II 

111TH CONGRESS 

1ST SESSION S. 1086 

To amend the Packers and Stockyards Act, 1921, to prohibit the use of 

certain anti-competitive forward contracts. 

IN THE SENATE OF THE UNITED STATES 

MAY 20, 2009 

Mr. ENZI (for himself, Mr. DORGAN, Mr. JOHNSON, and Mr. GRASSLEY) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Packers and Stockyards Act, 1921, to prohibit 

the use of certain anti-competitive forward contracts. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Livestock Marketing 

5 Fairness Act’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of the amendments made by this Act 

8 is to prohibit the use of certain anti-competitive forward 

9 contracts— 


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1 (1) to require a firm base price in forward con2 tracts and marketing agreements; and 

3 (2) to require that forward contracts be traded 

4 in open, public markets. 

5 SEC. 3. LIMITATION ON USE OF ANTI-COMPETITIVE FOR6 WARD CONTRACTS. 

7 (a) IN GENERAL.—Section 202 of the Packers and 

8 Stockyards Act, 1921 (7 U.S.C. 192), is amended— 

9 (1) by striking ‘‘Sec. 202. It shall be’’ and in10 serting the following: 

11 ‘‘SEC. 202. UNLAWFUL PRACTICES. 

12 ‘‘(a) IN GENERAL.—It shall be’’; 

13 (2) by striking ‘‘to:’’ and inserting ‘‘to—’’; 

14 (3) by redesignating subsections (a), (b), (c), 

15 (d), (e), (f), and (g) as paragraphs (1), (2), (3), (4), 

16 (5), (7), and (8), respectively, and indenting appro17 priately; 

18 (4) in paragraph (7) (as redesignated by para19 graph (3)), by designating paragraphs (1), (2), and 

20 (3) as subparagraphs (A), (B), and (C), respectively, 

21 and indenting appropriately; 

22 (5) in paragraph (8) (as redesignated by para23 graph (3)), by striking ‘‘subdivision (a), (b), (c), (d), 

24 or (e)’’ and inserting ‘‘paragraph (1), (2), (3), (4), 

25 (5), or (6)’’; 


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1 (6) in each of paragraphs (1), (2), (3), (4), (5), 

2 (7), and (8) (as redesignated by paragraph (3)), by 

3 striking the first capital letter of the first word in 

4 the paragraph and inserting the same letter in the 

5 lower case; 

6 (7) in each of paragraphs (1) through (5) (as 

7 redesignated by paragraph (3)), by striking ‘‘or’’ at 

8 the end; 

9 (8) by inserting after paragraph (5) (as redesig10 nated by paragraph (3)) the following: 

11 ‘‘(6) except as provided in subsection (c), use, 

12 in effectuating any sale of livestock, a forward con13 tract that— 

14 ‘‘(A) does not contain a firm base price 

15 that may be equated to a fixed dollar amount 

16 on the day on which the forward contract is en17 tered into; 

18 ‘‘(B) is not offered for bid in an open, pub19 lic manner under which— 

20 ‘‘(i) buyers and sellers have the oppor21 tunity to participate in the bid; and 

22 ‘‘(ii) buyers and sellers may witness 

23 bids that are made and accepted; 

24 ‘‘(C) is based on a formula price; or 


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1 ‘‘(D) subject to subsection (b), provides for 

2 the sale of livestock in a quantity in excess of— 

3 ‘‘(i) in the case of cattle, 40 cattle; 

4 ‘‘(ii) in the case of swine, 30 swine; 

5 and 

6 ‘‘(iii) in the case of other types of live7 stock, a comparable quantity of the type of 

8 livestock determined by the Secretary.’’; 

9 and 

10 (9) by adding at the end the following: 

11 ‘‘(b) ADJUSTMENTS.—The Secretary may adjust the 

12 maximum quantity of livestock described in subsection 

13 (a)(6)(D) to reflect advances in marketing and transpor14 tation capabilities if the adjusted quantity provides rea15 sonable market access for all buyers and sellers. 

16 ‘‘(c) EXEMPTION FOR COOPERATIVES.—Subsection 

17 (a)(6) shall not apply to— 

18 ‘‘(1) a cooperative or entity owned by a cooper19 ative, if a majority of the ownership interest in the 

20 cooperative is held by active cooperative members 

21 that— 

22 ‘‘(A) own, feed, or control livestock; and 

23 ‘‘(B) provide the livestock to the coopera24 tive for slaughter; 


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1 ‘‘(2) a packer that is not required to report to 

2 the Secretary on each reporting day (as defined in 

3 section 212 of the Agricultural Marketing Act of 

4 1946 (7 U.S.C. 1635a)) information on the price 

5 and quantity of livestock purchased by the packer; 

6 or 

7 ‘‘(3) a packer that owns 1 livestock processing 

8 plant.’’. 

9 (b) DEFINITIONS.—Section 2(a) of the Packers and 

10 Stockyards Act, 1921 (7 U.S.C. 182(a)) is amended by 

11 adding at the end the following: 

12 ‘‘(15) FIRM BASE PRICE.—The term ‘firm base 

13 price’ means a transaction using a reference price 

14 from an external source. 

15 ‘‘(16) FORMULA PRICE.— 

16 ‘‘(A) IN GENERAL.—The term ‘formula 

17 price’ means any price term that establishes a 

18 base from which a purchase price is calculated 

19 on the basis of a price that will not be deter20 mined or reported until a date after the day the 

21 forward price is established. 

22 ‘‘(B) EXCLUSION.—The term ‘formula 

23 price’ does not include— 

24 ‘‘(i) any price term that establishes a 

25 base from which a purchase price is calVerDate Nov 24 2008 00:37 May 22, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1086.IS S1086

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1 culated on the basis of a futures market 

2 price; or 

3 ‘‘(ii) any adjustment to the base for 

4 quality, grade, or other factors relating to 

5 the value of livestock or livestock products 

6 that are readily verifiable market factors 

7 and are outside the control of the packer. 

8 ‘‘(17) FORWARD CONTRACT.—The term ‘for9 ward contract’ means an oral or written contract for 

10 the purchase of livestock that provides for the deliv11 ery of the livestock to a packer at a date that is 

12 more than 7 days after the date on which the con13 tract is entered into, without regard to whether the 

14 contract is for— 

15 ‘‘(A) a specified lot of livestock; or 

16 ‘‘(B) a specified number of livestock over a 

17 certain period of time.’’. 

Æ 


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