Stockyards Act created in 1921 to protect competition in meat, poultry industry

Marilyn Tennissen Jul. 23, 2008, 2:52pm

The U.S. Fifth Circuit Court of Appeals recently reinterpreted the Packers and Stockyards Act in a case by poultry farmers against Pilgrim's Pride.

The judges tossed out precedent by ruling that plaintiffs do not have to prove that a defendant's actions adversely impacted competition. (see "Appeals court breaks from precedent on Stockyards Act ruling in Pilgrim's Pride case" )

The Packers and Stockyards Act was enacted in 1921, after years of concern about anti-competitive activities by the nation's major meatpackers.

The purpose of the P&S Act is to "assure fair competition and fair trade practices, to safeguard farmers and ranchers � to protect consumers � and to protect members of the livestock, meat and poultry industries from unfair, deceptive, unjustly discriminatory and monopolistic practices."

The act was originally designed to regulate the five largest meat packing companies: Armour, Cudahy, Morris, Swift and Wilson. Today, the act regulates the activity of packers, livestock dealers, market agencies, live poultry dealers and swine contractors.

The legislation gave the U.S. secretary of agriculture authority to regulate livestock marketing activities at public stockyards and the operations of meat packers and live poultry dealers.

Stockyards were forbidden from dealing in the livestock they handled, they were required to maintain accurate weights and measures and pay shippers promptly.

In Stafford v. Wallace (1922), it was argued that the act was unconstitutional since it exceeded the powers granted to the federal government. The Supreme Court, however, ruled that the regulation was licensed by the Commerce Clause, and was therefore constitutional.

The first major amendment to the P&S Act was in 1958, when Congress expanded the US Department of Agriculture's jurisdiction to all auction markets operating in commerce. Prior to 1958, only auction markets with an area of 20,000 square feet or more were covered.

In 1976, the P&S Act was amended to increase financial protection to livestock producers and to expand USDA jurisdiction.

This amendment:

  • Required meat packers with annual livestock purchases of over $500,000 to be bonded;
  • Provided trust protection for producers in the event of nonpayment for livestock by a meat packer;
  • Expanded USDA's jurisdiction over wholesale brokers, dealers, and distributors marketing meat in commerce; and
  • Authorized the agency to assess civil penalties of not more than $10,000 per violation.

    In subsequent legislation that amount was increased to $11,000 for packers, swine contractors, stockyard owners, market agencies, or dealers, and $27,000 for live poultry dealers.

    In 1987, the Act was amended to provide trust protection to live poultry sellers and contract growers in the event of nonpayment for poultry by live poultry dealers and in 2000 it was amended to require P&SP to perform an annual assessment of the cattle and hog industries.

    The Farm Security and Rural Investment Act of 2002, better known as the 2002 Farm Bill, amended the P&S Act to regulate certain activities of swine contractors who enter into swine production contracts with swine production contract growers.

    The P&S Act is administered by the U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration.

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