locations� A Central 

Reporting Unit (CRU) located in the Western region 

processes annual reports filed by entities subject to the 

Act�

The Enforcement Branch (EB) provides litigation support 

by reviewing investigations and preparing sanction and 

stipulation recommendations. It also assists and coordinates with the USDA Office of the General Counsel 

(OGC) and the U�S� Department of Justice (DOJ) on investigations, preparing for hearings, negotiating 

settlements, and testifying at hearings� The EB also develops PSD policy; prepares informational materials; 

and issues press releases, notices, and regulations under the Act�

Packers and Stockyards Division Overview

The Competition Branch (CB) identifies, monitors, and seeks to resolve competition and industry 

concentration challenges in the cattle, hog, poultry and lamb industries� The CB also processes and 

summarizes industry data, and provides regulatory impact analyses on proposed rules and regulations�
Packers and Stockyards Division Annual Report 2019

2

 PACKERS AND STOCKYARDS DIVISION OVERVIEW

OVERVIEW OF PSD AUTHORITIES AND RESPONSIBILITIES 

Under the Act, the Secretary of Agriculture (Secretary) regulates specified activities of businesses engaged 

in the marketing of livestock, meat, and poultry. PSD's regulatory oversight includes the following business 

entities:

• Livestock market agencies (entities selling on commission, e�g�, auction markets and ommission

buyers)

• Livestock dealers

• Stockyards

• Packers

• Swine contractors

• Live poultry dealers (those who obtain poultry for slaughter either by purchase or under poultry

growing arrangements)

All market agencies, dealers, and packers (whose annual livestock 

purchases exceed $500,000) must secure bonds or bond equivalents 

to ensure payment to livestock sellers. Market agencies selling 

livestock on commission are required to establish and maintain 

a separate bank account designated as a “custodial account for 

shippers proceeds” and deposit into that account the proceeds from 

the sale of livestock� Regulated buyers (dealers and packers) must 

pay promptly for livestock. Market agencies selling on commission 

must also promptly remit seller proceeds�

PSD uses its authority to investigate alleged violations of the 

Act and regulations� USDA’s OGC represents the Secretary in 

enforcement actions under the Act and regulations� OGC takes 

administrative action when PSD identifies violations of the 

Act� OGC may also refer matters to DOJ for prosecution, when 

warranted�

TRUST PROVISIONS

To protect unpaid cash sellers of 

livestock, the Act makes packers 

subject to trust provisions. 

An unpaid cash seller of livestock 

triggers these provisions by filing a 

written claim with both the packer and 

PSD� 

After receiving a claim, the packer 

must hold in trust livestock inventories 

and receivables, and proceeds from 

meat, meat food products, or livestock 

products until it makes full payment to 

all unpaid cash sellers�

PSD can penalize a packer for failing 

to pay for livestock in violation of the 

Act and can bring an action to prevent 

dissipation of trust assets�

A similar provision applies to live 

poultry dealers� 
Packers and Stockyards Division Annual Report 2019

3 Packers and Stockyards Division Snapshot

 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

PSD benefits America's agriculture and consumers by enforcing provisions for fair trade, prompt 

payment, and competition in the marketing of livestock, meat, and poultry� Below is a snapshot of the 

division in 2019 and its accomplishments in promoting industry compliance with the Act�

$11.5 Million Recoveries

(Custodial Account 

Shortages,

 Bond and Trust Claims, 

Restitution) 

1,972 Regulatory 

Reviews Completed

1,776 Investigations 

Closed in the Field

PSD Budget

 $23.3 Million

117 Employees 84.5% Industry 

Compliance Rate

6,108 Regulated 

Entities
Packers and Stockyards Division Annual Report 2019

4 Economic State of the Livestock and Poultry Industries

 ECONOMIC STATE OF THE LIVESTOCK AND POULTRY INDUSTRIES

Section 415 of the Act (7 U.S.C. § 228d) requires PSD to provide Congress an annual assessment of the cattle 

and hog industries. The first part of this section assesses the general economic state of the industries that 

are regulated by PSD. This includes trends in the number of entities, financial conditions, and market share 

of the four largest packers by type of livestock (market concentration)� The second part examines changing 

business practices of entities in the regulated industries� This includes pricing and procurement methods and 

the volume marketed through market agencies and direct purchases. Finally, this section outlines specific 

concerns about the events and conditions in the industries regulated under the Act�

PSD relies on data from reports that regulated entities are required to file with PSD each year. The annual 

reports for the 2019 calendar-reporting year are not due until April 15, 2020� As a result, most data series 

in this section end with the 2018 reporting year. There are exceptions. These include statistics on entities 

currently bonded and/or registered as recorded in PSD databases, USDA Agricultural Census statistics on 

swine contractors, and statistics on types of procurement methods compiled from data reported to AMS under 

the provisions of the Livestock Mandatory Reporting Act (LMR) (7 U.S.C. § 1635 et seq.). 

The following entities are subject to the Act:

• All packers operating in interstate commerce are subject to the unfair and deceptive practices 

provisions and prompt payment provisions of the Act� Packers that purchase $500,000 or more of 

livestock for slaughter annually are required to be bonded� Bonded packers include entities operating 

federally inspected plants, as well as some entities operating State-inspected plants� Some packers that 

purchase less than $500,000 of livestock voluntarily obtain bonds�

• Live poultry dealers include persons or entities who purchase poultry for slaughter and poultry 

integrators who contract with producers for grower services to raise the integrators' chicks or poults to 

slaughter weight�

• Livestock dealers purchase livestock for resale on their own account or may purchase or sell as the agent 

or representative of another entity�

• Market agencies are engaged in the business of buying or selling livestock in commerce on a commission 

basis� 

• Posted stockyards are physical facilities and are not necessarily separate businesses� Livestock auctions, 

which are market agencies that sell on commission, are usually located at posted stockyards�

• Swine contractors contract with hog producers to care for and raise the contractors’ hogs for slaughter�
Packers and Stockyards Division Annual Report 2019

5

 ECONOMIC STATE OF THE LIVESTOCK AND POULTRY INDUSTRIES

Table 1 lists the number of regulated entities subject to the Act as of the end of the FY 2019.1 There were 319 

bonded packers, 90 live poultry dealers, 4,495 registered livestock dealers and market agencies buying on 

commission, and 1,204 market agencies selling on commission� The number of bonded packers increased to 

its highest level in the past decade. The number of market agencies selling on commission declined from 2018, 

as did the number of livestock dealers and market agencies buying on commission, but firm totals have been 

relatively stable for the past decade� The total number of livestock dealers and market agencies buying on 

commission includes packer buyers, whose bond coverage is provided by their employing packers�

The number of live poultry dealers has fluctuated throughout the past decade. In 2010 and 2011, several live 

poultry dealers faced bankruptcy as a result of challenging economic conditions and high feed prices� Starting 

in 2012, with the economic recovery as well as a more favorable production environment, there was some 

expansion in the industry. The total number of poultry firms has been declining in recent years as some smaller 

companies exited the industry and others were acquired by larger operations� The pace of consolidation has 

picked up in recent years, with the number of live poultry dealers declining from 99 to 90�

1 Data sources for all tables and figures are listed in Appendix A.

Year Bonded 

Packers

Livestock Dealers, 

Market Agencies 

Buying On 

Commission and 

Packer Buyers

Market Agencies 

Selling on 

Commission

Live Poultry 

Dealers

2010 233 4,468 1,205 110

2011 258 4,572 1,220 98

2012 295 4,619 1,234 112

2013 297 4,639 1,216 110

2014 295 4,650 1,202 107

2015 303 4,607 1,224 105

2016 294 4,660 1,221 101

2017 304 4,634 1,223 99

2018 312 4,582 1,236 94

2019 319 4,495 1,204 90

Table 1. Number of Bonded Packers, Livestock Dealers, Market Agencies, 

and Live Poultry Dealers Reporting to PSD, 2010–2019

There were 575 swine contractors as of 2017 (Table 2)� From 2012 to 2017, the total number of hog farms 

increased from 55,882 to 64,781, compared to a decline of about 25 percent between 2007 and 2012. The 

number of contractors and contract growers also increased from 2012 to 2017. When slaughter hogs are grown 

under contract, swine contractors typically own the hogs and sell the finished hogs to pork packers. 

PSD = Packers and Stockyards Division
Packers and Stockyards Division Annual Report 2019

6

 ECONOMIC STATE OF THE LIVESTOCK AND POULTRY INDUSTRIES

Figure 1. Value of Livestock Purchased by Packers, Dealers, and Market Agencies Buying on 

Commission, and Value of Livestock Sold Through Market Agencies Selling on Commission,

2009–2018

Grower / Producer Type 2007 2012 2017

Independent Grower 65,067 47,336 55,739

Contractor or Integrator 737 515 575

Contract (contract grower) 8,995 8,031 8,557

Total 74,789 55,882 64,871

Table 2. Number of Farms by Swine Grower / Producer Type

The value of livestock purchases for packers reporting to PSD was $61.5 billion in 2018, down from $62.8 

in 2017 (Figure 1)� The dollar volume for livestock sold on commission follows a similar trend, as does the 

value of livestock for entities operating as dealers or commission buyers, decreasing to $30�5 and $32�0 

billion, respectively� Fed cattle prices have continued to decline from the historical high of over $170 per 

hundredweight in late 2014� Hog prices have also fallen sharply from the record levels reached in 2014� 

Swine contractors typically provide feed and medication to contract growers who own the growing facilities 

and provide growing services� PSD regulates the business practices of swine contractors, but swine contractors 

are not required to register with PSD or maintain bonds� 

15

25

35

45

55

65

75

85

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Billions ($)

Commission Sales Value of Livestock Packer Purchases Dealer and Commission Purchase Total Value
Packers and Stockyards Division Annual Report 2019

