April 2, 2010
On April 2, USDA’s Grain Inspection and Stockyards Administration (GIPSA) issued a final rule for its Swine Contract Library, which takes effect on May 3, 2010. The Livestock Mandatory Reporting Act of 1999 required GIPSA to establish and maintain a library of swine marketing contracts for the purchase of hogs between large hog packing firms and hog farmers. The purpose of the Swine Contract Library is to increase the knowledge of farmers about the terms of contracts and the number of hogs under contract, improve market transparency, and give hog farmers the ability to make more informed marketing decisions. The Library may also increase market efficiency by reducing the costs to producers of finding price information.
The Library has a checkered history. Regulations under the 1999 Act required large hog packing firms to submit examples of their marketing contracts to GIPSA and to provide GIPSA with monthly estimates of the swine to be delivered under contract. These regulations were not implemented until 2003. In September 2005, the statutory authority for the Library lapsed. GIPSA asked hog firms to voluntarily submit contracts and report swine deliveries but only half of the 32 firms subject to the 2003 regulation voluntarily complied.
The Livestock Mandatory Reporting Reauthorization Act of 2006 restored and revised the mandatory reporting requirements. The final rule just issued implements the 2006 Reauthorization Act and restores mandatory reporting requirements. The number of hog packing firms required to report has risen to 35.
Not all information submitted by the firms will be available to the public. Under the final rule, GIPSA will summarize the information received on the terms in contracts, including, but not limited to, base price determination and the schedules of premiums or discounts offered to swine producers by the firms. That information will be made available by region and contract type one month after the information is submitted to GIPSA.
For more information on the Swine Contract Library, see the Federal Register notice of the final rule or the GIPSA website for the Library, which will updated as GIPSA gathers information required by the final rule.
Categories: Competition & Anti-trust