FAQ's - The Swine Contract Library

Who will provide information for the swine contract library?

Packers, as defined in 9 CFR 206.1, provide source information for the library. The library contains information for about 55 plants. Approximately 33 packers own or use these plants. We expect the overall number of plants and firms to remain relatively constant. However, the specific firms required to report will vary. These variations will depend on consolidation and construction in the industry. These packers provide example contracts. They must also provide monthly reports. In the monthly report, a packer reports the projected number of swine committed and the maximum number of swine it expects to receive over the next 12 months by contract type.

What information from the swine contract library will GIPSA make available to the public?

GIPSA uses the submitted example contracts as our source of information. We summarize the information by region and contract type. Then we make the summarized information available to producers and other interested persons. The Livestock Mandatory Reporting Act contains confidentiality restrictions. As a result, we cannot make either the example contracts or other proprietary information available.

We will present the information we receive in four categories:

  • base price determination
  • premiums and discounts
  • application of ledger
  • other provisions

In addition, GIPSA will provide a monthly report. This report summarizes estimated deliveries, as reported by packers, by contract type. It will be released to the on the first business day of each month.

We will make both reports available for download and printing.

How will information from the swine contract library help producers?

Producers may use the library to investigate what contract terms packers offer. A producer could identify contract provisions of interest. Producers would not know which packers are offering any of the provisions listed in the summarized information. Nor would they know how a packer would combine those provisions in any contract. However, it is valuable to know that those provisions exist in the marketplace. A producer could use that knowledge to negotiate what may result in a more favorable contract with a packer.

Producers may use the monthly report on swine contracted for future delivery in several ways. A producer may use this report to decide how many sows to breed. A producer may also use it to decide whether to contract with packers in regions where packers have fewer numbers of swine committed for delivery.

How will GIPSA make reports from the swine contract library available to the public?

The information is available on this web site and in the GIPSA Regional Office in Des Moines, Iowa

Do I need to provide swine contract information?

If you are a packer, as defined in 9 CFR 206.1, and you meet the conditions in either paragraph (1) or (2) below, you must submit example contracts and monthly reports.

1) You purchase at least 100,000 head of swine per year and slaughter the swine at a federally inspected swine processing plant at which you:

  1. Slaughtered an average of at least 100,000 head of swine per year during the immediately preceding five calendar years, with the average based on those periods in which the plant slaughtered swine; or
  2. Have the capacity to slaughter at least 100,000 swine per year, based on plant capacity information.

2) You purchased an average of at least 200,000 sows, boars, or any combination thereof, per year. You also slaughtered at least 200,000 sows, boars, or any combination thereof at one or more federally inspected swine processing plants during the immediately preceding five calendar years, with the average based on those periods in which the plants slaughtered swine.

Review the Code of Federal Regulations for further details.

What existing or available contracts do I need to provide?

If you meet the definition of a packer in 9 CFR 206.1, you must provide an example of each contract that you currently have with a producer

  • available at each plant that you operate, or
  • available at each plant where you have swine slaughtered.

Submit these example contracts to GIPSA. Your submission is due on the first business day of the month following the determination that your plant has the slaughtering capacity specified in the definition of packer in 9 CFR 206.1.

After the initial submission, submit an example of each subsequent new contract you make available to a producer or producers. Submit these latter example contracts to GIPSA within one business day of you making the contract available at each plant that you operate, or at which you have swine slaughtered that meets the definition of packer in 9 CFR 206.1.

Use the following guidelines to determine when you must make another submission or notify us of a change.

  • Required submission of contract made available: When you make a contract available that represents an example contract, submit it as an example contract (for discussion purposes, Example contract A).
  • Potential subsequent submission due to contract changes: When a contract changes, submit a new example contract. Specify whether it replaces the previously submitted example contract. If not, indicate that it is an additional new example contract (for discussion purposes, Example contract B). You do not have to submit example contracts continuously during negotiations. Rather, submit an example contract when you make it available. When necessary, submit another when the negotiation results in a new contract, or when an existing example contract changes.
    • New additional example contract example: If the packer and the producer agree to a contract with a change that results in a different example contract (Example contract B) and the packer continues to make Example contract A available to other producers, the negotiated contract will be submitted as a new example contract (Example contract B).
    • Replacement example: If, however, in that scenario, the packer no longer makes the original Example contract A available to any other producer, and Example contract A is no longer used, then the negotiated contract would be submitted as an example contract to replace the previously submitted Example contract A.
  • Notification of example contracts that have expired or you have withdrawn: When a previously submitted example contract no longer represents any contracts, notify us that the example contract has expired. When a previously submitted example contract did not result in any contracts, and it no longer represents any available contracts, notify us that you have withdrawn the example contract.