3 Packers and Stockyards Division Snapshot

 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

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 ECONOMIC STATE OF THE LIVESTOCK AND POULTRY INDUSTRIES

Year Cattle Hogs Sheep and 

Lambs Broilers Turkeys

2009 32.1 113.2 2.0 46.4 6.9

2010 33.0 110.1 1.9 48.4 7.2

2011 33.8 108.9 1.8 49.0 7.1

2012 33.5 110.1 2.1 49.4 7.5

2013 31.8 113.3 2.7 52.1 7.4

2014 30.0 122.3 2.3 50.1 7.2

2015 28.1 113.7 2.1 52.2 6.8

2016 29.3 116.3 2.0 54.1 7.3

2017 31.3 120.7 2.0 54.1 7.6

2018 32.0 122.8 2.3 55.7 7.5

Table 3. Annual Volume of Livestock Purchased for Slaughter by Packers

and Poultry Processed by Live Poultry Dealers Reporting to PSD, 2009–2018

(Million Head) (Billion Pounds)

PSD requires reporting packers to report the number of head slaughtered annually� The number of cattle 

slaughtered by packers reporting to PSD has been increasing steadily in recent years, from 28.1 million head 

in 2015 to 32 million in 2018 (Table 3). Total cattle includes fed steers and fed heifers, cows, and bulls, but 

excludes calves� 

The number of hogs slaughtered by packers reporting to PSD in 2018 is the highest in the past decade at 122.8 

million head� 

Sheep and lamb slaughter has been close to 2 million head in most years since 2009, except for 2013, when 

slaughter was 2.7 million head, a 28-percent increase from the prior year. In 2018, the number of sheep and 

lambs slaughtered by packers reporting to PSD was 2�3 million head, slightly higher than the prior year�

Live poultry dealers reporting to PSD processed an estimated 55�7 billion pounds of chicken, the highest level 

reported in the past decade. Turkey production reported to PSD declined to 7.5 billion pounds in 2018, from 

7.6 billion in 2017.

PSD = Packers and Stockyards Division
Packers and Stockyards Division Annual Report 2019

8

 ECONOMIC STATE OF THE LIVESTOCK AND POULTRY INDUSTRIES

Year Cattle and Calves Hogs Sheep and Lambs Poultry

2009 133 134 54 NA

2010 135 129 59 NA

2011 147 136 70 NA

2012 168 157 81 NA

2013 166 143 79 NA

2014 163 125 72 230

2015 161 138 81 240

2016 150 141 73 220

2017 150 145 70 224

2018 151 144 65 223

Table 4. Number of Slaughter Plants Operated by Packers and 

Live Poultry Dealers Reporting to PSD, 2009–2018

There were only minor changes to the number of hog and cattle plants from 2017 to 2018, and the total 

counts of both types of operations are lower than in 2012� The number of plants slaughtering sheep and 

lambs increased significantly from 2009 to 2015, but has decreased to 65 in 2018. Many of these are small 

multispecies plants that slaughter only a few sheep and lambs (Table 4)� Poultry plant counts for facilities 

that process broilers, turkeys, duck, and other fowl are only available for the most recent years, and fluctuate 

between 220 and 240� 

PSD = Packers and Stockyards Division NA = Not Available
Packers and Stockyards Division Annual Report 2019

3 Packers and Stockyards Division Snapshot

 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

9

 ECONOMIC STATE OF THE LIVESTOCK AND POULTRY INDUSTRIES

Year

Total Value 

Purchases 

(Total $ Value)

 %

Steers & 

Heifers 

(Total Head)

 %

Cows & 

Bulls 

(Total Head) 

%

Hogs

(Total Head)

 %

Sheep & 

Lambs 

(Total Head)

 %

Broilers 

(Total Lbs.)

 %

Turkeys 

(Total Lbs.)

 %

2009 71 86 55 66 68 53 58

2010 67 85 53 65 65 51 56

2011 67 85 52 64 67 52 55

2012 68 85 57 64 62 51 53

2013 67 85 60 64 59 54 53

2014 67 83 57 62 55 51 58

2015 68 85 58 66 56 51 57

2016 67 84 58 66 59 50 57

2017 67 83 55 66 56 51 53

2018 68 85 52 70 62 54 55

In Table 5, industry concentration data on Total Value Purchases are the total dollar value of livestock (cattle, 

hogs, sheep and lambs) purchases reported to PSD on packer annual reports filed with PSD. Data on total head 

of steers and heifers, cows and bulls, hogs, and sheep and lambs are from federally inspected slaughter plants� 

Data on broiler and turkey slaughter are total slaughter reported on live poultry dealer annual reports filed with 

PSD�

The four largest packers’ share of industry expenditures on livestock for slaughter has ranged from 67 to 71 

percent for the past decade (Table 5)� The four largest packers that slaughter steers and heifers accounted for 

85 percent of total steer and heifer slaughter in 2018, an increase from the previous year. Concentration in steer 

and heifer purchases ranged from 83 to 86 percent in the past decade. 

Cow and bull slaughter has been consistently less concentrated than fed cattle slaughter. The four-firm 

concentration ratio was 52 percent in 2018 down from its highest level of 60 percent in 2013. 

The four-firm concentration ratio for hog slaughter increased to 70 percent in 2018, but was in the low to mid60’s range in most years.

Due to the small total slaughter volume for sheep and lambs, moderate volume adjustments by any of the 

largest four packers can result in relatively large changes in market shares. The four-firm concentration ratio 

in the sheep and lamb market was between 62 and 68 percent from 2009 through 2012. Since 2013 it has 

been below 60 percent, until it increased to 62 percent in 2018. The market shares and other concentration 

measurements likely overstate concentration in the lamb market because non-traditional markets account for as 

much as one-third of the lambs slaughtered in the United States and are not included in the totals�

Concentration in broiler slaughter has ranged between 50 and 54 percent in the past decade� The share of 

production accounted for by the four largest turkey slaughter firms has been between 53 and 58 percent over 

the last 10 years�

Table 5. Annual Four-Firm Concentration Ratios Among Meat Packing and 

Poultry Processing - Federally Inspected Plants, 2009–2018
Packers and Stockyards Division Annual Report 2019

10

 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

Procurement and Pricing Methods

The pricing method that sellers and purchasers agree to use for a transaction is a fundamental characteristic of 

any market transaction. For livestock, pricing methods are most often divided into two categories: live-weight 

and carcass pricing methods� 

In live-weight purchasing of livestock, the final payment is based on the weight of the live animal. 

Transactions that use some variation of live-weight purchasing are usually on an “as-is” basis with a single 

price per pound for all animals in the entire transaction. The price may be fixed by negotiation in advance or 

established by formula from prices reported by USDA, AMS or a market price reporting service when the 

animals are delivered or slaughtered. In some instances, provisions may be made for paying different prices 

for animals that differ significantly from other animals in the transaction (e.g., animals that are much smaller 

than the average for the transaction may receive a different price).

In a carcass-based purchase, the final payment is based on each animal’s hot carcass weight, which is the 

weight of the carcass after the animal has been slaughtered and eviscerated� Carcass-weight transactions can 

involve a single price per pound for all of the carcasses in a lot� They can also involve schedules of premiums 

or discounts based on the quality of the carcasses� These may be referred to as "carcass-merit" transactions� 

The price of carcasses can also be determined by other features, such as time of delivery and number of 

animals in the transaction. The price before premiums or discounts is referred to as the base price. One benefit 

of carcass-based pricing is the ability to convey market signals to livestock producers through premiums and 

discounts. The proportion of cattle purchased on a carcass basis has ranged from 59 percent to 66 percent of 

total purchases, while the proportion of calves purchased on a carcass-weight basis is much lower and varies 

widely from 14 percent to 44 percent (Table 6).

Carcass-based purchases have become the predominant method to procure hogs for slaughter and have 

comprised between 76 and 83 percent of the total over the last decade. The proportion of sheep and lambs 

purchased on a carcass basis has ranged from 26 to 40 percent.

Year Cattle 

%

Calves

 %

Hogs 

%

Sheep and Lambs 

%

2009 61.8 27.5 76.5 30.6

2010 59.1 36.2 77.5 31.6

2011 59.2 44.0 76.0 40.8

2012 60.6 28.9 76.4 36.2

2013 63.9 35.7 83.1 27.5

2014 62.9 38.7 76.9 26.5

2015 63.1 42.4 82.1 29.2

2016 66.1 41.3 82.3 30.4

2017 65.8 14.9 81.5 26.3

2018 61.0 21.0 83.4 28.9

Table 6. Percentage of Livestock Purchases on a Carcass-Weight Basis

Packers Reporting to PSD, 2009–2018

Business Practices in the Livestock and Poultry Industries

PSD = Packers and Stockyards Division
Packers and Stockyards Division Annual Report 2019

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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

The number of cattle sold through livestock auctions decreased from 35 million head in 2017 to about 34 

million head in 2018 (Table 7). Stockers (heifers and/or steers that are being raised on pasture or other forage 

for sale later) and feeders (weaned calves that have been raised to a certain weight and then sent to feedlots to 

be fattened) make up the majority of cattle sold. Breeding stock, such as replacement heifers, young cows, and 

bulls, also tend to sell through livestock auctions. Livestock auctions also sell a significant number of slaughter 

cows and bulls (beef or dairy cows and bulls that are no longer needed for breeding or milk production)�

The volume of hogs marketed by market agencies selling hogs on commission from 2009 to 2018 has been 

between 7 and 9 million head in most years� The highest level (of 9 million head) occurred in 2009; volume 

has totaled less than 8 million since 2012 (Table 7). 

