Packers and Stockyards Review. Chelsea Good Livestock Marketing Association VP of Government and Industry Affairs

Transcription

1 Packers and Stockyards Review Chelsea Good Livestock Marketing Association VP of Government and Industry Affairs

2 Overview Current Requirements / History of the Law Modernization Concerns Process so far LMA 9-stop listening tour Cross industry outreach Next Steps Three possibly short-term changes

3 GIPSA History P&S Act enacted in 1921 to address concerns about marketing and distribution of livestock and meat products at the turn of the century.

4 P&S Requirements Who falls under GIPSA requirements? GIPSA regulates livestock markets (aka stockyards or market agencies selling on commission), packers, dealers, and order buyers Farmers and feedyards are not covered GIPSA is not sure if online auctions are covered and in what circumstances Main Topics Financial Protection Competition and Transparency

5 Financial Protection Current Tools o Prompt Payment o Bond o Markets Keep Custodial Account for Trust Funds o Packer Statutory Trust o Reparations Cases o Insolvency

6 Competition / Transparency Unjust, unreasonable, unfair, deceptive, or discriminatory practices are prohibited Markets publish rates Scale requirements Markets must sell livestock in consignment and key employees (auctioneers and weigh masters) may not buy Disclosure required when the market or an owner or employee buys Packers and dealers must be in competition and independent of one another

7 Concerns About the Law Is it doing what was intended? Is it causing more harm than good in some situations? Has it kept up with time?

8 Review Process 9-Stop Listening Tour to Receive Member Feedback (summer 2015) Meeting with other industry stakeholders; Initial look at existing policies (fall 2015) Working with Cornerstone Government Affairs, USDA, and Congressional staff to analyze law and potential solutions (winter 2015/2016)

9 Listening Tour Takeaways Very few regional differences Need for modernization of requirements Ex: Prompt Payment Ability to use new technology to transfer money Internet sales handling producers money should be covered Need for improved financial protection against dealer default Current bonds not sufficient Dealer Statutory Trust preferred Update Focus should be on Financial Protection GIPSA completion and transparency requirements backed up by modern technology and more information and options for producers selling livestock Inconsistent enforcement in a concern

10 Industry Discussion Takeaways Need for modernization of some requirements recognized Recognition that agriculture is more successful when united on a topic In order to maintain consensus, focus should be targeted to financial protections Education of congress and the industry will be part of the process

11 Possible Adjustments 1.Prompt Payment Current Requirement: Pay by close of next business day (often by a check in the mail) Breaks down into cattle for slaughter and not Allows wire transfer; not other electronic payment Proposed Requirement: Speeds up payment and allows for new types of transfers Seller is present Actually deliver check that day or next day OR Start wire or electronic transfer by close of business the next day Seller is not present Either of the options above OR

12 Possible Adjustments 2. Dealers Statutory Trust Provide increased protection in addition to bonds Modeled after Packer Trust (1976) Would allow unpaid livestock producers and markets to take priority in event of dealer default, first opportunity to be made whole by assets (e.g. accounts receivable) 3. Include Video and Online Auctions Clarify that all selling agents handling producers money, selling on a commission basis must comply with P&S requirements Provides financial security to all producers, regardless of where they sell

13 Questions? Chelsea Good LMA VP of Government and Industry Affairs - cgood@lmaweb.com Cell

14 Guiding Principles The law should provide for open competition. The law should regulate only where necessary. The law should provide the financial protection it was intended to provide. The law should be modernized to reflect 21 st century business practices and allow for the development of new marketing techniques. GIPSA should focus resources on the most serious concerns of the livestock industry. Enforcement should be implemented in a just, uniform, and transparent manner.

15 General Questions What is P&S s main job currently What should it be? What do they do well? What could they do better? Who should fall under P&S requirements?

16 Packer Statutory Trust Has the packer statutory trust been an effective tool? Any changes needed? Financial Protection Prompt Payment Should there be a prompt payment requirement? What time frame and payment methods should qualify as prompt payment? Bonds Should there be a bond requirement? Should there be any changes to bond levels? Custodial Accounts Should livestock markets be required to have custodial accounts for producers funds? Are any changes needed?

17 Financial Protection Are there tools to protect producers or markets financially that P&S should consider adding? Examples - Dealers statutory trust / letter of credit instead of a bond

18 Does GIPSA effectively enhance competition by prohibiting collusion between packers and between buyers? Competition / Transparency GIPSA prohibits unfair, deceptive, and discriminatory practices How have you seen GIPSA apply these terms? What specific behaviors should GIPSA regulate for competition and transparency? Should livestock markets be able to exclude certain individuals from their businesses? Should market employees and owners be able to buy at their market? If so, who and when? Should disclosure be required? Should an order buyer be permitted to carry orders for multiple people?

19 Wrapping up In an ideal world, what would the P&S requirements be? How little P&S requirements would you be comfortable with? What changes could be made to the way GIPSA does business?

20 Updates to the requirements 1921 P&S Act passes 1942 Brand inspection fee provision added 1958 Increased scope to add more livestock marketing businesses Packer Statutory Trust and packer bond requirements added 1976 Prompt payment requirement added for markets, packers, and dealers 1978 Allowed for % tariffs 2008 Farm Bill directed Secretary to establish criteria for undue or unreasonable Regulations were promulgated but mostly rejected