Sec. 204. Unlawful practices
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Section 202 of the Packers and Stockyards Act, 1921 ( 7 U.S.C. 192 ), is amended to read as follows: In this section: The term base price means the price established in a poultry production contract that corresponds to the stated value provided by the independent contract producer under the terms of the contract, prior to the assessment of any performance-based premium or penalty. The price described in subparagraph
(A)may be established using the price per square foot of contracted farm infrastructure or price per pound of poultry production. The term cooperative association of producers means a cooperative association (as defined in section 15(a) of the Agricultural Marketing Act ( 12 U.S.C. 1141j(a) )) engaged in marketing, bargaining, shipping, or processing agricultural products. The term expected performance standard means, with respect to a poultry production contract, a standard established in the contract for the growth and health performance of live poultry under the management of an independent contract producer, which may include expected mortality, weight gain, or feed conversion efficiency. The term independent contract producer means an agricultural producer that— enters into a contract to manage the production of an agricultural commodity owned by a live poultry dealer or another contracting party; and is not a member of a cooperative association of producers that has engaged in bargaining with the other contracting party. The term minimum price means a contractually guaranteed price floor within a poultry production contract below which the final price delivered to an independent contract producer may not be reduced, including by performance-based penalties. The term performance-based incentive formula means a formula designed to compare the real performance of live poultry being managed by an independent contract producer relative to an expected performance standard. The term poultry production contract means an oral or written contract established between a live poultry dealer and an independent contract producer in which the independent contract producer provides the land, farm infrastructure, or management labor of the independent contract producer to house and raise live poultry owned by the live poultry dealer. It shall be unlawful for any packer or swine contractor with respect to livestock, meats, meat food products, or livestock products in unmanufactured form, or for any live poultry dealer with respect to live poultry, to do any of the following: Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device. Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect. Sell or otherwise transfer to or for any other packer, swine contractor, or any live poultry dealer, or buy or otherwise receive from or for any other packer, swine contractor, or any live poultry dealer, any article for the purpose or with the effect of apportioning the supply between any such persons, if such apportionment has the tendency or effect of restraining commerce or of creating a monopoly. Sell or otherwise transfer to or for any other person, or buy or otherwise receive from or for any other person, any article for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce. Engage in any course of business or do any act for the purpose or with the effect or manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce. Conspire, combine, agree, or arrange with any other person— to apportion territory for carrying on business; to apportion purchases or sales of any article; or to manipulate or control prices. Use, in effectuating any sale of livestock, a forward contract that— does not contain a firm base price that may be equated to a fixed dollar amount on the date on which the forward contract is entered into; is not offered for bid in an open, public manner under which— buyers and sellers have the opportunity to participate in the bid; more than 1 blind bid is solicited; and buyers and sellers may witness bids that are made and accepted; is based on a formula price; or provides for the sale of livestock in a quantity in excess of— in the case of cattle, 40 cattle; in the case of swine, 30 swine; and in the case of another type of livestock, a comparable quantity of that type of livestock, as determined by the Secretary. Own or feed livestock directly, through a subsidiary, or through an arrangement that gives a packer operational, managerial, or supervisory control over the livestock, or over the farming operation that produces the livestock, to such an extent that the producer of the livestock is not materially participating in the management of the operation with respect to the production of the livestock, except that this paragraph shall not apply to— an arrangement entered into not more than 7 business days before slaughter of the livestock by a packer, a person acting through the packer, or a person that directly or indirectly controls, or is controlled by or under common control with, the packer; a cooperative or entity owned by a cooperative, if a majority of the ownership interest in the cooperative is held by active cooperative members that— own, feed, or control the livestock; and provide the livestock to the cooperative for slaughter; a packer that is not required to report to the Secretary on each reporting day (as defined in section 212 of the Agricultural Marketing Act of 1946 ( 7 U.S.C. 1635a )) information on the price and quantity of livestock purchased by the packer; or a packer that owns only 1 livestock processing plant. Take any action that adversely affects or is likely to adversely affect competition, regardless of whether there is a business justification for the action. Conspire, combine, agree, or arrange with any other person to do, or aid or abet the doing of, any act made unlawful by paragraphs
