When did swine contractors become subject to the Packers and Stockyards Act?
The Farm Security and Rural Investment Act of 2002, better known as the 2002 Farm Bill, amended the Packers and Stockyards Act of 1921 (Act) to regulate certain activities of swine contractors who enter into swine production contracts.
Whom do the swine production contracts provisions of the P&S Act impact?
Anyone who is a "swine contractor" or a "swine production contract grower."
What is a "swine contractor"?
A "swine contractor" is a person or business that has a growout contract or other arrangement, (called a swine production contract) under which another person or business (called a swine production grower) raises and cares for swine according to the instructions of another person.
The swine contractor must obtain swine to be sold for slaughter or slaughtered commerce. All packing plants operated in commerce are federally inspected.
What is a "swine production contract grower?"
A "swine production contract grower" is a person or business that raises and cares for swine according to another person's instructions.
What is a "swine production contract?"
A "swine production contract" is any growout contract or arrangement under which a person or business raises and cares for swine according to the instructions of another person. The person providing instructions does not have to own the swine.
A+B Farm has 500 swine it wants to finish for slaughter at a federally inspected packer.
F.O. Farm has a 1,000 head finishing operation.
A+B Farm contracts with F.O. Farm to finish the swine using certain feeds and medications.
In this example:
Swine contractor: A+B Farm
Swine Production Contract Grower: F.O. Farm
Swine Production Contract: Agreement between A+B Farm and F.O. Farm
What types of persons and businesses are impacted?
Any person or business that meets the definition of swine contractor, or swine production contract grower, including packers, producers, feed companies, and investors.
What do these provisions do?
In general, the provisions added swine contractors as subject to certain provisions of the Packers and Stockyards Act. The provisions prohibit certain activities of swine contractors, require swine contractors to maintain certain records, and hold them responsible for the acts of its employees, officers, and agents. It also gives swine production contract growers the right to bring a lawsuit against swine contractors in Federal District Court.
Conduct prohibited under the Packers and Stockyards Act?
Swine contractors are subject to all of the prohibitions contained in Section 202 of the Act (pdf).
- Using any unfair, unjustly discriminatory, or deceptive practice.
- Giving any unreasonable preference or advantage to any person or locality.
- Apportioning supply if apportioning supply restrains commerce or creates a monopoly.
- Manipulating or control prices.
What is an "unfair practice?"
Whether or not a practice is "unfair" is determined on a case-by-case basis after reviewing all the evidence. As an example, using false weights has been determined to be an unfair practice.
What is the recordkeeping requirement?
Swine contractors are required to keep and maintain records that fully and correctly disclose all transactions involved in their swine contracting business(es). The records must by maintained for two full years, or longer if instructed by the AMS Administrator. Although growers are not required to keep records, it is a good idea for them to do so in case there is a contract dispute, or other violation of the P&S Act. Records are usually the best evidence of the parties' agreement and what happened after the agreement. Records are essential to an effective investigation.
Are there any new bonding or registration requirements?
Did the new provisions establish a trust for swine production contract growers?
Did the new provisions establish any prompt payment requirements for swine contractors?
How do the provisions help growers?
First, if a grower thinks a swine contractor has violated the P&S Act in any way, he or she should call the Midwestern Regional Office of the Packers and Stockyards Division (PSD) in Des Moines, Iowa (our swine office), the Hotline, or send in a complaint via PSDComplaints@usda.gov. PSD will investigate the complaint. If warranted, PSD will take action against the swine contractor. If PSD initiates an administrative action, an administrative law judge could order the swine contractor to stop violating the law and fine the swine contractor up to $11,000 per violation. By law, those persons assessed fines (called civil penalties) must pay them to the U.S. Government.
Second, if a grower believes that a swine contractor has violated the P&S Act relating to its swine production contract, the grower can sue the contractor by filing suit in Federal District Court alleging that the contractor has violated the P&S Act. If the grower wins the lawsuit, the contractor will have to pay the grower the full amount of damages caused by the contractor's violation of the P&S Act.
Third, the PSD engages in oversight of swine contractors as part of its enforcement of the swine contract provisions. PSD regularly investigates packers and includes a review of swine production contracts in the investigations. PSD also respond to any complaints that it receives.
For inquiries, questions, or information, please contact our Midwestern Regional Office in Des Moines, Iowa:
U.S. Department of Agriculture
210 Walnut Street
Des Moines, IA 50309
To report suspected violations by swine contractors, please:
- Call the Violations Hotline at 833-342-5773, or
- Send an e-mail complaint to PSDComplaints@usda.gov