The volume of sheep and lambs sold through market agencies selling on commission has fluctuated slightly 

over the past 10 years, but remained close to 3 million head in most years (Table 7)� 

Year Cattle Hogs Sheep and Lambs 

2009 33,214 9,047 2,883

2010 35,623 8,471 2,974

2011 34,956 8,919 3,046

2012 33,683 8,119 2,857

2013 33,690 7,319 3,162

2014 33,426 7,185 3,079

2015 31,650 7,453 3,015

2016 32,970 7,662 3,416

2017 35,065 7,744 3,293

2018 34,425 7,305 3,425

Table 7. Volume of Livestock Marketed Through Market Agencies 

Selling on Commission Reporting to PSD, 2009–2018

(Thousand Head)

PSD = Packers and Stockyards Division
Packers and Stockyards Division Annual Report 2019

12

 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

Packers use multiple direct exchange procurement methods to obtain livestock for slaughter� The methods 

commonly fall into two categories: (1) “committed procurement” arrangements that commit the livestock to 

a particular packer more than 14 days prior to delivery, and (2) cash or “spot” sales for immediate delivery or 

delivery within 14 days �

Committed procurement usually uses some form of formula pricing� In cash sales, the prices generally are 

negotiated, although the transaction may include grids to establish premiums and discounts�

Important components of committed 

procurement are “packer fed” livestock, 

“forward contracts,” and “marketing 

agreements.” PSD defines “packer fed” livestock 

as all livestock obtained for slaughter that a 

packer, a subsidiary of the packer, the packer’s 

parent firm, or a subsidiary of the packer’s parent

firm owns, in whole or part, for more than 14 

days before the packer slaughters the livestock�

PSD considers “forward contracts” to be 

agreements between packers and sellers for 

deliveries more than 14 days in the future of 

specific lots or quantities of livestock. The price 

of the livestock in a forward contract can be set 

at the time of the contract or determined upon 

delivery based upon an agreed-pricing arrangement�

The term “marketing agreements” includes a variety of arrangements that establish an ongoing relationship for 

trading multiple lots of livestock rather than negotiating single lots� In these arrangements, the seller agrees to 

deliver livestock to the packer at a future date, with the price generally determined by some type of formula 

pricing mechanism� The price is often based on the reported cash market or meat price at the time of delivery, 

with premiums or discounts determined by evaluation of carcass characteristics�

AMS publishes prices and volumes of livestock purchased under alternative pricing methods as reported under 

the provisions of the Mandatory Price Reporting Act (https://mpr.datamart.ams.usda.gov/). Individual packers 

use a variety of pricing and procurement methods, ranging from packers that rely on production and marketing 

agreements to packers that rely primarily on the open market� 

In 2019, formula pricing represented almost 65 percent of total fed cattle procurement, compared to about 45 

percent in 2010 (Figure 2)� Forward contracting increased to over 11 percent in 2019, but has been declining 

as a share of the total since 2015� Negotiated pricing, including negotiated grid and cash or spot market 

transactions, has also been declining to about 24 percent of total fed cattle procured (not including packerowned cattle) in 2019, from over 45 percent in 2009�
Packers and Stockyards Division Annual Report 2019

3 Packers and Stockyards Division Snapshot

 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

13

 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

Figure 2. Fed Cattle Procurement by Purchase Type, 2010–2019

Formulas have been the dominant form of pricing for market hogs. For all pork packers reporting to AMS in 

2019, almost 60 percent of hog purchases were based on formula pricing (Figure 3). Pork packers obtained 

about 1.8 percent of their hogs through negotiated purchases in 2019, compared to about 5 percent in 2010. 

Procurement based on negotiated pricing has been under 3 percent since 2014� Packer-owned hogs accounted 

for over 38 percent of hog slaughter reported to AMS in 2019.

0

10

20

30

40

50

60

70

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Percent of Total

Formula Forward Contract Negotiated Grid Cash
Packers and Stockyards Division Annual Report 2019

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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

With the decline in the volume of negotiated spot market hogs, both production and slaughter sectors 

increasingly question whether the negotiated live price fully reflects the value of fed hogs sold for slaughter. 

Consequently, the industry began migrating from formulas based on negotiated live or carcass prices to other 

publicly reported prices. A popular replacement price is the pork carcass cutout price reported by AMS.

In some respects, the market for slaughter lambs is similar to markets for cattle and hogs, but in others it 

is considerably different. Lambs tend to be marketed in one of two channels. In the traditional market for 

slaughter lambs, the lambs are fed in feedlots and marketed to packers� It is this traditional market that supplies 

most of the lamb to supermarkets and traditional stores�

Lamb packers use similar methods to purchase lambs as beef and pork packers� The methods include spot 

markets, marketing agreements, forward contracts, and packer feeding� In the traditional lamb market in 2019, 

packers purchased almost 24 percent of their lambs under negotiated prices� They purchased about 59 percent 

with marketing agreements based on formula pricing, and packers fed about 17 percent of the lambs for 

slaughter (Figure 4)�

The non-traditional market is much different. It is characterized by small butchers and meat shops that process 

lambs and sell directly to consumers� Consumers can often choose the lamb before slaughter, and consumers 

may have the choice of purchasing the lamb and processing it themselves�

Figure 3. Hog Procurement by Purchase Type, 2010–2019

0

10

20

30

40

50

60

70

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Percent of Total

Producer Sold Formula Packer-Owned and Packer Sold Producer Sold Negotiated
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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

One aspect of the non-traditional market is that lambs are 

not typically processed in federally inspected slaughter 

facilities� Also, the packers that process the lambs are far 

too small to meet any of the mandatory price reporting 

requirements� Consequently, there are very limited data 

available on the number of lambs in the non-traditional 

market� There are also limited data on the prices paid 

for the lambs or the amount of meat produced� Some 

estimates suggest that the non-traditional market for 

lambs may account for as much as one-third of the lambs 

produced in the United States�

There are also small butchers and meat shops that process 

cattle and hogs to sell directly to end consumers, and there 

are consumers that purchase cattle or hogs and have them 

butchered� However, unlike in the lamb market, these 

buyers purchase a very small portion of the cattle and 

hogs produced in the United States�

Figure 4. Lamb Procurement by Purchase Type, 2010–2019

0

10

20

30

40

50

60

70

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Percent of Total

Formula Packer-Owned Negotiated
Packers and Stockyards Division Annual Report 2019

16

 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

CHANGES IN OPERATION AND ORGANIZATION

PSD uses information about business practices at the packing plant level to identify industry trends� Such 

information includes the intensity of plant operations (e�g� one or two shifts per day), the number of plants 

in business at any given time, and the ownership of those plants. Plant closures or re-openings can affect 

competition by shifting supply and demand patterns� The Federal Trade Commission (FTC) and the DOJ 

Antitrust Division evaluate all livestock, packer, and live poulty dealer mergers and acquisitions, under the 

Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Public Law 94-435).

PSD monitors packers’ mergers and acquisitions to determine whether a change in business practices might 

reduce competition� Other changes in operations and industry conditions including procurement methods, 

international trade, and regulatory changes may also affect competition as entities attempt to adjust to changing 

conditions. PSD monitors these industry events for any competitive effects.

Cattle, Sheep, and Hogs

Tyson Foods announced in November 2018 the completion of its $2.16 billion acquisition of Keystone 

Foods from Marfrig Global Foods� This acquisition included plants and innovation centers in China, South 

and it also included an innovation center 

and 6 processing plants in the United 

States with locations in Alabama, Georgia, 

Kentucky, North Carolina, Pennsylvania, and 

Wisconsin. Keystone is a leading supplier of 

chicken, beef, fish and pork to the growing 

global foodservice industry and adds to 

Tyson’s international operations� 

In January 2019, Sam Kane Beef 

Processors LLC filed for Chapter 11 

bankruptcy protection, having been under 

court-ordered receivership since October 

2018. Before the company’s financial 

problems, it processed about 270,000 head of 

cattle annually and employed over 700 people� In February 2019, STX Beef Co�, a subsidiary of JDH Capital 

LLC, acquired the company in a court-approved bankruptcy auction� STX Beef reopened the plant in April 

2019 and it has gradually resumed packing operations� 

Korea, Malaysia, Thailand, and Australia, 

In March 2019, Prestage Farms opened a new hog slaughter plant in Eagle Grove, Iowa� The plant processes 

about 5,400 hogs per day� Prestage Farms is the largest family-owned pork producer in the United States�

In April 2019, Iowa Food Group suspended operations at a Cherokee, Iowa, plant purchased late in 2018. In 

July 2019, Lopez Foods bought the plant and anticipates reopening it in 2020 after renovations are complete�

Also in April 2019, Central Valley Meat Holding Company agreed to acquire Harris Ranch Beef Holding 

Company, in Selma, California. Central Valley Meat has plants in Selma, Hanford, and Vernon, California, 

and processes up to 1,400 head per day, while Harris Ranch Beef processes about 1,200 head. The two firms 

will operate independently under the combined ownership of Central Valley Meat Holding Company. 
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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

In May 2019, Perdue Farms acquired Panorama Meats in Modesto, California, the largest U�S� producer of 

grass-fed certified organic beef. This acquisition will add to the Perdue Premium Meat Company business, 

which includes Niman Ranch, Coleman Natural, Prairie Grove, and Sioux-Preme Packing� Panorama’s 

operation comprises almost 50 independent family farms in 7 States that raise cattle on USDA Certified 

Organic grasslands� 

In June 2019, National Beef Packing Company, LLC, completed its purchase of Iowa Premium, LLC� 

National Beef is the fourth largest beef packing company in the United States and is majority-owned by 

Marfrig Global Foods� Iowa Premium processes about 1,100 head of Black Angus cattle daily in its plant in 

Tama, Iowa�

In October 2019, The Maschoffs LLC completed the purchase of facilities from Smithfield Foods Inc. in 

Albin, Wyoming. The operation consists of sow farms, nursery, finishing space, and a feedmill, and brings the 

total sow herd at Maschoffs to almost 200,000.

Poultry

In February 2019, Sanderson Farms began operations 

in its new poultry complex in Tyler, Texas� The company 

expects the complex, which includes a processing plant, 

feed mill, and hatchery, to reach full production early in 

2020� 

In April 2019, Mountaire Farms opened a processing 

plant in Siler City, North Carolina� It anticipates it will 

employ over 1,200 people and have potential capacity 

to process up to 1�4 million chickens per week when 

the plant is operating at full capacity. Mountaire Farms 

purchased the plant from Townsends in 2016.

