Packers and Stockyards Act
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The Packers and Stockyards Act of 1921 ( 7 U.S.C. §§ 181-229b; P&S Act) regulates
meatpacking The meat-packing industry (also spelled meatpacking industry or meat packing industry) handles the slaughtering, processing, packaging, and distribution of meat from animals such as cattle, pigs, sheep and other livestock. Poultry is generally no ...
, livestock dealers, market agencies, live poultry dealers, and swine contractors to prohibit unfair or deceptive practices, giving undue preferences, apportioning supply, manipulating prices, or creating a monopoly. It was enacted following the release in 1919 of the Report of the
Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
on the meatpacking industry.


History and passage

As the outbreak of World War I occurred and the
cost of living Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a c ...
rose, President
Woodrow Wilson Thomas Woodrow Wilson (December 28, 1856February 3, 1924) was an American politician and academic who served as the 28th president of the United States from 1913 to 1921. A member of the Democratic Party, Wilson served as the president of ...
ordered the FTC to investigate the industry from the "hoof to the table" to determine whether or not there were any "manipulations, controls,
trusts A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settl ...
,
combinations In mathematics, a combination is a selection of items from a set that has distinct members, such that the order of selection does not matter (unlike permutations). For example, given three fruits, say an apple, an orange and a pear, there are t ...
, or
restraints Physical restraint refers to means of purposely limiting or obstructing the freedom of a person's bodily movement. Basic methods Usually, binding objects such as handcuffs, legcuffs, ropes, chains, straps or straitjackets are used for thi ...
out of harmony with the law or the public interest." The FTC reported packers were manipulating markets, restricting flow of foods, controlling the price of dressed meat, defrauding producers and consumers of food and crushing competition. The FTC, in fact, recommended governmental ownership of the stockyards and their related facilities. The meat packing industry had also become a prime concern of Wilson's
Attorney General In most common law jurisdictions, the attorney general or attorney-general (sometimes abbreviated AG or Atty.-Gen) is the main legal advisor to the government. The plural is attorneys general. In some jurisdictions, attorneys general also have exec ...
Alexander Mitchell Palmer. After threatening an antitrust suit, in February 1920 Palmer managed to force the "Big Five" packers (
Armour Armour (British English) or armor (American English; see spelling differences) is a covering used to protect an object, individual, or vehicle from physical injury or damage, especially direct contact weapons or projectiles during combat, or fr ...
, Cudahy, Morris, Swift and Wilson) to agree to a consent decree under the
Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. Th ...
which drove the packers out of all non-meat production, including stockyards, warehouses, wholesale and retail meat. Agitation for legislation to regulate the packers persisted into the
Warren Harding Warren Gamaliel Harding (November 2, 1865 – August 2, 1923) was the 29th president of the United States, serving from 1921 until his death in 1923. A member of the Republican Party, he was one of the most popular sitting U.S. presidents. ...
administration despite the decree. The
United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...
sought to protect farm profits through the
Emergency Tariff of 1921 An emergency is an urgent, unexpected, and usually dangerous situation that poses an immediate risk to health, life, property, or environment and requires immediate action. Most emergencies require urgent intervention to prevent a worsening ...
on May 27. Congress passed the Packers and Stockyards Act on August 15, 1921 as H.R. 6320 and the law went into effect in September 1921. Congress would go on to pass the Future Trading Act the next week and granted farmers' co-ops broad antitrust immunity in the
Capper–Volstead Act Capper–Volstead Act (P.L. 67-146), the Co-operative Marketing Associations Act (7 U.S.C. 291, 292) was adopted by the United States Congress on February 18, 1922. It gave “associations” of persons producing agricultural products certain exem ...
on February 18, 1922. The Act's purpose at the time it was passed was to "regulate interstate and foreign commerce in live stock, live-stock produce, dairy products, poultry, poultry products, and eggs, and for other purposes." It prohibited packers from engaging in unfair and deceptive practices, giving undue preferences to persons or localities, apportioning supply among packers in restraint of commerce, manipulating prices, creating a
monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...
or conspiring to aid in unlawful acts. The Act also made stockyards quasi-public utilities and required yard officers, agents and employees to register with the government. Stockyards were forbidden from dealing in the livestock they handled, and required them to maintain accurate weights and measures and pay shippers promptly. However, not all stockyards were under the jurisdiction of the Act. Only those with pen space larger than twenty thousand square feet were regulated. Today, the Act's scope has expanded to regulate the activity of livestock dealers, market agencies, live poultry dealers and swine contractors as well as meatpackers.