(1)through (9). Acts by a packer, swine contractor, or live poultry dealer that violate subsection (b)(1) include the following: Refusal to provide, on the request of a livestock producer, swine production contract grower, or poultry grower with which the packer, swine contractor, or live poultry dealer has a marketing or delivery contract, the relevant statistical information and data used to determine the compensation paid to the livestock producer, swine production contract grower, or poultry grower, as applicable, under the contract, including— feed conversion rates by house, lot, or pen; feed analysis; breeder history; quality grade; yield grade; and delivery volume for any certified branding program (such as programs for angus beef or certified grassfed or Berkshire pork). Conduct or action that limits or attempts to limit by contract the legal rights and remedies of a livestock producer, swine production contract grower, or poultry grower, including the right— to a trial by jury, unless the livestock producer, swine production contract grower, or poultry grower, as applicable, is voluntarily bound by an arbitration provision in a contract; to pursue all damages available under applicable law; and to seek an award of attorneys’ fees, if available under applicable law. Termination of a poultry growing arrangement or swine production contract with no basis other than an allegation that the poultry grower or swine production contract grower failed to comply with an applicable law, rule, or regulation. A representation, omission, or practice that is likely to mislead a livestock producer, swine production contract grower, or poultry grower regarding a material condition or term in a contract or business transaction. Acts by a packer, swine contractor, or live poultry dealer that violate subsection (b)(2) include the following: The execution, termination, extension, or renewal of a contract or agreement that materially disadvantages a livestock producer, swine production contract grower, or poultry grower unless the packer, swine contractor, or live poultry dealer can show, by a preponderance of the evidence, that the acts were predominantly motivated by— compliance with applicable regulations; a distinct and materially disadvantageous change to the financial relationship with the livestock producer, swine production contract grower, or poultry grower; or the termination of operations in the geographic region by the packer, swine contractor, or live poultry dealer. The failure to meet the requirements described in paragraph (2). In the case of a poultry production contract that contains a performance-based incentive formula, the failure to meet the requirements described in paragraph (3). The requirements described in this paragraph are as follows: Subject to subparagraph (B), a live poultry dealer shall structure any poultry production contract in a manner that provides for payment by the square footage of the barn or facility space in which the live birds that are subject to the contract are reared and raised. In lieu of providing for payment by the square footage of the barn or facility space in which the live birds that are subject to the contract are reared and raised, a live poultry dealer may meet the requirement specified in subparagraph
(A)if the dealer includes in the poultry production contract an alternative base price provision that was obtained through negotiations with a cooperative association of producers representing the individual independent contract producer. The requirements described in this paragraph are as follows: The poultry production contract shall guarantee a minimum price. The expected performance standard in the poultry production contract shall be based on at least a 6-month rolling performance average of all producers in the complex of the independent contract producer. The performance-based incentive formula shall not assess a premium or penalty percentage that exceeds the percentage difference between the performance of the independent contract producer and the expected performance average. The expected performance standard in the poultry production contract shall be mathematically adjusted to account for expected performance with respect to expected mortality, weight, or feed conversion efficiency, with differences relative to— layer flock age and health; predelivery health issues; flock breed; flock pick-up age; feed type; feed disruption of 6 hours or more; and medical care protocols (such as an antibiotic-free protocol). The poultry production contract shall include a procedure for settling payment outside of the performance-based payment formula, through a performance average of at least the last 5 flocks of the independent contract producer, in the case of the independent contract producer bringing an appeal related to input quality or provision issues. In determining whether an act, device, or conduct is a violation under paragraph
(1)or
(2)of subsection (b), a finding that the act, device, or conduct adversely affected or is likely to adversely affect competition is not required. . Subject to paragraph (2), paragraph
(8)of section 202(b) of the Packers and Stockyards Act, 1921 ( 7 U.S.C. 192 ) (as designated by subsection (a)), shall take effect on the date of enactment of this Act. In the case of a packer that, on the date of enactment of this Act, owns, feeds, or controls livestock intended for slaughter in violation of paragraph
(8)of section 202(b) of the Packers and Stockyards Act, 1921 ( 7 U.S.C. 192 ) (as designated by subsection (a)), that paragraph shall take effect— in the case of a packer of swine, beginning on the date that is 18 months after the date of enactment of this Act; and in the case of a packer of any other type of livestock, beginning not later than 180 days after the date of enactment of this Act, as determined by the Secretary.
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