In April 2019, the new House of Raeford poultry plant 

in Teachey, North Carolina opened� The previous facility

was torn down and rebuilt after a fire in 2017. The plant 

is processing about 700,000 chickens per week; volume 

is expected to increase when the plant is fully operational in 2020� 

In June, Hain Celestial Group Inc� sold Hain Pure Protein Corp to Aterian Investment Partners III LP, 

a private equity company� This sale included its chicken production businesses, Empire Kosher operating in 

Mifflintown, Pennsylvania, and Freebird Chicken in Fredericksburg, Pennsylvania� In February, the company 

sold its turkey production operations, Plainville Farms in New Oxford, Pennsylvania, to Plainville Brands 

LLC, a Delaware limited liability company�

The Simply Essentials plant in Charles City, Iowa closed in August 2019� Simply Essentials purchased the 

plant in June 2016 out of bankruptcy court after the facility had been operating as Cedar River Poultry.

Simply Essentials employed over 500 people at the plant and associated field operations.

In September 2019, Costco opened a new chicken processing complex in Fremont, Nebraska, including a 

hatchery, feed mill, and processing plant� Lincoln Premium Poultry operates the facility on behalf of Costco 

and will potentially process 100,000 chickens per day and employ 1,000 people�
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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

In September 2019, the Jamaica Broiler Group, headquartered in St� Catherine, Jamaica, acquired the broiler 

operations of Gentry’s Poultry Company, Ward, South Carolina. Gentry’s Poultry Company is a small, 

family-owned and operated poultry processing company� 

Simmons Foods began operations in September 2019 in a new poultry processing plant located in Gentry, 

Arkansas. The company estimates it will eventually employ over 2,000 people, including 800 who will 

transition from an existing plant in Decatur, Arkansas� The Decatur plant will cease operations in 2020�

In September 2019, Cargill announced it would end its fresh and frozen turkey operations in Waco, Texas, in 

November 2019. The company, which processed about 27,000 turkeys per day at the Waco plant, has other 

turkey operations in Virginia, Minnesota, Arkansas, Nebraska, and Missouri. Cargill offered contract growers 

in Waco a buyout option for the remaining term of their contracts.

In October 2019, Mountaire Farms opened its new $60 million feed mill in Scotland County, North Carolina. 

The feed mill’s location will allow the company to deliver feed faster to growers closer to Mountaire’s Lumber 

Bridge, North Carolina, processing plant, while the company’s other feed mill in Candor, North Carolina, will 

serve growers who raise poultry for the new processing plant in Siler City, North Carolina�

Some turkey processors were dealing with challenging market conditions in 2018 which has been attributed 

to an oversupply of turkey. In November 2018, Zacky Farms, which had been operating the family-owned 

company for 45 years, filed for bankruptcy, citing difficult industry conditions. The company closed its 

operations in January 2019, including a turkey slaughter plant in Fresno, California, and in October 2019, 

Foster Farms of California won the bidding auction for the assets of Zacky Farms, consisting of 19 turkey 

farms�

CHANGING BUSINESS PRACTICES

In October 2019, JBS USA stated it was eliminating the use of Ractopamine from its supply chain to 

maximize export opportunities� Tyson Fresh Meats also announced in October it would prohibit the use of 

Ractopamine in market hogs it purchases beginning in February 2020� Ractopamine is a feed supplement that 

promotes lean meat in hogs, and although the Federal Drug Administration (FDA) approved its use, China, 

Russia, and the European Union have banned the importing of pork from hogs treated with the drug�

INDUSTRY CONDITIONS AND EVENTS

2018 Farm Bill

On December 20, 2018, President Donald Trump signed the 

2018 Farm Bill into law, which will remain in effect through 

2023. The Farm Bill appropriates $867 billion over 10 years 

and includes provisions for funding agricultural subsidies, crop 

insurance and research efforts.

Livestock Dealer Statutory Trust

The 2018 Farm Bill required the USDA to conduct a study of 

the feasibility of establishing a livestock dealer statutory trust� 

PSD conducted the study to assist Congress in assessing the 

feasibility of establishing a livestock dealer statutory trust for 

the financial protection of livestock sellers. PSD completed the 

study in December 2019�
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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

Rulemaking

On December 20, 2016, the USDA published proposed rules that would have established conduct and criteria 

to determine unfair or unjustly discriminatory practices, and undue, or unreasonable preferences. Concurrently, 

the USDA issued an Interim Final Rule (IFR) stating that when enforcing sections 202(a) or (b) of the Act, the 

USDA did not need to find that a challenged conduct or action adversely affects competition.

On October 18, 2017, USDA withdrew the IFR and issued a notice of no further action on the proposed 

rules� USDA cited its concern that unintended consequences of the rules could be detrimental to agricultural 

markets. However, the 2008 Farm Bill continues to require the Secretary to establish criteria to consider when 

determining whether an undue or unreasonable preference or advantage has occurred in violation of section 

202(b) of the Act. The USDA intends to meet this requirement by proposing and finalizing a rule during Fiscal 

Year 2020�

Cattle, Sheep, and Hogs

Price-Fixing Litigation

In April 2019, Ranchers Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA) 

filed a lawsuit against Tyson Foods, JBS S.A., National Beef Packing Co., and Cargill, in U.S. District Court, 

Northern District of Illinois� The complaint alleges the four largest beef packing companies in the United 

States conspired to depress prices for fed cattle to the detriment of ranchers and cattle futures traders� R-CALF 

asserted the price depreciation had been going on since at least January 1, 2015� 

Following the R-CALF USA lawsuit, two cattle producers, Douglas Wright and Sam Mendenhall, filed a 

consumer class action lawsuit in April 2019 against the four largest packing companies in U�S� District Court, 

District of Minnesota. In the suit, the producers allege the packing companies conspired to suppress the price 

of fed cattle they purchased in the United States. The suit also alleges that the packers’ coordinated efforts to 

reduce slaughter volumes and limit purchases of fed cattle in the cash cattle market led to a collapse in fed 

cattle prices in 2015�

In May 2019, a live cattle futures trader filed a lawsuit in the United States District Court for the District of 

Minnesota, alleging he suffered financial losses by transacting in live cattle futures and options at artificial 

prices� The suit alleges the losses were the direct result of the packing companies’ conduct, including their 

suppression of fed cattle prices� 

All three of the lawsuits allege beef packers colluded to suppress beef prices agreeing to reduce slaughter 

volumes and cattle purchases� Several of the largest packing companies have issued public statements denying 

the allegations. In July 2019, a Minnesota Federal court consolidated the three lawsuits into one.

In August 2019, a Federal judge in the United States District Court for the District of Minnesota dismissed 

antitrust lawsuits filed in 2018 against major pork packers including Hormel Foods Corp, JBS USA, 

Smithfield Foods Inc., Tyson Foods Inc., and data provider Agri Stats, Inc. The complaint alleged the 

companies conspired to limit supply and increase prices. The dismissal was without prejudice, which means 

the plaintiffs can amend their complaint.

Extreme Weather

Extreme weather conditions at the beginning of 2019 that continued through the spring caused major damage 

in the Midwest, especially in agriculture. There were losses in livestock, crops, buildings and machinery, and 

damage to infrastructure. Midwestern States experienced freezing temperatures in late January that set all-time 

cold records� 
Packers and Stockyards Division Annual Report 2019

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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

In February, snowfall in some Western and Midwestern States was at historic levels. The persistent cold 

temperatures and heavy snow set the stage for disastrous flooding in March. A severe snowstorm in the upper 

Midwest and the Plains followed by heavy rains caused widespread flooding. In May, numerous tornadoes and 

heavy rainfall in some Midwestern States led to more flooding. The extreme weather conditions resulted in 

higher-than-normal livestock losses in the Northern Plains, fewer cattle on feed in Northern States, increased 

days on feed and cost of gains, delayed marketing of finished cattle, and reduced carcass weights. The extreme 

weather also caused delayed crop plantings� Continued rain and snow in the fall of 2019 resulted in harvests 

that were behind schedule� 

Trade Agreements

Trade disagreements between the United States and China that began in 2018 continued to impact beef, 

lamb, and pork exports from the United States to China� The trade disagreements have resulted in each 

country raising tariffs on each other's imports. Both countries have held numerous rounds of trade talks. As 

of December 2019, the United States and China still lacked a trade deal, but negotiations were ongoing and 

eventually led to a bilateral trade agreement between the two countries in 2020�

In November 2018, the United States removed a ban on beef from Argentina imposed after an outbreak of footand-mouth disease in 2001� The agreement signed between the United States and Argentina permits the export 

of up to 22,000 tons of beef from Argentina to the United States, and the United States can export an unlimited 

amount of beef to Argentina�

In May 2019, the governments of Canada and Mexico announced the removal of their tariffs on U.S. pork and 

beef imposed in retaliation for tariffs imposed on aluminum and steel imports from those countries. This move 

by Mexico and Canada sets the stage for ratification of the U.S.-Mexico-Canada Agreement (USMCA), which 

will replace the North American Free Trade Agreement (NAFTA)� 

In May 2019, Japan lifted restrictions on beef imports from the United States that had been in place since 

2003, following the first case of bovine spongiform encephalopathy (BSE) in the United States that year. 

In September 2019, the United States and Japan signed a preliminary trade agreement allowing reductions 

in tariffs on up to $7.2 billion of agricultural imports from the United States, including beef and pork. The 

reduced tariffs on beef and pork imports from the United States will allow U.S. domestic producers to compete 

more effectively with countries that have preferential trade agreements with Japan.