Interpretation


Court interpretation

The
Supreme Court of the United States The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
upheld the act in ''Stafford v. Wallace'' (1922).John D. Shively, and Jeffrey S. Roberts, ''Competition under the Packers and Stockyards Act: What Now,''
15 Drake J. Agric. L. 419 (2010).
Chief Justice
William Howard Taft William Howard Taft (September 15, 1857March 8, 1930) was the 27th president of the United States (1909–1913) and the tenth chief justice of the United States (1921–1930), the only person to have held both offices. Taft was elected pr ...
reasoned the act was a valid exercise under the interstate
Commerce Clause The Commerce Clause describes an enumerated power listed in the United States Constitution ( Article I, Section 8, Clause 3). The clause states that the United States Congress shall have power "to regulate Commerce with foreign Nations, and amon ...
because it addressed the same problem as the injunction upheld in '' Swift & Co. v. United States'' (1905). In 1996, a group of cattle feeders brought a class action lawsuit under the P&S Act against
Iowa Beef Packers Tyson Fresh Meats, Inc., formerly IBP, Inc. and Iowa Beef Processors, Inc., is an American meat packing company based in Dakota Dunes, South Dakota, United States. IBP was the United States' biggest beef packer and its number two pork processor. ...
for
captive supply Captive supply is a term for that part of the supply that is not owned by a company A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objectiv ...
agreements. In 2004, a jury delivered a verdict for the plaintiffs, finding damages of $1.2 billion. The verdict was then thrown out by the
United States Court of Appeals for the Eleventh Circuit The United States Court of Appeals for the Eleventh Circuit (in case citations, 11th Cir.) is a federal court with appellate jurisdiction over the following U.S. district courts: * Middle District of Alabama * Northern District of Alabama * ...
in ''Pickett v. Tyson Fresh Meats Inc.'' (2005) because it found the meatpacker had a legitimate business reason to limit competition. In 2008, a federal district court found that
Pilgrim's Pride Pilgrim's Pride Corporation is an American, multi-national food company, currently one of the largest chicken producers in the United States and Puerto Rico and the second-largest chicken producer in Mexico. It exited bankruptcy in December 2009 ...
had given undue advantages to
Lonnie "Bo" Pilgrim Lonnie Alfred "Bo" Pilgrim (May 8, 1928 – July 21, 2017) was the co-founder of Pilgrim's Pride, which at one time was one of the largest chicken producers in the United States. Pilgrim founded Pilgrim's Pride when he opened a feed store in 1946 ...
, its founder and chairman. Judge Emilio M. Garza of
United States Court of Appeals for the Fifth Circuit The United States Court of Appeals for the Fifth Circuit (in case citations, 5th Cir.) is a federal court with appellate jurisdiction over the district courts in the following federal judicial districts: * Eastern District of Louisiana * M ...
affirmed, over a dissent by Judge
Thomas Morrow Reavley Thomas Morrow Reavley (June 21, 1921 – December 1, 2020) was an American jurist, who was a Senior United States circuit judge of the United States Court of Appeals for the Fifth Circuit (and the oldest serving federal judge) at the time of his ...
. The Fifth Circuit
en banc In law, an en banc session (; French for "in bench"; also known as ''in banc'', ''in banco'' or ''in bank'') is a session in which a case is heard before all the judges of a court (before the entire bench) rather than by one judge or a smaller ...
then reversed, voting 9-7 in ''Wheeler v. Pilgrim's Pride Corp.'' (2009). Judge Reavley wrote that all claims under the P&S Act must prove adverse impact to competition, over a dissent by Judge Garza.


