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.
Bill: S.949 | Sponsor: Sen. Grassley, Chuck (R-IA)
Policy area: Agriculture and Food

Summary:
This bill establishes that a minimum of 50% of a covered packer's weekly volume of livestock slaughter must be purchased through spot market sales from nonaffiliated producers. (The term covered packer applies to a packer that is required to report to the Department of Agriculture each reporting day information on the price and quantity of livestock purchased by such packer and does not include a packer that owns only one livestock processing plant.)
A spot market sale is a purchase and sale of livestock by a packer from a producer under (1) an agreement that specifies a firm base price that may be equated with a fixed dollar amount on the date the agreement is entered into, (2) which the livestock are slaughtered not more than 14 days after the date on which the agreement is entered into, and (3) circumstances in which a reasonable competitive bidding opportunity exists on the date on which the agreement is entered into.

To amend the Agricultural Marketing Act of 1946 to foster efficient 
 markets and increase competition and transparency among packers that 
                   purchase livestock from producers.

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

SECTION 1. SPOT MARKET PURCHASES OF LIVESTOCK BY PACKERS.

    Chapter 5 of subtitle B of the Agricultural Marketing Act of 1946 
(7 U.S.C. 1636 et seq.) is amended--
            (1) by redesignating section 260 (7 U.S.C. 1636i) as 
        section 261; and
            (2) by inserting after section 259 the following:

``SEC. 260. SPOT MARKET PURCHASES OF LIVESTOCK BY PACKERS.

    ``(a) Definitions.--In this section:
            ``(1) Covered packer.--
                    ``(A) In general.--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 livestock purchased by the 
                packer.
                    ``(B) Exclusion.--The term `covered packer' does 
                not include a packer that owns only 1 livestock 
                processing plant.
            ``(2) Livestock.--The term `livestock' does not include--
                    ``(A) pork;
                    ``(B) poultry;
                    ``(C) a dairy-bred, dairy-bred cross, or beef 
                animal over 30 months of age; or
                    ``(D) a foreign-born beef animal.
            ``(3) Nonaffiliated producer.--The term `nonaffiliated 
        producer' means a producer of livestock--
                    ``(A) that sells livestock to a covered packer; and
                    ``(B)(i) that has less than 1 percent equity 
                interest in that covered packer;
                    ``(ii) in which that covered packer has less than 1 
                percent equity interest;
                    ``(iii) that has no officers, directors, employees, 
                or owners that are officers, directors, employees, or 
                owners of that covered packer; and
                    ``(iv) that has no fiduciary responsibility to that 
                covered packer.
            ``(4) Spot market sale.--
                    ``(A) In general.--The term `spot market sale' 
                means a purchase and sale of livestock by a covered 
                packer from a nonaffiliated producer--
                            ``(i) under an agreement that specifies a 
                        firm base price that may be equated with a 
                        fixed dollar amount on the date on which the 
                        agreement is entered into;
                            ``(ii) under which the livestock are 
                        slaughtered not more than 14 days after the 
                        date on which the agreement is entered into; 
                        and
                            ``(iii) under which a reasonable 
                        competitive bidding opportunity exists on the 
                        date on which the agreement is entered into, as 
                        determined under subparagraph (B).
                    ``(B) Reasonable competitive bidding opportunity.--
                For the purposes of subparagraph (A)(iii), a reasonable 
                competitive bidding opportunity is considered to exist 
                if--
                            ``(i) no written or oral agreement 
                        precludes the nonaffiliated producer from 
                        soliciting or receiving bids from other covered 
                        packers; and
                            ``(ii) no circumstance, custom, or practice 
                        exists that--
                                    ``(I) establishes the existence of 
                                an implied contract (as determined in 
                                accordance with the Uniform Commercial 
                                Code); and
                                    ``(II) precludes the nonaffiliated 
                                producer from soliciting or receiving 
                                bids from other covered packers.
    ``(b) General Rule.--Of the quantity of livestock that is 
slaughtered by a covered packer during each reporting week in each 
plant, the covered packer shall slaughter not less than 50 percent of 
the quantity through spot market sales from nonaffiliated producers.
    ``(c) Nonpreemption.--Notwithstanding section 259, this section 
does not preempt any requirement of a State or political subdivision of 
a State that requires a covered packer to purchase a greater percentage 
of livestock on the spot market than the percentage required under this 
section.
    ``(d) Relationship to Other Provisions.--Nothing in this section 
affects the interpretation of any other provision of this Act, 
including section 202.''.
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