Fire at the Tyson, Holcomb, Kansas Beef Plant

In August 2019, a fire at a Tyson beef plant in Holcomb, Kansas, disrupted beef production. This raised 

concern in the cattle industry as the spread between boxed beef and fed cattle prices increased� In response, 

Agriculture Secretary Sonny Perdue directed PSD to open an investigation into beef pricing margins to ensure 

that business entities did not violate the P&S Act through unfair practices following the fire. The investigation 

into potential violations is ongoing, and therefore, PSD has limited ability to publicly report the full scope and 

status of the investigation. Tyson processed about 30,000 head of cattle per week at the plant before the fire, 

which represents about 5 percent of the industry total� The company resumed meat fabrication operations soon 

after the fire, while slaughter did not resume until late 2019 when reconstruction of the plant was complete.
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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

African Swine Fever

Fearing the spread of African Swine Fever (ASF), the National Pork Producers Council (NPPC) cancelled 

the World Pork Expo 2019 that usually takes place in June in Des Moines, Iowa. ASF is a highly contagious 

and deadly viral disease affecting both domestic and wild pigs of all ages. The disease cannot be transmitted 

from animals to humans and is not a food safety issue�

In May 2019, the USDA announced the implementation of a surveillance plan to strengthen detection 

capabilities and enhance outbreak preparedness� The plan includes adding ASF to existing classical swine 

fever (CSF) surveillance, coordinating with Canada and Mexico on preventing the spread of the disease, 

working with U.S. Customs and Border Protection on inspection of cargo from countries affected by ASF, 

and collaborating with States, industry, and producers to ensure on-farm biosecurity and best practices are 

followed�

ASF first appeared in China in 2018, and it has since spread to most parts of the country as well as to several 

other Asian countries, including Vietnam, the Philippines, and Cambodia� Pork production has declined 

significantly in China with the spread of ASF and substantial losses in the hog herd. Despite higher tariffs on 

imports from the United States, pork exports to China have almost doubled from the prior year through August�

Poultry

Price-Fixing Lawsuits

Price-fixing lawsuits first filed against poultry processors in 2016 continued to be filed in 2019. In January 

2019, Darden Restaurants filed an antitrust lawsuit against Agri Stats Inc. and some of the top poultry 

companies in the United States, alleging the companies conspired to increase the cost of chicken sold in the 

United States. Poultry companies named in the antitrust lawsuit filed in the Illinois Northern District Court 

include Tyson Foods, Fieldale Farms, Foster Farms, George’s, Harrison Poultry, House of Raeford 

Farms, JCG Foods, Koch Foods, Mar-Jac Poultry, Mountaire Farms, Claxton Poultry, O.K. Foods, Peco 

Foods, Perdue Farms, Pilgrim’s Pride, Simmons Foods, Sanderson Farms, and Wayne Farms�

In May 2019, Walmart Inc. filed a lawsuit in the U.S. District Court for the Western District of Arkansas 

claiming various U.S. poultry companies conspired to inflate chicken prices. The antitrust lawsuit states 

significant chicken producers, including Pilgrim’s Pride Corp� and Sanderson Farms, engaged in price 

fixing from 2008 to 2016. Other defendants named in the latest lawsuit include House of Raeford Farms Inc., 

Mar-Jac Poultry Inc�, O.K. Foods Inc., Foster Farms LLC, Mountaire Farms Inc� and Agri Stats Inc.

On June 25, 2019, the Department of Justice (DOJ) filed a motion to intervene and stay discovery of evidence 

in an antitrust lawsuit involving major poultry processors. The lawsuit (Maplevale Farms, Inc., et al�, versus 

Koch Foods, Inc., et.al) filed in 2016, alleges the largest poultry processors conspired to fix broiler prices 

between 2008 and 2016. On June 27, 2019, the U.S. District Court of Illinois granted the DOJ motion to 

intervene in the poultry price-fixing lawsuit. The court ordered a 3-month stay of discovery, until September 

27, 2019, in connection with the civil lawsuit�

On September 9, 2019, a class-action lawsuit was filed in the U.S. District Court for the District of Maryland, 

accusing the largest poultry firms of conspiring to depress wages and other compensation paid to employees of 

poultry companies� Agri Stats Inc. and Webber, Meng, and Sahl, Inc. (WMS), are also named in the lawsuit 

for allegedly facilitating the exchange of compensation data�
Packers and Stockyards Division Annual Report 2019

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 BUSINESS PRACTICES IN THE LIVESTOCK AND POULTRY INDUSTRIES

INDUSTRY CONCERNS

Trade Uncertainties

Uncertainty about international trade and decreasing export opportunities for American agriculture is perhaps 

the most pressing issue for American beef and pork producers in 2019. Negotiations to ratify the USMCA and 

reach a trade deal with China were in progress through the end of December 2019�

Plant-Based and Lab-Created Proteins

Consumer interest in non-meat-based proteins has accelerated in recent years� In response, investment has 

increased in plant-based proteins and biotechnological innovations such as cultured meat. While Beyond Meat

and Impossible Foods are at the forefront offering alternatives to animal-based burgers, sausage, and chicken, 

several competitors have also developed their own brands of plant-based proteins, including Tyson Foods, 

Conagra, Nestle, and Kellogg� 

Several animal industry trade groups are continuing to educate consumers and policymakers about differences 

between animal-based meat and alternative-meat products� These trade groups are also seeking protections 

from the Federal Government and State Governments in the marketing and labeling of plant-based and labcreated protein items to ensure they are not labeled as meat, beef, or burgers, for example� 

Poultry

Avian Influenza

Avian Influenza was not a major concern in poultry flocks in 2019. A case of low pathogenic avian influenza 

(LPAI) in a flock of breeder ducks and geese was reported in Monterey County, California, in April 2019. A 

second case was detected in a non-commercial duck layer flock in Merced County, California, in June 2019 

during routine testing� In both of these cases, the premises were released from quarantine following treatment 

and testing by USDA and the California Department of Food and Agriculture (CDFA)� 
Packers and Stockyards Division Annual Report 2019

23

PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

PSD conducts two broad types of activities at the regional office level — investigations and regulatory 

activities� PSD generally categorizes regulatory and investigative activities as addressing areas of competition, 

trade practices, or financial concerns.

Investigations and regulatory activities are conducted by agents stationed in a regional office or by resident 

agents. PSD resident agents located in the field are the agency’s frontline staff who work daily with regulated 

entities as well as livestock producers and poultry growers. They are typically the first responders for 

complaints and, because of their daily contact with the industry, primary sources of market intelligence� The 

locations of PSD offices and resident agents are shown in Figure 8, Appendix B.

Regulatory activities are carried out to determine if a regulated entity is complying with the Act and 

regulations and also to help entities achieve compliance. Regional offices initiate regulatory activities based on 

annual business volume of the regulated entity, time elapsed since the last review, information obtained from 

an annual report submission, or guidance from the PSD Strategic Business Plan that is used to determine the 

annual industry compliance rate. Examples of regulatory activities include:

• Registering market agencies, dealers, and packer buyers who operate subject to the Act,

• Conducting orientations for new dealers, livestock auctions, and packers,

• Checking the accuracy and repeatability of weighing livestock, carcasses, live poultry, and feed,

• Auditing custodial accounts and payment practices,

• Reviewing marketing practices and determining the adequacy of bond amounts,

• Assisting producers with filing bond and trust claims, and

• Analyzing bond and trust claims�

Regulatory activities also include market-level price monitoring� PSD monitors industry markets using 

publicly available data. For example, every week PSD monitors livestock as reported by AMS. PSD also 

analyzes structural changes in the livestock, meat, and poultry industries� These monitoring activities have led 

to investigations at individual company levels�

PSD initiates an investigation when it has information that a violation of the Act may have occurred� For 

example, PSD may initiate an investigation in response to:

• a complaint from an industry participant,

• finding of possible violations during a routine regulatory activity,

• self-reported violations on annual and special reports filed with PSD,

• possible violations found through other monitoring activities, and

• a need for follow-up on previously identified violations of the Act.

PSD Investigation and Enforcement Activities

Stakeholders in the livestock and poultry industries and the public may report complaints in one of three ways

They may call the PSD hotline at (833) 342-5773 (DIAL PSD), they can call any of the regional offices to discuss 

their concerns, or they can send an e-mail to PSDComplaints@usda.gov. If desired, complainants may register thei

concerns anonymously. PSD responds to all of these external contact
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 PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

PSD sees a range of outcomes from its investigative and regulatory activities. PSD agents frequently find minor 

violations or none at all. The regional offices often attempt to achieve informal compliance of minor violations 

by asking regulated entities to take immediate corrective action�

When agents uncover violations that are more serious, the regional office typically issues a Notice of Violation 

as a first step. If the regulated entity fails to correct the identified violations, the regional office generally 

refers a formal investigative case file to the Enforcement Branch with a recommendation for more formal 

enforcement� The EB may stipulate2 the violation(s) with the entity to resolve the violations� Alternatively, it 

may pursue administrative enforcement through USDA’s OGC before a USDA Administrative Law Judge or 

through the DOJ in Federal court�

Administrative enforcements3 may result in a civil penalty against the regulated entity, suspension of the 

entity’s Packers and Stockyards registration, both a fine and suspension, and an order to cease and desist from 

repeating the violation(s)� In FY 2019, 29 entities stipulated to penalties totaling $83,255. Administrative 

Law Judges levied $697,320 in penalties and Federal courts awarded $16,862, for a total of $797,437 in civil 

penalties (Table 8). Total civil penalties in 2019 are the highest since 2015 and are more than double that of 

the prior year� There are many factors determining the number of enforcement actions and penalties� Industry 

compliance rates vary over time and may be influenced by external factors such as general economic conditions 

and livestock prices� Penalties are dependent on the type and severity of the violations and the regulated entity’s 

ability to pay and stay in business�

2 A stipulation is a legal agreement citing violation(s) found, and the civil penalty amount PSD will accept in settlement without pursuing a formal action� In signing the 

stipulation agreement, respondents agree to pay the civil penalty and waive their right to a hearing�

3

Administrative enforcement is legal action taken within USDA. A complaint alleging specific violations is filed against a firm or individual. The accused party has a 

right to a hearing before an administrative law judge. The judge's decision may be appealed to the USDA Judicial Officer. The accused party may appeal the Judicial 

Officer's ruling to a U.S. Appeals Court, and further to the Supreme Court of the United States.