What criteria do I use to select example contracts?

Use the following information to select example contracts. At GIPSA, we consider contracts to be the same if they are identical with respect to all of the following four example-contract criteria.

  1. Base price or determination of base price. Base price is defined in 9 CFR 206.1 as "The price paid for swine before the application of any premiums or discounts, expressed in dollars per unit."
  2. Application of a ledger or accrual account (including the terms and conditions of the ledger or accrual account provision). The terms ledger and accrual account are defined in 9 CFR 206.1 as meaning the same thing. That is "An account held by a packer on behalf of a producer that accrues a running positive or negative balance as a result of a pricing determination included in a contract that establishes a minimum and/or maximum level of base price paid. Credits and/or debits for amounts beyond these minimum and/or maximum levels are entered into the account. Further, the contract specifies how the balance in the account affects producer and packer rights and obligations under the contract."
  3. Carcass merit premiums and discount schedules (including the determination of the lean percent or other merits of the carcass that are used to determine the amount of the premiums and discounts and how those premiums and discounts are applied).
  4. Use and amount of noncarcass merit premiums and discounts. A noncarcass merit premium or discount is defined in 9 CFR 206.1 as "An increase or decrease in the price for the purchase of swine offered by an individual packer or packing plant, based on any factor other than the characteristics of the carcass, if the actual amount of the premium or discount is known before the purchase and delivery of the swine."

How do I document verbal contracts?

Verbal contracts must be documented with written descriptions for all terms. See GIPSA’s Verbal Contract Optional Documentation Sheet (Form PSP-343). This form outlines a basic set of contract terms.

When is the monthly report due?

GIPSA must receive your reports by the close of business (4:30 p.m. Central Time) on the fifteenth of each month. If due date falls on a Saturday, Sunday, or Federal holiday, submit your monthly report no later than the close of the next business day following the fifteenth.

What information do I need to provide in the monthly report?

You must complete a separate monthly report for each plant that meets the definition of a packer in 9 CFR 206.1.

You classify each example contract when you submit it. Classify each existing contract you list in the monthly report the same way you classified the example contract that represents it.

In this report, provide estimates of the number of swine committed for delivery. Include all existing contracts, aggregated by contract type. Additionally, you must project the maximum possible number of swine that producers could deliver during each of the 12 months following the report date. Include all existing contracts, aggregated by contract type.

The contract types are:

  1. Swine or pork market formula purchases with a ledger.
  2. Swine or pork market formula purchases without a ledger.
  3. Other market formula purchases with a ledger.
  4. Other market formula purchases without a ledger.
  5. Other purchase arrangement with a ledger.
  6. Other purchase arrangement without a ledger.

Every existing contract must be represented by an example contract. If an existing contract is not represented by an example contract, contact GIPSA for information on submitting contracts.

What if a contract does not specify the number of swine committed?

Estimate expected and potential deliveries based on the best information available to you. For example, it might include the producer's current and projected swine inventories, as well as the producer’s planned production.

When do I change previously reported estimates?

Do not change previously reported estimates. Base current estimates of deliveries on the most accurate information available at the time you prepare the report.

Where and how do I file a waiver request?

If you do not use marketing agreements to procure swine, you may obtain a waiver from the monthly report requirement. Otherwise, your monthly report would consist of zero estimate deliveries under existing contracts.

Submit a waiver request in writing. Include a statement that you do not procure swine using marketing agreements. Send the waiver request to address listed below. If GIPSA approves the request, we will inform you in writing that we granted you a waiver for 12 months. If you begin using marketing agreements during the waiver period, the waiver becomes void, and you must begin submitting monthly reports.

Where and how do I submit contracts and monthly reports?

Submit example contracts, notification of expired or withdrawn contracts, and monthly reports to:

Hardcopy

USDA-GIPSA
210 Walnut Street, Suite 317
Des Moines, Iowa 50309

Fax

515-323-2590

Electronic

https://scl.gipsa.usda.gov

Email

SwineContractLibrary@usda.gov

What are the penalties for not complying?

Willfully failing or refusing to provide accurate information constitutes a violation of the P&S Act (Section 222e). See Section 203 for the authorized procedures and maximum penalty that the Secretary may assess against any packer that violated or is violating a provision of Title II of the P&S Act. A civil penalty may not exceed $11,000 per violation.