Lummis introduces Livestock Marketing Fairness Act
To help ensure Wyoming ranchers and farmers stay competitive and puts an end to unfair market manipulation
by U.S. Representative Cynthia Lummis media release
July 27, 2011
WASHINGTON, D.C. – U.S. Representative Cynthia Lummis (R-Wyo.) has introduced H.R. 2631, the Livestock Marketing Fairness Act, a bipartisan bill authored by U.S. Senator Mike Enzi, which would target unfair meat packer practices and help restore a level playing field to independent livestock producers.
"America’s independent farmers and ranchers should be able to choose the best methods for selling livestock in an open and competitive market. Unfortunately, a lack of transparency in the marketplace can lead to price manipulation and abuse by some operations – and our local producers bear the brunt of these unfair practices.
"The Livestock Marketing Fairness Act would open up the markets to fair competition and ensure access to all producers. This bipartisan legislation will strengthen local ranchers and farmers in our communities and their continued essential roles in Wyoming’s economy."
The Packers and Stockyards Act of 1921 does not restrict forward contracts, whereby a buyer and seller agree to a transaction at a specified point of time in the future. However, certain forward contracting agreements by packing operations that own their own livestock or have a stake in livestock through marketing agreements allow these operations to buy from themselves when prices are high and buy from others when prices are low.
The Livestock Marketing Fairness Act would:
• Require marketing agreements to have a firm base price derived from an external source. This guarantees that local contract prices are not subject to manipulation by packer-owned herds.
• Encourage transparency and openness in public markets where buyers and sellers can witness bids and make their own offers. Forward contracts and marketing agreements allow packers and producers to coordinate supply and reduce risk, but when they are negotiated in secret, all of the bargaining power is on one side. This practice unjustly depresses prices and reduces market access for small and independent producers.
• Not hinder the freedom for an individual livestock producer to negotiate a contract price for livestock with a buyer. Instead it gives a seller confidence that the contract price he or she negotiates will not be subject to price manipulation caused by captive supplies.
• Exempt producer-owned cooperatives, packers with low volumes and packers who own only one processing plant. This exemption targets the source of price manipulation and ensures that the business practices of small family-owned processors are not impacted by the law.