Table 8. Penalties Levied for Packers and Stockyards Act Violations 

2015–2019

Type Judgment 2015 2016 2017 2018 2019

Stipulations $158,950 $155,425 $128,575 $77,725 $83,255

Administrative Penalties $499,300 $128,900 $489,950 $154,000 $697,320

Department of Justice Civil 

Penalties

$299,360 $74,468 $128,950 $145,950 $16,862

Total Penalties $957,610 $358,793 $747,475 $377,675 $797,437

Suspensions 6 7 5 11 9
Packers and Stockyards Division Annual Report 2019

25

PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Fed Cattle and Hog Market Price Monitoring

PSD’s fed cattle market price monitoring program includes a weekly internal reporting protocol based on 

statistical models for the fed cattle markets� The statistical model relies on publicly reported price data to assess 

regional price differences. The hog price monitoring program was suspended in FY 2019 as reported negotiated 

prices in regional markets were no longer adequate and made price monitoring impractical� PSD is currently 

looking into alternatives for its hog price monitoring program�

ENFORCING BUSINESS PRACTICE PROVISIONS

The regional offices are responsible for conducting regulatory reviews and investigations of competition and 

trade practice provisions of the Act, collectively referred to as business practice provisions. The regional offices 

investigate alleged anti-competitive practices and unfair and deceptive trade practices by market agencies, 

livestock dealers and commission buyers, packers, and live poultry dealers� 

Resident agents and resident auditors conduct investigations and regulatory activities from field locations 

throughout the region� Economists, legal specialists, and investigative attorneys conduct the more complex 

competition investigations and regulatory activities. For example, an economist might monitor market and firm 

prices for indications of anti-competitive behavior. Marketing specialists conduct trade practice investigations 

and regulatory actions related to inaccurate scales or carcass evaluation instruments, improper weighing 

practices, and compliance with contracts�

Competition

In FY 2019, PSD re-established a Competition Branch staffed with economists. PSD investigates complaints 

alleging anti-competitive behavior such as collusion, price fixing, failure to compete, buyers acting in concert 

to purchase livestock, apportionment of territory, price discrimination, price manipulation, and predatory 

pricing� PSD’s economists, legal specialists, and investigative attorneys collaborate with USDA’s OGC on 

competition investigations. When the results of an investigation, the evidence, and circumstances support legal 

action, PSD formally refers the case file to OGC for enforcement. OGC further refers some cases to DOJ.

PSD monitors changes in industry behavior in order to understand the nature of and reasons for changes, and 

to anticipate potential competition issues that may result from those changes� PSD also conducts economic 

analysis of significant industry events, including mergers, acquisitions, and plant closings. PSD interacts 

with DOJ and the Commodity Futures Trading Commission (CFTC) on competition investigations and when 

analyzing mergers and acquisitions�

In FY 2019, PSD price monitoring activities identified 43 outliers in the fed cattle markets. In 

reviewing these price differences, PSD determined that, in each instance, it could attribute the price 

anomalies to external market factors, such as weather conditions or other circumstances
Packers and Stockyards Division Annual Report 2019

3 Packers and Stockyards Division Snapshot

 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

26

 PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Poultry Contract Compliance Review Process

Poultry is almost exclusively grown under production contracts� Under a production contract, the live poultry 

dealer provides the poultry grower with many inputs including the live chicks, feed, and medications� The 

poultry grower provides the housing, equipment, labor, and fuel to grow the birds to a target weight established 

in the production contract� Once the birds meet the target slaughter weight, the live poultry dealer picks up the 

birds for slaughter� The payment to the poultry grower for the growing services is often determined by a poultry 

grower ranking system (commonly referred to as a tournament) outlined in the production contract�

PSD regularly conducts poultry contract reviews to examine poultry contracts and payment practices for 

consistency and compliance with the Act and regulations� PSD generally selects a sample of payment data from 

the live poultry dealer's records for a detailed review for accuracy and completeness and compares the results to 

the integrator’s ranking sheets, settlement sheets, and payments to ensure adherence to the contract�

If PSD uncovers discrepancies, it opens an investigation. If PSD does not find evidence of a violation, the 

review is closed with a finding that the live poultry dealer is in compliance.

Trade Practices

PSD reviews the activities of regulated entities to ensure that packers, market agencies, livestock dealers, swine 

contractors, and live poultry dealers do not engage in unfair or deceptive practices in the procurement and 

marketing of livestock, meat, and poultry�

Regulated entities that own or use a scale for the purchase, sale, or payment for livestock or poultry are required 

to file scale test reports as evidence of accuracy of scales, but PSD also examines scales and weighing practices. 

PSD also evaluates the accuracy and use of electronic carcass evaluation devices when the equipment is used to 

determine payment for livestock�

Entities that furnish stockyard services in commerce, i�e�, services at a stockyard in connection with the 

receiving, buying, selling, marketing, feeding, watering, holding, delivery, shipment, weighing, or handling 

of livestock, are required to post a notice that informs the public that the stockyard meets the definition of a 

stockyard under the Act� Once posted, the stockyard remains posted until PSD de-posts it through public notice�

In FY 2019, PSD conducted 69 poultry contract compliance reviews, including 41 that were conducted 

pursuant to a Strategic Business Plan random sample and included as a component of PSD’s performance 

measure (see Packers and Stockyards Division's Performance and Efficiency section).
Packers and Stockyards Division Annual Report 2019

27

PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Historically, several commission firms bought and sold livestock at the terminal stockyards, but most of 

these facilities are no longer operating� Today, nearly all of the posted stockyards are local livestock auctions� 

Internet and video auctions that hold sales of livestock over the internet or through a video platform are subject 

to the Act and regulations, even if they do not operate at a posted stockyard. An amendment to the Act in 2016 

made clear that farmers and ranchers selling through online and video auctions are offered the same protections 

as those selling at traditional livestock auctions�

PSD meets with new auction owners and managers, ideally before they begin operations, to ensure that 

operators understand their responsibilities under the Act and regulations� Visits in the early stages of operation 

also serve to protect livestock producers who rely on the livestock auction to provide a nondiscriminatory and 

competitive marketplace�

PSD reviews procurement practices of packers to determine if they have engaged in unfair or deceptive trade 

activities or have provided undue or unreasonable advantages in procuring livestock or poultry� The reviews 

assess procurement and pricing methods, payment practices, and weighing of livestock and carcasses�

 Anyone who believes that an action or omission of a stockyard, market agency, or dealer caused 

personal loss or damage in violation of the Act may file a complaint seeking reparation (damages) 

with PSD within 90 days of learning of the action that caused damages
Packers and Stockyards Division Annual Report 2019

28

PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

A transaction made on false or inaccurate weights, including instances in which a livestock auction, livestock 

dealer, or packer modifies the actual weight of the livestock or fails to pass on a shrink allowance, is an unfair 

and deceptive practice� PSD regulations require livestock auctions, dealers, and packers to test scales used for 

the purposes of determining payment two times per year, with one test in the first 6 months and one test in the 

second 6 months, and to file scale-test reports as evidence of scale maintenance and accuracy. State or local 

governments and private companies provide scale test services�

PSD inspects the scales used by livestock auctions, dealers, and packers for weighing live animals� PSD also 

inspects hopper scales for weighing poultry feed� It tests static and dynamic monorail scales used to weigh 

livestock carcasses in slaughter plants and also conducts feed weighing inspections on truck scales and hopper 

scales at feed mills�

In addition, PSD conducts several types of regulatory and investigative inspections to ensure scale operators 

and entities subject to the Act are using their scales properly and recording weights accurately in the purchase 

and sale of livestock and for payments to hog and poultry contract growers� These inspections include check 

weighing to assure repeatability of weight� The types and number of weighing inspections conducted by PSD 

and violations from 2015 to 2019 appear in Table 9. In 2019, out of 869 inspections conducted, PSD agents 

found a total of 128 violations, or 85 percent in compliance, slightly higher than the prior year.

Type 2015 2016 2017 2018 2019

Inspections

Livestock Auctions 376 391 294 300 305

Dealers 247 253 241 301 278

Packers 160 143 138 159 155

Poultry 101 110 108 98 88

Feed 75 88 83 68 43

Total 959 985 864 926 869

Violations

Livestock Auctions 108 134 56 59 32

Dealers 44 56 30 34 37

Packers 36 39 37 43 41

Poultry 7 21 14 16 14

Feed 13 15 17 5 4

Total 208 265 154 157 128

Table 9. Weighing Inspections and Violations, 2015–2019
Packers and Stockyards Division Annual Report 2019

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 PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

ENFORCING FINANCIAL PROVISIONS

The financial provisions of the Act and regulations support the financial integrity of regulated entities and foster 

liquidity in markets for livestock, meat, and poultry� PSD enforces these provisions through several activities 

that include on-site financial compliance reviews and investigations and reviewing annual and special reports 

submitted by regulated entities. Financial compliance reviews and investigations address five issues. These 

issues include maintenance of custodial accounts, solvency, payment to livestock sellers and poultry growers, 

bond claims, and trust claims�

Under the Act, livestock dealers, market agencies, and packers are required to be solvent, i�e�, current assets 

must exceed current liabilities. PSD monitors solvency by conducting on-site financial compliance reviews and 

investigations. PSD also monitors solvency by reviewing financial data in annual and special reports filed by 

regulated entities� PSD requires special reports from entities whose annual reports disclose insolvencies� If PSD 

determines that an entity is insolvent, it notifies the entity that it must correct the insolvency immediately. In 

addition, PSD conducts on-site financial investigations. These investigations confirm whether entities correctly 

reported insolvencies. The investigations also confirm whether entities resolved other financial issues. PSD 

initiates formal disciplinary action when appropriate�

Market agencies selling livestock on commission, such as local livestock auctions and video and internet 

auctions, are required by the Act and regulations to establish and maintain a bank account designated as 

“custodial account for shippers’ proceeds�” This account is a trust account which holds in trust proceeds from 

the sale of consigned livestock for the benefit of livestock sellers. The market agency selling on commission 

acts as a fiduciary depositor to the account. 

