The Packers and Stockyards Act passed in 1921 to maintain competition in the livestock industry.

The Act contains provisions banning price discrimination, the manipulation of prices, weight manipulation of livestock or carcasses, manipulation of carcass grades, commercial bribery, and misrepresentation of source, condition, or quality of livestock, in addition to other unfair and deceptive practices. The importance of the law has increased as concentration in the livestock industry continues to grow dramatically.

Unfortunately, the PSA is a model case of a good law that is not enforced. Complaints and petitions to the federal Grain Inspection, Packers and Stockyards Administration (GIPSA) are not acted upon, and the agency remains understaffed. A recent GAO report chastised GIPSA for not using its authority to protect farmers, and made a list of recommended reforms.

A primary problem with enforcement is the difficulty in proving anti-competitive practices. Concentration caps have been proposed to automatically bring action to maintain competition if one firm controls a certain percentage of the market. Minnesota passed legislation that copies verbatim the federal PSA language directly into state law, making it easier to bring PSA state cases on the state level. Other states have attempted to pass legislation specifically banning price discrimination.

New rules are under development. A primary problem with enforcement is the difficulty in proving anti-competitive practices. Other states have attempted to pass legislation specifically banning price discrimination. On the federal level, the Packers and Stockyards Act was amended by the Livestock Mandatory Reporting Act of 1999 requiring GIPSA to collect information about marketing contracts from packers and make them publicly available. While the USDA slowly moves to implement it's own new regulations and holds hearings to ensure fair competition, it is also considering a model proposal from the Western Organization of Resource Councils (WORC). In this section we will continue to update these efforts to strengthen and enforce the Packers and Stockyards Act.

View the full text of the Packers and Stockyards Act.

View key sections:

• Section 202
• Section 308
• Section 401
• Section 407
• Regulations Under the Packers and Stockyards Act Part 201
• Regulations Under the Packers and Stockyards Act Part 203 - Statements of general policy issued under The Packers and Stockyards Act

RULES

• Agriculture Concentration Caps - Federal
  Between 1975-77, Neil Smith (U.S. Representative, IA, 1959-1994) held hearings of the U.S. House Small Business Committee to examine other countries' laws regulating packer ownership and concentration issues. Several countries assume that at a certain level of industry concentration, anti-competitive practices are unavoidable, and action to maintain competition must therefore follow immediately. The Committee found that Germany had a rule limiting packers from controlling more than 25 percent of the market. Smith later introduced the Meat Industry Act To Preserve Competition (HR 5733) in 1979, modeled on this standard (at this time the largest U.S. packer had 22 percent of the market). More...
• Packers and Stockyard Act (PSA) - Minnesota
  Minnesota passed legislation in 1989 that copies the federal PSA language directly into state law to create a "Minnesota Packers and Stockyards Act." Nebraska, Kansas and Missouri have examined or introduced similar bills on the issue, though none have passed. The intent is to make it easier for farmers to bring PSA-related cases on the state level. Enforcement of the Minnesota law remains a problem. More...
• WORC Petition on Concentrated Ownership
  U.S. Department of Agriculture's (USDA) Grain Inspection, Packers and Stockyards Administration (GIPSA) held a hearing in September 2000 on captive supplies, examining a rule proposed by the Western Organization of Resource Councils (WORC) in 1996. The rule would prohibit packers from owning and feeding cattle, unless the cattle are sold for slaughter in an open, public market. The rule would also prohibit packers from procuring cattle for slaughter through the use of a forward contract, unless the contract is offered or bid in an open, public manner. More...