Senator Chuck Grassley (R-IA) continues to push for more competitive markets through Transparency for Independent Livestock Producers Act legislation, co-authored with Sen. Russell Feingold (D-WI). The legislation, presented on the Senate floor before the August recess, aims to guarantee independent producers a share in the marketplace.

On July 25, U.S. House of Representatives Tom Latham, Greg Ganske, Jim Nussle (Iowa) and John Thune (South Dakota) introduced the legislation on the House floor.

Key points in the legislation include:

  • Packers would be required to purchase 25% of livestock (cattle, sheep and hogs) on the daily open market, or on a cash basis.

  • Spot market purchase means the purchase of livestock by a processor from a seller, if the livestock is slaughtered not more than seven days after the seller and the processor agree on a date of delivery, and the base purchase price is determined by an oral or written agreement between the seller and processor executed on the day of delivery for slaughter.

  • Packer spot market purchase requirements shall be fulfilled only by purchases from nonaffiliated producers; a person or entities holding less than 1% of the equity in the packer; or a person who does not hold an executive position, does not sit on the board of directors or does not owe the packer a fiduciary duty.

  • The rules only apply to packers large enough to be required to report daily live animal prices to USDA through the Mandatory Price Reporting Act.

  • The schedule of daily spot market purchases shall be reduced by 50% for the closed cooperatives for the January 2006 and January 2008 dates, respectively. Closed cooperatives shall also purchase the daily spot market livestock from non-shareholders and nonaffiliated producers of the cooperative.

  • Single plant entities with no affiliation to larger packing entities are exempt.

  • Does not preempt state law regarding packer feeding of livestock; state law may be more restrictive.

The proposed schedule of daily spot market purchases would begin with a mandatory 5% by Jan. 1, 2004, move to 15% by Jan. 1, 2006, then advance to the full 25% by Jan. 1, 2008. The timeline allows contracts to expire and be rewritten, utilizing the expanded cash market prices as a basis.

Supporters of the legislation now include Iowa Pork Producers Association, Iowa Cattlemen's Association, Iowa Farm Bureau, Ranchers-Cattlemen Action Legal Fund (R-CALF), Center for Rural Affairs and the Organization for a Competitive Marketplace (OCM).

The congressmen are aiming to attach the Transparency Act to the agricultural appropriations bill scheduled for a final vote this month.