PSD monitors custodial accounts in several ways� It reviews annual and special custodial account reports 

from market agencies and conducts on-site custodial account audits. When the reviews reveal custodial 

account shortages, PSD acts to have the livestock auction bring the account into balance by issuing a Notice of 

Violation or preparing for a formal enforcement� Table 10 shows the number of custodial reviews conducted 

by PSD in the past 5 years, the number of violations found, and the value of shortages corrected by market 

agencies because of the intervention by PSD�

PSD conducted 409 custodial reviews in 2019 and found 137 violations. While the number of violations in 

2019 declined from previous years, the dollar value of shortage corrections has increased to over $3�5 million, 

the highest in the past 5 years�

Year Reviews Account 

Violations

Shortage 

Corrections 

2015 400 180 $2,978,657

2016 453 204 $3,317,866

2017 417 193 $1,668,901

2018 420 170 $1,577,974

2019 409 137 $3,573,403

Table 10. Number of Custodial Account Reviews, Violations 

Found, and Shortages Corrected, 2015–2019
Packers and Stockyards Division Annual Report 2019

30

PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Bond Protections for Unpaid Livestock Sellers

All market agencies, all livestock dealers, and packers purchasing over $500,000 of livestock annually must 

file and maintain bonds or bond equivalents for the protection of livestock sellers. The bonds are for the 

benefit of unpaid livestock sellers should a regulated entity fail to pay for livestock. Those required to meet 

the bonding requirement may choose from three options to comply�

They may obtain a surety bond or, in lieu of a surety bond, they may pledge one or more savings accounts or 

certificates of deposit under a Trust Fund Agreement. Alternatively, they may obtain one or more irrevocable, 

transferable, standby letter(s) of credit, issued by a federally insured bank or institution, and pledge the 

letter(s) of credit to a Trust Agreement� They may use a combination of these options to meet the total bond 

requirement�

To be eligible to receive payment under the bond, a livestock seller who does not receive payment for a 

transaction must file a bond claim within 60 days of the transaction. The seller may obtain claim forms from 

PSD regional offices or at https://www.ams.usda.gov/resources/bond-bond-equivalent-and-claim-forms.

The seller must file a completed claim form, accompanied by supporting documents, with PSD or the surety 

company. PSD analyzes each claim to determine whether the claimant filed it timely and whether the claimant 

provided adequate documentation to support the claim� PSD provides its analysis to the principal and to the 

bond surety or trustee on a bond equivalent� The surety or the trustee decides whether claims are valid and 

timely filed and how much will be paid.

When circumstances warrant, PSD immediately deploys a rapid response team to conduct 

an investigation for potentially serious financial situations that may cause imminent and 

irreparable harm to livestock producers
Packers and Stockyards Division Annual Report 2019

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31

 PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Fiscal 

Year

Total 

Claims

Valid 

Claims Bond Other Total Recovered

% Valid 

Claims 

Recovered

2010 $213,332 $101,512 $51,781 $4,479 $56,260 55

2011 $38,521,193 $18,516,016 $1,132,329 $851,944 $1,984,273 11

2012 $1,060,117 $516,344 $95,000 $68,811 $163,811 32

2013 $3,877,665 $3,828,780 $328,810 $2,411,470 $2,740,281 72

2014 $15,315 $13,315 $10,315 $0 $10,315 77

2015 $838,700 $20,926 $4,510 $16,416 $20,926 100

2016 $11,466,498 $11,331,648 $1,308,839 $273,947 $1,582,786 14

2017 $1,028,459 $752,707 $290,133 $151,813 $441,946 59

2018 $5,139,226 $3,710,515 $501,032 $1,429,830 $1,930,862 52

2019 $1,329,822 $475,183 $188,563 $58,064 $246,627 52

Bonds often do not cover the entire loss sustained when a firm fails to make full payment. In that case, the 

claimant(s) receives a pro-rata share of the bond based on the value of the bond and the total amount of the 

valid, timely claims�4

The dollar amount of total claims on dealer bonds often varies significantly from the dollar amount of valid 

claims. This is because sellers frequently file claims beyond the 60 days after the transaction took place and, 

in this circumstance, the surety may deny the claim� Over the past 9 years, the largest dollar amount of valid 

claims was filed in 2011, and the rate of recovery in 2011 was a low of 11 percent. Claims filed in subsequent 

years declined substantially until 2016, when the dollar value of valid claims increased to over $11 million. The 

share of valid claims recovered also fell to 14 percent in that year� In 2019, the dollar amount of valid dealer 

bond claims filed declined to less than $500,000, and as of the end of the fiscal year, 52 percent of that amount 

has been recovered (Table 11)�

4 In all bond claim tables, total claims are computed for the fiscal year in which the first claim was received. Bond claims are not always closed 

in the same fiscal year they were first opened and recovery for claims may be ongoing. Recoveries for claims are recorded in the same year as 

the original claims were filed. Claims that are withdrawn are not included in any of the totals. Claims may be amended or adjusted, resulting in 

changes in totals. Total Recovered amount is as of the end of FY 2019.

Table 11. Dealer Bond Claims and Recovery, 2010–2019
Packers and Stockyards Division Annual Report 2019

32

PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Claims filed against livestock auctions have varied widely over the past 10 years, with the total dollar amount 

of valid claims consistently under $1 million until 2019 (Table 12)� There was a big increase in bond claims 

filed against auction markets in the past year, with a total of $2.1 million in valid claims. The recovery rate for 

claims filed against auction markets in 2019 is the lowest for several years at 13 percent. 

Table 12. Livestock Auction Bond Claims and Recovery, 2010–2019

Fiscal 

Year

Total 

Claims

Valid 

Claims Bond Other Total Recovered

% Valid 

Claims 

Recovered

2010 $20,901 $4,547 $4,547 $0 $4,547 100

2011 $75,119 $23,518 $22,162 $1,357 $23,519 100

2012 $877,861 $201,657 $82,953 $0 $82,953 41

2013 $763,422 $0 $0 $0 $0 NA

2014 $12,181 $706 $706 $0 $706 100

2015 $69,307 $66,307 $60,000 $0 $60,000 90

2016 $397,946 $0 $0 $0 $0 NA

2017 $441,433 $197,913 $143,468 $639 $144,107 73

2018 $165,099 $80,052 $72,473 $13,751 $74,092 93

2019 $2,700,707 $2,108,679 $233,437 $37,016 $270,453 13

NA = Not Applicable
Packers and Stockyards Division Annual Report 2019

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33

 PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

As discussed earlier, the Act authorizes unpaid livestock sellers to claim against packer trust assets. The trust 

provides additional protection above that of any bond held by the packer. Valid packer bond and trust claims 

increased dramatically in 2016 and 2017 and rose to almost $144 million in 2018 (Table 13). The vast majority 

of the packer bond and trust claims in the last 3 years are the result of the claims filed against Sam Kane Beef 

Processors, LLC, due to its difficulty in timely paying for its cattle purchases. 

Claims against packer bonds and trust assets resulted in a recovery of almost 100 percent of the total owed 

for valid claims opened in 2016, 96 percent of claims in 2017, and 74 percent in 2018. Like the claims, the vast 

majority of recoveries from 2016 to 2018 are the result of Sam Kane paying for livestock that had been subjected 

to packer bond and trust claims in 2018. After Sam Kane paid for those livestock, sellers rescinded their bond 

and trust claims and often submitted new claims as Sam Kane continued to fail to pay timely for its livestock 

purchases. This process of claims and rescindments continued over the past 3 years, which explains the majority 

of the high value of claims and recoveries from 2016 to 2018. In 2019, valid claims decreased to $1.23 million, 

and 96 percent of that amount has been reimbursed.

Fiscal 

Year Total Claims Valid Claims Bond Trust Other Total 

Recovered

% Valid 

Claims 

Recovered

2010 $5,960,684 $5,960,684 $748,435 $0 $3,825,518 $4,573,953 77

2011 $586,293 $586,293 $0 $81,978 $422,502 $504,480 86

2012 $22,706 $4,422 $0 $0 $0 $0 0

2013 $0 $0 $0 $0 $0 $0 NA

2014 $39,765 $0 $0 $0 $0 $0 NA

2015 $323,868 $247,562 $0 $247,562 $0 $247,562 100

2016 $14,210,690 $14,210,690 $20,000 $14,172,296 $7,259 $14,199,556 99�9

2017 $23,757,904 $23,757,904 $0 $22,722,824 $0 $22,722,824 96

2018 $149,278,059 $143,734,597 $4,730,000 $99,592,223 $1,338,841 $105,661,064 74

2019 $1,421,703 $1,234,400 $1,131,730 $48,003 $0 $1,179,732 96

Table 13. Packer Bond and Trust Claims and Recovery, 2010–2019

NA = Not Applicable
Packers and Stockyards Division Annual Report 2019

34

 PSD INVESTIGATION AND ENFORCEMENT ACTIVITIES

Fiscal 

Year

Total 

Claims

Valid 

Claims Trust Other Total Recovered

% Valid 

Claims 

Recovered

2010 $0 $0 $0 $0 $0 NA

2011 $8,010,978 $702,881 $270,525 $427,905 $698,430 99

2012 $387,688 $375,988 $187,354 $0 $187,354 50

2013 $127,596 $0 $0 $0 $0 NA

2014 $4,632,282 $239,341 $0 $0 $0 0

2015 $0 $0 $0 $0 $0 NA

2016 $0 $0 $0 $0 $0 NA

2017 $82,840 $82,840 $82,840 $0 $82,840 100

2018 $0 $0 $0 $0 $0 NA

2019 $0 $0 $0 $0 $0 NA

Table 14. Poultry Trust Claims and Recovery, 2010–2019

NA = Not Applicable

Live poultry dealers are not required to maintain bonds, but are covered by a statutory trust� Poultry growers 

and live poultry sellers do not file trust claims against live poultry dealers as frequently as livestock sellers, and 

there were no claims filed for several years (Table 14). In 2017, there was full restitution for claims filed against 

poultry dealers, and the poultry trust accounted for all of the reimbursement. In 2018 and 2019, no poultry trust 

claims were filed. 
Packers and Stockyards Division Annual Report 2019

35

 PSD PROGRAM PERFORMANCE AND EFFICIENCY

PSD achieves its mission by identifying broad, strategic, multi-year goals. It also sets shorter term tactical 

annual objectives and activities as set forth in its annual Strategic Business Plan. This section addresses how 

PSD strives to improve its performance and efficiency, and the demonstrated results.

