II 

110TH CONGRESS 

1ST SESSION S. 786 

To amend the Agricultural Marketing Act of 1946 to foster efficient markets 

and increase competition and transparency among packers that purchase 

livestock from producers. 

IN THE SENATE OF THE UNITED STATES 

MARCH 6, 2007 

Mr. GRASSLEY (for himself and Mr. FEINGOLD) introduced the following bill; 

which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Agricultural Marketing Act of 1946 to foster 

efficient markets and increase competition and transparency among packers that purchase livestock from producers. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SPOT MARKET PURCHASES OF LIVESTOCK BY 

4 PACKERS. 

5 Chapter 5 of subtitle B of the Agricultural Marketing 

6 Act of 1946 (7 U.S.C. 1636 et seq.) is amended by adding 

7 at the end the following: 


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1 ‘‘SEC. 260. SPOT MARKET PURCHASES OF LIVESTOCK BY 

2 PACKERS. 

3 ‘‘(a) DEFINITIONS.—In this section: 

4 ‘‘(1) COVERED PACKER.— 

5 ‘‘(A) IN GENERAL.—The term ‘covered 

6 packer’ means a packer that is required under 

7 this subtitle to report to the Secretary each re8 porting day information on the price and quan9 tity of livestock purchased by the packer. 

10 ‘‘(B) EXCLUSION.—The term ‘covered 

11 packer’ does not include a packer that owns 

12 only 1 livestock processing plant. 

13 ‘‘(2) NONAFFILIATED PRODUCER.—The term 

14 ‘nonaffiliated producer’ means a producer of live15 stock— 

16 ‘‘(A) that sells livestock to a packer; 

17 ‘‘(B) that has less than 1 percent equity 

18 interest in the packer, which packer has less 

19 than 1 percent equity interest in the producer; 

20 ‘‘(C) that has no officers, directors, em21 ployees, or owners that are officers, directors, 

22 employees, or owners of the packer; 

23 ‘‘(D) that has no fiduciary responsibility to 

24 the packer; and 

25 ‘‘(E) in which the packer has no equity in26 terest. 


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1 ‘‘(3) SPOT MARKET SALE.— 

2 ‘‘(A) IN GENERAL.—The term ‘spot mar3 ket sale’ means a purchase and sale of livestock 

4 by a packer from a producer— 

5 ‘‘(i) under an agreement that specifies 

6 a firm base price that may be equated with 

7 a fixed dollar amount on the date the 

8 agreement is entered into; 

9 ‘‘(ii) under which the livestock are 

10 slaughtered not more than 7 days after the 

11 date on which the agreement is entered 

12 into; and 

13 ‘‘(iii) under circumstances in which a 

14 reasonable competitive bidding opportunity 

15 exists on the date on which the agreement 

16 is entered into. 

17 ‘‘(B) REASONABLE COMPETITIVE BIDDING

18 OPPORTUNITY.—For the purposes of subpara19 graph (A)(iii), circumstances in which a reason20 able competitive bidding opportunity shall be 

21 considered to exist if— 

22 ‘‘(i) no written or oral agreement pre23 cludes the producer from soliciting or re24 ceiving bids from other packers; and 


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1 ‘‘(ii) no circumstance, custom, or 

2 practice exists that— 

3 ‘‘(I) establishes the existence of 

4 an implied contract (as determined in 

5 accordance with the Uniform Com6 mercial Code); and 

7 ‘‘(II) precludes the producer from 

8 soliciting or receiving bids from other 

9 packers. 

10 ‘‘(b) GENERAL RULE.—Of the quantity of livestock 

11 that is slaughtered by a covered packer during each re12 porting day in each plant, the covered packer shall slaugh13 ter not less than the applicable percentage specified in 

14 subsection (c) of the quantity through spot market sales 

15 from nonaffiliated producers. 

16 ‘‘(c) APPLICABLE PERCENTAGES.— 

17 ‘‘(1) IN GENERAL.—Except as provided in para18 graph (2), the applicable percentage shall be 25 per19 cent. 

20 ‘‘(2) EXCEPTIONS.—In the case of a covered 

21 packer that reported to the Secretary in the 2006 

22 annual report that more than 75 percent of the live23 stock of the covered packer were captive supply live24 stock, the applicable percentage shall be the greater 

25 of— 


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1 ‘‘(A) the difference between the percentage 

2 of captive supply so reported and 100 percent; 

3 and 

4 ‘‘(B)(i) during each of calendar years 2008 

5 and 2009, 10 percent; 

6 ‘‘(ii) during each of calendar years 2010 

7 and 2011, 15 percent; and 

8 ‘‘(iii) during calendar year 2012 and each 

9 calendar year thereafter, 25 percent. 

10 ‘‘(d) NONPREEMPTION.—Notwithstanding section 

11 259, this section does not preempt any requirement of a 

12 State or political subdivision of a State that requires a 

13 covered packer to purchase on the spot market a greater 

14 percentage of the livestock purchased by the covered pack15 er than is required under this section. 

16 ‘‘(e) RELATIONSHIP TO OTHER PROVISIONS.—Noth17 ing in this section affects the interpretation of any other 

18 provision of this Act, including section 202.’’. 

Æ 


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