Agency interpretation

The P&S Act is administered by the
Grain Inspection, Packers and Stockyards Administration The Grain Inspection, Packers and Stockyards Administration (GIPSA) was an agency of the United States Department of Agriculture that facilitates the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products, and ...
(GIPSA) of the
United States Department of Agriculture The United States Department of Agriculture (USDA) is the United States federal executive departments, federal executive department responsible for developing and executing federal laws related to farming, forestry, rural economic development, ...
. In 2010, GIPSA Administrator J. Dudley Butler and
United States Assistant Attorney General Many of the divisions and offices of the United States Department of Justice are headed by an assistant attorney general. The president of the United States appoints individuals to the position of assistant attorney general with the advice and ...
for Antitrust Christine A. Varney held a series of hearing on
monopsony In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The microeconomic theory of monopsony assumes a single entity ...
,
market manipulation In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...
, and
market concentration In economics, market concentration is a function of the number of firms and their respective shares of the total production (alternatively, total capacity or total reserves) in a market. In any industry, a handful of firms that hold a significa ...
in agriculture. On June 22, 2010, GIPSA published a proposed rule that would have reduced the legal standard for
anti-competitive practices Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws differ among state and federal laws to ensure businesses do not engage in competitive practices that harm other, usuall ...
, forbidden unfair practices and undue advantages even without harm to competition, and ensured producers had access to arbitration. In addition, the proposed rule sought to combat
price fixing Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
by prohibiting packers from selling to other packers and preventing multiple packers from using a single buyer.
Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a c ...
Report R41673, USDA's "GIPSA Rule" on Livestock and Poultry Marketing Practices, by Joel L. Greene (2015).
The proposed rule was supported by the National Farmers Union and the U.S. Cattlemen's Association but opposed by the National Cattlemen's Beef Association and the
National Chicken Council The National Chicken Council (NCC) is a non-profit trade association based in Washington, D.C. that represents the interests of the United States chicken industry to the United States Congress and United States federal agencies. The association ch ...
. USDA estimated the rule would cost between $21.3 million to $72.1 million. The
American Meat Institute The American Meat Institute (AMI) was the oldest and largest trade association representing the U.S. meat and poultry industry. In 2015, it was merged into the North American Meat Institute (NAMI). Overview Founded in 1906 in Chicago as the Amer ...
estimated the rule would cost $14 billion. On November 3, 2011, GIPSA announced it would publish the final rule, but without the controversial price fixing measures. On November 18, 2011, Congress defunded USDA's implementation of most of the rest of the rule. Assistant AG Varney and Administrator Butler had both resigned by the end of January 2012. Congress continued defunding the rule in riders to the 2013, 2014, and 2015 appropriation bills. An amendment to permanently repeal the GIPSA rule in the
Agricultural Act of 2014 The Agricultural Act of 2014 (; , also known as the 2014 U.S. Farm Bill), formerly the Federal Agriculture Reform and Risk Management Act of 2013, is an act of Congress that authorizes nutrition and agriculture programs in the United States for t ...
failed after meatpackers' opposition to the rule was lampooned on ''
Last Week Tonight with John Oliver ''Last Week Tonight with John Oliver'' (often abridged as ''Last Week Tonight'') is an American late-night talk and news satire television program hosted by comedian John Oliver. The half-hour-long show premiered in April 2014 on HBO. ''Last Wee ...
''.Chickens: Last Week Tonight with John Oliver (HBO) - YouTube
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Amendment

The Act has been updated several times to keep pace with a changing and dynamic industry. The first major amendment to the Act was in 1958, when Congress expanded the
jurisdiction Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels. Jur ...
of the
United States Department of Agriculture The United States Department of Agriculture (USDA) is the United States federal executive departments, federal executive department responsible for developing and executing federal laws related to farming, forestry, rural economic development, ...
(USDA) to include all
auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...
markets operating in commerce. Before 1958, only auction markets with an area of 20,000 square feet (1,858 m2) or more were covered. In addition, jurisdiction over market agencies and dealers was expanded to include all of their livestock activities in commerce, including those away from stockyards. In 1976, the 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
bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...
ed; #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 The Farm Security and Rural Investment Act of 2002, also known as the 2002 Farm Bill, includes ten titles, addressing a great variety of issues related to agriculture, ecology, energy, trade, and nutrition. This act has been superseded by the 2007 ...
(2002
Farm Bill In the United States, the farm bill is the primary agricultural and food policy instrument of the federal government. Every five years, Congress deals with the renewal and revision of the comprehensive omnibus bill. Johnson, R. and Monke, J. (8 ...
) amended the Act to regulate certain activities of swine contractors who enter into swine production contracts with contract growers. In general, the amendment made swine contractors subject to certain provisions of the Packers and Stockyards Act. The amendment prohibited certain activities of swine contractors, required swine contractors to maintain certain records, and held them responsible for the acts of their employees, officers, and agents. The amendment also gave swine production contract growers the right to sue swine contractors in
federal district court The United States district courts are the trial courts of the U.S. federal judiciary. There is one district court for each federal judicial district, which each cover one U.S. state or, in some cases, a portion of a state. Each district cou ...
. The amendment did not impose any new bonding or registration requirements, establish a trust for swine production contract growers, or establish any prompt payment requirements for swine contractors.


Amendments to 1921 Act

Chronological amendments and revisions to the Packers and Stockyards Act of 1921.


See also

*
Packers and Stockyards Act, Section 409 Section 409 of the Packers and Stockyards Act regulates that meatpackers pay promptly for livestock that they purchase. It requires that any meatpacker or dealer buying livestock to pay up in full to the seller before the end of the next busi ...
* Packer concentration


References

* * * * *


External links

* {{COMPS, 10273
Packers and Stockyards Division
of the USDA
Regulations Under the Packers and Stockyards Act
from the
Legal Information Institute The Legal Information Institute (LII) is a non-profit, public service of Cornell Law School that provides no-cost access to current American and international legal research sources online alaw.cornell.edu The organization is a pioneer in the del ...

Regulations Under the Packers and Stockyards Act
in the e-CFR 1921 in law 67th United States Congress Food law United States federal agriculture legislation