I
107TH CONGRESS
2D SESSION
H. R. 5247
To amend the Agricultural Marketing Act of 1946 to increase competition
and transparency among packers required to report information on the
price and quantity of livestock purchased by the packer.
IN THE HOUSE OF REPRESENTATIVES
JULY 26, 2002
Mr. LATHAM (for himself, Mr. GANSKE, Mr. NUSSLE, and Mr. THUNE) intro-
duced the following bill; which was referred to the Committee on Agri-
culture
A BILL
To amend the Agricultural Marketing Act of 1946 to in-
crease competition and transparency among packers re-
quired to report information on the price and quantity
of livestock purchased by the packer.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Livestock Packer and
Producer Fairness Act of 2002’’.
SEC. 2. REQUIRED SPOT MARKET PURCHASES OF LIVE-
STOCK BY PACKERS.
(a) IN GENERAL.—Chapter 5 of subtitle B of the Ag-
ricultural Marketing Act of 1946 (7 U.S.C. 1636 et seq.)
is amended by adding at the end of the following new sec-
tion:
‘‘SEC. 260. REQUIRED SPOT MARKET PURCHASES OF LIVE-
STOCK BY PACKERS.
‘‘(a) DEFINITIONS.—In this section—
‘‘(1) COOPERATIVE.—The term ‘cooperative’
has the meaning given the term ‘cooperative associa-
tion of producers’ in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
‘‘(2) COVERED
PACKER.—The term ‘covered
packer’ means a packer that is required under this
subtitle to report to the Secretary each reporting
day information on the price and quantity of live-
stock purchased by the packer. The term does not
include a packer that owns only one livestock proc-
essing plant.
‘‘(3) NONAFFILIATED
PRODUCER.—The term
‘nonaffiliated producer’ means a producer that—
‘‘(A) sells livestock to a packer in which
the packer has no equity interest;
‘‘(B) has less than one percent equity in-
terest in the packer and the packer has less
than one percent equity interest in the pro-
ducer;
‘‘(C) has no officers, directors, employees,
or owners that are officers, directors, employ-
ees, or owners of the packer; and
‘‘(D) has no fiduciary responsibility to the
packer.
‘‘(4) SPOT
MARKET
PURCHASE.—The term
‘spot market purchase’ means the purchase of live-
stock by a packer under circumstances in which—
‘‘(A) the purchase agreement specifies a
firm base price that may be equated with a
fixed dollar amount on the day the agreement
is entered into;
‘‘(B) the livestock are to be slaughtered
not more than seven days after the date of the
agreement;
‘‘(C) no other written or oral agreement
precludes the seller of the livestock from solic-
iting or receiving bids from other packers; and
‘‘(D) no circumstances, customs, or prac-
tices exist that establishes the existence of an
implied contract, as defined by the Uniform
Commercial Code, or precludes the seller of the
livestock from soliciting or receiving bids from
other packers.
‘‘(b) SPOT MARKET PURCHASES REQUIRED.—Of the
quantity of livestock slaughtered by a covered packer dur-
ing each reporting day in each plant of the packer, the
covered packer shall slaughter not less than the applicable
percentage specified in subsection (c) or (d) of livestock
that were purchased by the packer through spot market
purchases from nonaffiliated producers.
‘‘(c) APPLICABLE PERCENTAGES.—Except as pro-
vided in subsection (d), the applicable percentage shall
be—
‘‘(1) 12.5 percent for a covered packer that is
a cooperative; and
‘‘(2) 25 percent for a covered packer that is not
a cooperative.
‘‘(d) TRANSITIONAL PERCENTAGES.—
‘‘(1) SPECIAL
RULE
FOR
COOPERATIVES.—In
the case of a covered packer that is a cooperative
and that reported more than 87.5 percent captive
supply cattle in its 2001 annual report to the Sec-
retary, the applicable percentage shall be the greater
of—
‘‘(A) the difference between 100 and the
percentage of captive supply so reported; and
‘‘(B) the following percentages:
‘‘(i) During each of the calendar years
of 2004 and 2005, 5 percent.
‘‘(ii) During each of the calendar
years of 2006 and 2007, 7.5 percent.
‘‘(iii) During the calendar year 2008
and each calendar year thereafter, 12.5
percent.
‘‘(2) SPECIAL
RULE
FOR
OTHER
COVERED
PACKERS.—In the case of a covered packer that is
not a cooperative and that reported more than 87.5
percent captive supply cattle in its 2001 annual re-
port to the Secretary, the applicable percentage shall
be the greater of—
‘‘(A) the difference between 100 and the
percentage of captive supply so reported; and
‘‘(B) the following percentages:
‘‘(i) During each of the calendar years
of 2004 and 2005, 5 percent.
‘‘(ii) During each of the calendar
years of 2006 and 2007, 15 percent.
‘‘(iii) During the calendar year 2008
and each calendar year thereafter, 25 per-
cent.
‘‘(e) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall affect the interpretation of any other provision
of this Act, including section 202.’’.
(b) NONPREEMPTION.—Section 259 of the Agricul-
tural Marketing Act of 1946 (7 U.S.C. 1636h) is
amended—
(1) by inserting ‘‘(a) REPORTING AND PUBLI-
CATION OF INFORMATION.—’’ after ‘‘In order’’; and
(2) by adding at the end of the following new
subsection:
‘‘(b) SPOT MARKET PURCHASES.—This section does
not preempt any requirement of a State or political sub-
division of a State that requires a packer to purchase on
the spot market a greater percentage of the livestock pur-
chased by the packer than is required under section 260.’’.
(c) APPLICATION OF AMENDMENT.—The amendment
made by subsection (a) shall apply to covered producers
(as defined in such amendment) beginning January 1,
2004.
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