The purpose of the Packers and Stockyards Act is “to assure fair competition and fair trade practices, to safeguard farmers and ranchers…to protect consumers…and to protect members of the livestock, meat, and poultry industries from unfair, deceptive, unjustly discriminatory and monopolistic practices…”

The Packers and Stockyards (P&S) Programs of the U.S. Department of Agriculture’s Grain Inspection, Packers and Stockyards Administration (GIPSA) is charged with the responsibility of administering the Packers and Stockyards (P&S) Act.

The P&S Act was enacted on August 15, 1921, prompted by the Federal Trade Commission investigation into the amount of control exercised by the Nation’s five largest meat packing and livestock and meat marketing firms.   The Act was enacted to assure effective competition and integrity in the marketing of livestock, meat, and poultry.  It has been updated several times to keep pace with a changing and dynamic industry.   The Act provides payment protection by requiring prompt payment, bonding, packer and poultry trusts, and market agency custodial accounts.  It covers unlawful acts such as unfair, deceptive, discriminatory, or monopolistic practices in the marketing of livestock, meat, and poultry.  Those engaged in the business of marketing livestock, meat, and poultry in commerce are subject to the P&S Act.  Stockyards, commission firms, livestock auctions, order buyers, dealers, meat packers, meat brokers, meat wholesalers, and distributors, and live poultry dealers are also included.

However, farmers and ranchers are not subject to the P&S Act when buying livestock for their own stocking or feeding purposes, or when marketing their own livestock.  The Act pursues an aggressive program to maintain standards of financial stability for those engaged in the marketing of livestock, meat, and poultry. Specific requirements include:

• Bonds
• Prompt Payment
• Custodial (Trust) Accounts
• Packer and Poultry Trusts
• Temporary Restraining Orders
• Solvency

The P&S Act continuously investigates and analyzes the structure and performance of the livestock, meat, and poultry industries to ensure fair and open competitive conditions.  Moreover, it aggressively pursues programs to detect and prevent the following:

• Monopolies.
• Apportioning of trade territories or supplies, and the manipulation or control of prices.
• Predatory pricing, boycotting, and other restraints on competition, including pricing agreements, agreements not to compete, and intimidation of potential competitors.
• Conflicts of interest.

A considerable portion of the agency’s resources is allocated to counter unfair, deceptive, and fraudulent practices that may properly be described as “white collar crime” including:

• Conspiracies
• Diversion of packer and poultry trusts
• False weighing of livestock, meat, and poultry and use of inaccurate scales
• Weight or price manipulations
• Misuse of custodial (trust) accounts by auction markets and commission firms
• Commercial bribery
• Extortion
• Bankruptcy fraud: preferential payments, planned bankruptcies, or “bustout schemes”
• Bait and switch advertising
• Check kiting
• Unfair business-getting tactics such as free trucking and commission rebates
• Commission firms and auction markets defrauding consignors
• Misrepresentation of quality, quantity, or origin
• False accounting and record keeping
• Illegal brokerage used as part of a payoff scheme

Livestock sellers have specific responsibilities to be eligible for protection under P&S Programs’ payment protection provisions.  The seller must file a written claim with P&S within 60 days of the transaction in which s/he failed to receive payment.  Packer and poultry trusts relate to sales of livestock to a meat packer and sales, or delivery of live poultry under a growing arrangement, to a live poultry dealer.

Injured parties must file a claim with P&S in writing within 90 days of the transaction date, or within 90 days of the date of discovery, in the case of fraud.

Penalties for violations include:

• Cease and desist orders.
• Suspension of business operations.
• Civil penalties up to a maximum of $20,000 per violation for poultry payment and trust infractions and up to a maximum of $10,000 per violation of all other infractions of the P&S Act.
• Permanent injunctions, fines, and jail sentences for actions taken through the Justice Department.

The enforcement procedures under the Act are:

• Letters of Notice.
• Administrative actions within the USDA.
• Court action.

Persons who feel they have been financially harmed may file claims for reparations against stockyards operators, commission firms, auction markets, dealers, and order buyers.  However, there are no reparation provisions against packers and live poultry dealers under the P&S Act.