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Swine Contract Provisions of the 2002 Farm Bill

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.

The amendment extended the jurisdiction of the Act to anyone who is a "swine contractor" or a "swine production contract grower," which includes individuals and firms not previously regulated under the Act. 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.) In accordance with these definitions, the amendment affected packers, producers, feed companies, and investors.

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. Under Section 202 of the Act, swine contractors are prohibited from:

  • Using any unfair, unjustly discriminatory, or deceptive practice.
  • Giving any unreasonable preference or advantage to any person or locality.
  • Apportioning supply if such action restrains commerce or creates a monopoly.
  • Manipulating or control prices.

The amendment also gave swine production contract growers the right to sue swine contractors in Federal District Court.

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.

Growers benefit from the new provisions in three ways:

First, if a grower thinks a swine contractor has violated the Packers and Stockyards Act in any way, he or she can call the Packers and Stockyards Program Midwestern regional office in Des Moines, Iowa (our hog office), call the GIPSA hotline, or send a complaint into Packers and Stockyards Program via PSPComplaints@usda.gov. GIPSA will investigate the complaint, and, if warranted, take action against the swine contractor. If GIPSA 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) for violations must pay the penalty 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, GIPSA oversees swine contractors as part of its enforcement of the amendment. As part of its regular investigations of packers, GIPSA now reviews swine production contracts. GIPSA also responds to any complaints that are received.

Visit GIPSA's web site for Frequently Asked Questions on the swine production contract provisions of the Packers and Stockyards Act.

For inquiries, questions, or information, please contact our Midwestern regional office in Des Moines, Iowa:

U.S. Department of Agriculture
GIPSA
Federal Building
210 Walnut Street
Des Moines, IA 50309
Telephone: 515-323-2579
Fax: 515-323-2590

To report suspected violations by swine contractors, please:

Contact the Midwestern regional office,