| S 325 IS
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).
`(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.
`(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.
`(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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