Market Agency Selling on Commission (SOC) or Stockyard Owner

Market Agencies Selling Livestock on Commission (SOC) and Stockyard Owners

Under the Packers and Stockyards Act (the Act), a person who sells livestock, in commerce, on behalf of consignors, or furnishes stockyard services, is a market agency selling livestock on commission. The person who operates a stockyard is considered a stockyard owner. A stockyard is a public market for livestock producers, feeders, market agencies, and buyers, where livestock is received, held, or kept for sale or shipment in commerce. 

This page describes the responsibilities of market agencies selling livestock on commission (markets) and stockyard owners under the Act, both prior to commencing business operations and on an ongoing basis.  Please refer to the Packers and Stockyards Act, 1921, as Amended and Supplemented, and the Regulations issued thereunder, for a complete list of legal responsibilities. If you have further questions, contact one of the Packers and Stockyards Division (PSD) offices listed on the Contact Packers and Stockyards page.

Index for Page
Initial Steps for Complying with the Packers and Stockyards Act

Ongoing Responsibilities of Market Agencies

How New Market Agencies Comply with the Packers and Stockyards Act

The following instructions cover most situations, although new markets or stockyard owners should contact PSD and explain their business plans before starting operations, especially if they plan to operate in other capacities subject to the Act. All forms should be submitted to their respective PSD Regional Office. 

Register

Register with PSD before operating as a market. Complete form:

File Bond or Bond Equivalent

Obtain either a Clause 1 bond, bond equivalent, or some combination of both. A bond equivalent (such as a trust fund agreement governing funds deposited in a Federally insured account or a letter of credit) is an alternative to a surety bond. The bond or bond equivalent protects livestock sellers, in case you fail to meet your remittance obligations.

Markets should select clause 1 on the bond or bond equivalent form for operations as a market agency selling livestock on commission. The size of the clause 1 bond or bond equivalent is based on the volume of business, which is generally the average volume per sale. The minimum bond amount is $10,000.  See the form instructions for guidance and How to Comply with the Bond Requirement for additional information, including how to calculate the required bond amount.

Establish and Maintain Custodial (Trust) Accounts

  • Establish a separate bank account designated as a “Custodial Account for Shippers’ Proceeds,” for use exclusively to collect and disburse proceeds from livestock sales. 
  • Deposit all livestock sale proceeds into the account.
  • Maintain a separate business account for market operating expenses and proceeds from non-livestock items, such as tack, rabbits, or chickens.
  • Use custodial funds only for permitted purposes: paying consignors, covering lawful charges against the consignment of livestock (as defined by PSD regulations), and paying the market for commissions and yardage.
  • Conduct a monthly reconciliation of the custodial account using the special custodial account report and correct any shortage identified by depositing additional funds (such as by drawing on a line of credit or transferring funds from the operating account) into the account equal to the shortage.
  • Submit the special custodial account report when requested by PSD for review.

See the Custodial Accounts fact sheet (pdf) for information about custodial accounts and the Market Guide to Custodial Accounts for guidance on maintaining custodial accounts, including PSD’s analysis requirements and audits, and what is a lawful charge against a custodial account.

Post Tariff

Stockyard owners and markets must publicly post a list of their rates and charges, known as a tariff.  

At least 10 days before you want to make a new tariff effective:

  • Post the new tariff at the market so consignors and buyers have time to review and understand the changes; and
  • File a signed copy of the new tariff with PSD for its review and acceptance. 

Once the tariff is approved, post the stamped and accepted tariff at your market, replacing the proposed tariff and any previously accepted tariffs. Begin using the new tariff on the effective date designated by PSD. 

Relevant Links: 

  • The sample tariff shows how rates and charges can be listed.
  • The tariff checklist indicates what information must be included on the posted tariff.
  • See the Tariffs page for information about how to obtain copies of the tariffs filed with PSD.

Posting Name Change/New Stockyard

  • If taking over a previously posted stockyard, complete a posting name change form.
  • If opening a new stockyard not previously posted, complete a stockyard information form.  

Ongoing Responsibilities for Market Agencies 

Prompt Remittance of Livestock Proceeds 

After a livestock sale, the market must send the consignor their money and a detailed sales report by the next business day. The report must show the number, weight, and price of the animals sold, the date of the sale, and any charges like commission or yardage. This ensures that sellers are paid promptly and have a clear record of the transaction, which protects both sides and keeps the process transparent. 

Maintain Accurate Scales

Ensure all scales used by markets for buying or selling livestock are accurate.

Weigh Accurately

Only trained weighmasters may weigh livestock. Ensure each weighmaster signs an Acknowledgment Form stating they know the rules, including:

  • Keep the scale balanced at zero;
  • Verify the zero balance every 15 minutes or 15 drafts;
  • Document the zero-balance check with a printed and time-stamped ticket;
  • Weigh each group to the nearest scale division;
  • Print a ticket only when the livestock is on the settled scale;
  • Allow all interested parties to witness the weighing; and
  • Reweigh immediately upon request.

See the scales and weighing webpage for more explanation of these requirements. 

Use Fair Business Practices

It is a violation of the P&S Act for any market or stockyard owner to engage in unfair, discriminatory, or deceptive practices.

Keep Accurate Records

Keep clear records of all business transactions, including the true ownership of the business and any livestock. Keep records for at least two years, or longer if instructed by the PSD. 

File Annual Reports with PSD

Each individual, corporation, and association engaged in business as a market agency selling livestock on a commission basis is required to file an annual report with PSD. See the instructions to complete Annual Report of Market Agency Selling on Commission, Form PSD 3003.

Audit Availability

Upon request, each market and each stockyard owner must allow authorized representatives of the Secretary of Agriculture to enter its premises during normal business hours and provide access to any business records required by the Act. 

Post the Stockyard Notice

If the USDA classifies a facility as a stockyard, it must display the posting notice clearly near the ring for buyers and sellers to see.   
Filing a Complaint

Anyone may file a complaint if they believe a market or stockyard owner is not complying with the Act. See the Reporting Violations page for information about how to file a complaint. 

Resources