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Fact Sheet - Signing of H.R. 8410 - Amendments to the Packers and Stockyards Act
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7345643
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Fact Sheet - Signing of H.R. 8410 - Amendments to the Packers and Stockyards Act
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White House Press Releases (Ford Administration)
Press Releases
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U.S. House of Representatives. (03/04/1789 - )
Legislation
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7345643
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13
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1976-09-13
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9
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1976
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Digitized from Box 30 of the White House Press Releases at the Gerald R. Ford Presidential Library
FOR IMMEDIATE RELEASE
September 13, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
SIGNING OF H.R. 8420 - AMENDMENTS TO
THE PACKERS AND STOCKYARDS ACT
The President today signed H.R. 8410, which amends the Packers
and Stockyards Act to assure that livestock producers will
receive payment due for livestock sold to meat packers, should
the packers default.
The legislation arose out of a demonstrated need for greater
protection of livestock producers who sell to packers. Federal
action in this situation was necessary, appropriate and in the
best interest of producers, packers and consumers. H.R. 8410
provides a reasonable degree of protection without excessive
restrictions on industry and without the establishment of
superfluous new government agencies.
BACKGROUND
Under the Packers and Stockyards Act, the Secretary of
Agriculture is authorized to provide close supervision,
including imposition of a bonding requirement for dealers
and market agencies, over transactions involving the purchase
and sale of livestock at terminal markets (such as stockyards).
This supervision is performed by the Packers and Stockyards
Administration at USDA. For many years, this system assured
that most producers would receive full payment for their
livestock because most livestock was sold through large
terminal markets. The Act also authorizes the Secretary,
at the wholesale marketing level, to prohibit unfair,
unjustly discriminatory, or deceptive practices on the
part of persons who slaughter livestock or manufacture
meat products.
However, starting in the 1950's ever-increasing proportions
of livestock (now over 80 percent) were sold for slaughter
directly to meat packers through country auction markets
where bonding protection for producers has generally not
been required. This increased the financial risk for
producers because the failure of a packing firm could
leave the producers unpaid for their recent livestock
sales.
Financial losses resulting from this lack of coverage under
the Act have been a growing problem. Specifically, between
1958 and 1975, packer failures resulted in about $43 million
worth of livestock sales for which producers did not receive
payment. Over $20 million of this bad debt arose out of the
bankruptcy of a large midwestern meat packing firm in
January 1975.
These losses led to a reappraisal of the supervisory authority
of USDA in this area and culminated in enactment of the
remedial legislation being signed by the President today.
DESCRIPTION OF H.R. 8410
The bill amends the Packers and Stockyards Act to provide
increased financial protection to livestock producers. The
major provisions:
more
2
Authorize the Secretary to require packers, purchasing
more than $500,000 of livestock annually, to obtain
reasonable bonds to protect livestock sellers.
Require payment by packers, market agencies and livestock
dealers by the close of the next business day, unless
the buyer and seller expressly agree otherwise.
Stipulate, for all sales in which the packer pays by
check, that the livestock, the product inventory of
the packer, and the accounts receivable and proceeds
therefrom, are held in trust for the livestock sellers
until the packer's bank makes payment on the check.
O
Extend the Secretary's supervisory authority over certain
trade practices to cover all persons competing in the
wholesale marketing of meat or meat products.
O
Empower the Secretary, after notice and a hearing, to
issue an order requiring an insolvent packer to stop
purchasing livestock, either entirely or under such
conditions as the Secretary may prescribe.
O
Give the Secretary authority to ask the Attorney General
to seek to enjoin or restrain persons subject to the
Act from operating except under those conditions necessary
to protect livestock sellers until appropriate administrative
action is completed (e.g., such action could be taken when
an operator fails to pay for livestock or operates while
insolvent or without a bond).
O
Authorize the assessment of civil penalties of up to
$10,000 for each violation of the Act.
O
Provide generally for the preemption of State laws
dealing with bonding and prompt payment requirements
for packers.
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