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Legislation Strengthens Packers and Stockyards Act

A bipartisan group of senators recently introduced legislation aimed to strengthen the 1921 Packers and Stockyards Act. The introduced legislation goal is to improve competition in livestock markets and fairness in the production and sale of agricultural commodities.

"Competitive and Fair Agricultural Markets Act of 2006," introduced by Sen. Tom Harkin, D-Iowa, Sen. Mike Enzi, R-Wyo., and Sen. Craig Thomas, R-Wyo., proposes a series of changes in response to the failure by the USDA to prevent unfair, manipulative and anti-competitive behavior prohibited under the Packers and Stockyards Act. This bill will also strengthen the ability of producers to succeed in cases involving unfair and manipulative practices by packers and provide needed protections for producers that use agricultural contracts. 

Recently, a USDA Inspector General's report commissioned detailed widespread inaction at the Grain Inspection, Packers and Stockyards Administration in enforcing the Packers and Stockyards Act. The report detailed actions by management to prevent employees from conducting investigations into complaints of anti-competitive behavior and efforts to cover-up the lack of enforcement through inflating the reported number of investigations.  The report also makes clear the lack of attention by high level USDA officials to oversee and manage GIPSA to ensure enforcement of the Packers and Stockyards Act.  

"We've witnessed a widespread failure by USDA in enforcing existing producer protections," Harkin says. "We need to get rid of extra layers of bureaucracy and allow competition issues to be in the forefront, rather than swept under the rug as they currently are." 

The bill would:     

• Reorganize USDA to establish an Office of Special Counsel whose sole responsibility will be to investigate and prosecute violations on competition matters. Currently, the Deputy Administrator at GIPSA oversees the Packers and Stockyards program and has the responsibility of enforcing the Packers and Stockyards Act. GIPSA personnel responsible for investigating violations of the Packers and Stockyards Act would be transferred to The Office of Special Counsel. The Special Counsel would be appointed by the President and confirmed by the Senate. This position will also serve as a liaison between the Department of Justice and Federal Trade Commission. 

Make the following amendments to the Packers and Stockyards Act:  

• Strengthen Producer Protections by making it easier for them to prove unfair actions by packers without additional burdens of having to prove adverse affects on competition. For example, recent court decisions such as London vs. Fieldale Farms have ruled that in order for producers to succeed in cases involving unfair actions they must prove how it adversely affects competition for their region. These rulings will now complicate USDA's ability to enforce the Packers and Stockyards Act.
• Strengthen USDA's authority in enforcing the Packers and Stockyards Act over the poultry industry and make it more in line with livestock. Currently, it is illegal for poultry integrators to engage in unfair or anti-competitive practices, but the enforcement section of the law to prosecute violations was left out many years ago.

Make the following changes to the Agricultural Fair Practices Act:

• Prohibits unfair or deceptive practices by a person that affects the marketing, receiving, purchasing, sale or contracting of agricultural commodities.
• Provides needed contract protections to ensure that the contract clearly spells out what is required of the producer. Requires giving the producer at least 3 days to review or cancel the contract. Prevents confidentiality clauses so that producers are free to share the contract with family members or a lawyer to help them decide whether or not they should sign it. The legislation would also protect producers from having their contracts prematurely terminated if they have made a sizable capital investment. The bill also prevents mandatory arbitration so that producers are not prevented from going to the courts to speak out against unfair actions by companies.
• Prevent discrimination against producers belonging to an organization or cooperative by removing a disclaimer clause allowing processors, handlers, or contractors to refuse to do business with producers just because they belong to such organizations.