The Swine Production Contracts Provisions of the Packers and Stockyards Act
- When did swine contractors become subject to the Packers and Stockyards Act?
- Who is impacted by the swine production contracts provisions of the Packers and Stockyards Act?
- What is a "swine contractor?"
- What is a "swine production contract grower?"
- What is a "swine production contract?"
- What types of persons and businesses are impacted?
- What do these provisions do?
- Conduct prohibited under the Packers and Stockyards Act?
- What is an "unfair practice?"
- What is the recordkeeping requirement?
- 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?
The Farm Security and Rural Investment Act of 2002, better known as the 2002 Farm Bill, amended the Packers and Stockyards Act of 1921 (the Act) to regulate certain activities of swine contractors who enter into swine production contracts.
Anyone who is a "swine contractor" or a "swine production contract grower."
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 must be obtained by the swine contractor to be sold for slaughter or slaughtered commerce. All packing plants operated in commerce are federally inspected.
A swine production contract grower is a person or business that raises and cares for swine according to another person's instructions.
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 giving the 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
Any person or business that meets the definition of swine contractor, or swine production contract grower, including: packers, producers, feed companies, and investors.
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 sue swine contractors in Federal District Court.
Swine contractors are subject to all of the prohibitions contained in Section 202 of the Act.
- 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.
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.
Swine contractors are required to keep and maintain records that fully and correctly disclose all transactions involved in their swine contracting business(es). 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 Packers and Stockyards Act. Records are usually the best evidence of the parties' agreement and what happened after the agreement. Records are essential to an effective investigation.
The provisions help growers in three ways:
First, if a grower thinks a swine contractor has violated the Packers and Stockyards Act in any way, he or she should call the Packers and Stockyards Program' Midwestern regional office in Des Moines, Iowa (our swine office), the GIPSA Hotline, or send in a complaint via PSPComplaints@usda.gov. P&SP will investigate the complaint. If warranted, P&SP will take action against the swine contractor. If P&SP 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 Packers and Stockyards 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 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 Packers and Stockyards Act.
Third, the Packers and Stockyards Program engages in oversight of swine contractors as part of its enforcement of the swine contract provisions. P&SP regularly investigates packers and includes a review of swine production contracts in the investigations. P&SP 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 GIPSA's Violations Hotline at 800-998-3447, or
- Send an e-mail complaint to PSPComplaints@usda.gov