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108th CONGRESS
1st Session
S. 325
To amend the Agricultural Marketing Act of 1946 to increase competition
and transparency among packers that purchase livestock from producers.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 6, 2003
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 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 by adding at the end the following:
``SEC. 260. SPOT MARKET PURCHASES OF LIVESTOCK BY PACKERS.
``(a) Definitions.--In this section:
``(1) Cooperative association of producers.--The term
`cooperative association of producers' has the meaning given
the term in section 1a of the Commodity Exchange Act (7 U.S.C.
1a).
``(2) 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.
``(3) Nonaffiliated producer.--The term `nonaffiliated
producer' means a producer of livestock--
``(A) that sells livestock to a packer;
``(B) that has less than 1 percent equity interest
in the packer, which packer has less than 1 percent
equity interest in the producer;
``(C) that has no officers, directors, employees,
or owners that are officers, directors, employees, or
owners of the packer;
``(D) that has no fiduciary responsibility to the
packer; and
``(E) in which the packer has no equity interest.
``(4) Spot market sale.--
``(A) In general.--The term `spot market sale'
means a purchase and sale of livestock by a packer from
a producer--
``(i) under 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;
``(ii) under which the livestock are
slaughtered not more than 7 days after the date
on which the agreement is entered into; and
``(iii) under circumstances in which a
reasonable competitive bidding opportunity
exists on the date on which the agreement is
entered into.
``(B) Reasonable competitive bidding opportunity.--
For the purposes of subparagraph (A)(iii),
circumstances in which a reasonable competitive bidding
opportunity shall be considered to exist if--
``(i) no written or oral agreement
precludes the producer from soliciting or
receiving bids from other 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 producer from
soliciting or receiving bids from other
packers.
``(b) General Rule.--Of the quantity of livestock that is
slaughtered by a covered packer during each reporting day in each
plant, the covered packer shall slaughter not less than the applicable
percentage specified in subsection (c) of the quantity through spot
market sales from nonaffiliated producers.
``(c) Applicable Percentages.--
``(1) In general.--Except as provided in paragraph (2), the
applicable percentage shall be--
``(A) in the case of a covered packer that is not a
cooperative association, 25 percent; and
``(B) in the case of a covered packer that is a
cooperative association, 12.5 percent.
``(2) Exceptions.--
``(A) Covered packers with a high percentage of
captive supply cattle.--In the case of a covered packer
(other than a covered packer described in subparagraph
(B)) that reported to the Secretary in the 2001 annual
report that more than 75 percent of the cattle of the
covered packer were captive supply cattle, the
applicable percentage shall be the greater of--
``(i) the difference between the percentage
of captive supply so reported and 100 percent;
and
``(ii)(I) during each of calendar years
2004 and 2005, 5 percent;
``(II) during each of calendar years 2006
and 2007, 15 percent; and
``(III) during calendar year 2008 and each
calendar year thereafter, 25 percent.
``(B) Cooperative associations with high percentage
of captive supply cattle.--In the case of a covered
packer that is a cooperative association and that
reported to the Secretary in the 2001 annual report
that more than 87.5 percent of the cattle of the
covered packer were captive supply cattle, the
applicable percentage shall be the greater of--
``(i) the difference between the percentage
of captive supply so reported and 100 percent;
and
``(ii)(I) during each of calendar years of
2004 and 2005, 5 percent;
``(II) during each of calendar years of
2006 and 2007, 7.5 percent; and
``(III) during calendar year 2008 and each
calendar year thereafter, 12.5 percent.
``(d) 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 on the spot market a
greater percentage of the livestock purchased by the covered packer
than is required under this section.
``(e) 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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