PERFORMANCE MEASUREMENT

PSD assesses its performance annually by measuring industry compliance with the Act and regulations� PSD 

performs compliance reviews of a random sample of regulated entities to estimate industry compliance rates in 

the following five areas:

1) Prompt payment by livestock auctions, dealers, and packers,

2) Financial reviews of livestock auction custodial accounts,

3) Scales and weighing practices at livestock auctions, dealers, and live poultry dealers,

4) Static and dynamic monorail scales, carcass evaluation devices, and related practices at livestock 

 packing plants purchasing more than 1,000 head per year, and

5) Contract compliance of live poultry dealers with contract poultry growers�

PSD analyzes compliance data and general economic conditions� It uses this information to deploy its 

resources effectively to meet changing industry conditions. The overall compliance rate declined from 89 

percent in FY 2018 to 85 percent in FY 2019. Compliance with most of the components weakened from 

the prior year, except weighing practices compliance, which remained at 100 percent� Carcass evaluation 

compliance fell from 91 percent to 87 percent, and poultry contract compliance slipped from 83 percent to 

78 percent. Custodial account compliance decreased the most, from 81 percent to 70 percent, and prompt pay 

compliance dropped from 91 percent to 89 percent (Figure 5).

Figure 5. Industry Compliance by Component and Average Industry Compliance, 2015-2019 

PSD Program Performance and Efficiency

0.

10.

20.

30.

40.

50.

60.0

70.

80.0

90.

100.

2015 2016 2017 2018 2019

Percent in Compliance

Prompt Pay Custodial Audit Weighing Practices

Carcass Evaluation Poultry Contracts Average Industry Compliance
Packers and Stockyards Division Annual Report 2019

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36

 PSD PROGRAM PERFORMANCE AND EFFICIENCY

PSD puts emphasis on educational and outreach activities that improve industry compliance� During each 

regulatory review or investigation, PSD agents discuss how to achieve compliance with regulated entities� 

However, economic conditions within the industry affect compliance rates. For example, weak economic 

conditions or highly volatile livestock prices may contribute to lower rates of compliance� 

EFFICIENCY MEASUREMENT

PSD measures its efficiency at conducting regulatory reviews and investigations by comparing the total 

days between when it opens and closes each type of activity. The following figure shows the total number of 

regulatory reviews conducted by PSD and the average number of days to complete a review (Figure 6).

The average number of days to complete a regulatory activity ranged from 19 days to 21 days from 2015 to 

2018 but declined to 13 days in 2019. The number of regulatory reviews completed declined to 1,972 from 

2,048 in 2018.

Figure 6. Number of Regulatory Reviews and Average Days to Complete a Review, 

2015–2019

23 2,500

21

2,000 19

sw

17

eive

sya

1,500

 R

15 y

 D

ro

e

t

g

a

a

l

r

u

e

13 g

v

e

A

1,000 R

11

 f o�o

9 N

500

7

5 0

2015 2016 2017 2018 2019

Average Days Number of Regulatory Reviews
Packers and Stockyards Division Annual Report 2019

37

 PSD PROGRAM PERFORMANCE AND EFFICIENCY

Figure 7. Number of Investigations and Average Days to Complete, 

2015–2019

110 2,500

100

2,000 90

80

sno

s

1,500

it

y

a

a

g

 D

70

its

eg

e

ar

v

60 n

ev

1,000

 If

A

o

50

 �oN

40 500

30

20 0

2015 2016 2017 2018 2019

Average Days Number of Investigations

The total number of investigations completed by PSD in the field and the average number of days to complete 

an investigation appear in Figure 7� PSD considers an investigation complete when it is closed by PSD at the 

regional office level, closed by the Enforcemet Branch (EB), or when the formal enforcement action related to 

the investigation has been completed for cases referred to OGC or DOJ�

For investigations closed in FY 2019, the average number of days to complete and close an investigation in the 

field declined from 106 to 104 days.

The number of investigations completed in the field decreased to 1,776 from 1,919 in FY 2018. PSD 

completed these investigations in several ways� For some, PSD found no violations or reached an informal 

agreement to correct minor violations� PSD resolved and closed other investigations by issuing formal Notices 

of Violation�

In the remainder of the investigations, the regional offices submitted formal case files to the EB with a 

recommendation for stipulation or enforcement by OGC or DOJ� If a regulated entity agrees to a stipulation, it 

waives its right to a hearing, admits the violation(s), and voluntarily agrees to pay a penalty� PSD then closes 

the investigation� Cases referred to OGC or DOJ remain open until OGC or DOJ completes the enforcement 

action� It takes much longer to resolve and close investigations referred to OGC or DOJ for prosecution 

through a hearing before an administrative law judge or a Federal Court.
Packers and Stockyards Division Annual Report 2019

38

 APPENDIX A

Appendix A - Data Sources

Data Sources for Tables and Charts:

Table 1 Number of entities registered and/or bonded as recorded in PSD databases

Table 2 Data are from the 2017 and 2012 Census of Agriculture since swine contractors do not file 

reports with PSD

Table 3 Data are compiled from annual reports filed by packers and live poultry dealers with PSD.

Table 4 PSD databases

Table 5 Total Value Purchases is the total of livestock purchases reported by packers filing annual 

reports to PSD. Concentration statistics for livestock slaughter (heifers and steers, cows

and bulls, hogs, and sheep and lambs) are compiled from federally inspected plant data

Concentration statistics for broiler and turkey slaughter are computed from live poultry dealer 

annual reports filed with PSD.

Table 6 Data are compiled from annual reports filed by packers with PSD.

Table 7 Data are compiled from annual reports filed with PSD by livestock markets selling on 

commission

Table 8 Enforcement data from PSD databases

Table 9 Scales and weighing inspection data from PSD databases

Table 10 Data on custodial account reviews are from PSD databases

Table 11 Data are from bond claims filed with PSD by livestock sellers against livestock dealers.

Table 12 Data are from bond claims filed with PSD by livestock sellers against market agencies.

Table 13 Data are from bond and trust claims filed with PSD by livestock sellers against packer bonds 

and packer trusts

Table 14 Data are from trust claims filed with PSD by live poultry sellers against poultry trusts held by 

live poultry dealers

Figure 1 Dollar value of livestock purchases reported by packers, livestock dealers, and market 

agencies, and livestock sold through market agencies selling on commission, compiled 

from annual reports filed with PSD by packers, livestock dealers and markets selling on 

commission

Figures 2 - 4 Statistics on types of procurement methods compiled from data reported to USDA's AMS 

under the provisions of the Mandatory Price Reporting Act.

Figure 5 Data on compliance rates from PSD databases. The margin of error in compliance performance

measures in 2019 is (+/-) 6.8% for prompt pay, 9.1% for custodial account, 0.0% for weighing 

practices, 3.3% for carcass evaluation and 10.6% for poultry contract compliance.

Figures 6 - 7 Data on investigations and regulatory reviews from PSD databases
Packers and Stockyards Division Annual Report 2019

39

 APPENDIX B

Figure 8. PSD Offices and Resident Agent, Resident Auditor, and Market Inspector Locations.

Appendix B - Field Staff and Office Locations
Packers and Stockyards Division Annual Report 2019

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 PACKERS AND STOCKYARDS DIVISION SNAPSHOT

40

 CONTACTING PSD

Contacting PSD

To file a complaint, e-mail PSDComplaints@usda.gov, call PSD's hotline at (833) 342-5773, or contact the rele

regional office location:

vant 

Eastern Regional Office

75 Ted Turner Drive SW, Suite 230 

Atlanta, GA 30303

Telephone (404) 562-5840

FAX (404) 562-5848

E-mail: PSDAtlantaGA@usda.gov 

States Covered:

AL, AR, CT, DC, DE, FL, GA, LA, ME, MA, MD, MS, NH, NJ, NY, NC, PA, RI, SC, TN, VT, VA, WV,

and the Territories of the U�S�, including Puerto Rico

Midwestern Regional Office

Room 317, Federal Building, 210 Walnut Street

Des Moines, IA 50309 

Telephone (515) 323-2579

FAX (515) 323-2590

E-mail: PSDDesMoinesIA@usda.gov 

States Covered:

IA, IL, IN, KY, MI, MN, MO, ND, NE, SD, OH, WI

Western Regional Office

One Gateway Centre, 3950 North Lewiston, Suite 200

Aurora, CO 80011 

Telephone (303) 375-4240

FAX (303) 371-4609

E-mail: PSDDenverCO@usda.gov 

States Covered:

AK, AZ, CA, CO, HI, ID, KS, MT, NV, NM, OK, OR, TX, UT, WA, WY

Headquarters Offices:

Office of the Director located in Midwestern Regional Office

Room 917, Federal Building, 210 Walnut Street

Des Moines, IA 50309 

Telephone (515) 323-2579

Enforcement Branch located in Washington, DC

Stop 3601, 1400 Independence Ave., SW 

Washington, D.C. 20250-3601 

Telephone: (202) 720-7051 

FAX: (202) 205-9237

E-mail: PSDWashingtonDC@usda.gov

Please direct comments or questions about this publication to:

United States Department of Agriculture

Agricultural Marketing Service, Fair Trade Practices Program, Packers and Stockyards Division

1400 Independence Avenue, S.W., Washington, D.C. 20250-3601
Packers and Stockyards Division Annual Report 2019

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41

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations 

and policies, the USDA, its Agencies, offices, and employees, and institution participating in or administering 

USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender 

identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, 

income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil 

rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). 

Remedies and complaint filing deadlines vary by program or incident.

Persons with disabilities who require alternative means of communication for program information (e.g., 

Braille, large print, audiotape, American Sign Language, etc.) should contact the responsible Agency or USDA's 

TARGET Center at (202) 720-2600 (voice and TTY) or contact USDA through the Federal Relay Service at 

(800) 877-8339. Additionally, program information may be made available in languages other than English.

To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, 

AD-3027, found online at How to File a Program Discrimination Complaint and at any USDA office or write 

to a letter addressed to USDA and provide in the letter all of the information requested in the form. To request 

a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by: (1) mail: 

U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, 

S.W., Washington, D.C. 20250-9410; (2) fax: (202)690-7442; or (3) email: program.intake@usda.gov.

USDA is an equal opportunity provider, employer, and lender. 

Use of commercial and trade names does not imply approval or constitute endorsement by USDA.

August 2020