Choice gleanings from 45-plus years of Unregistered Bull.

It is well known to anybody who pays much attention to livestock market news that the Packers & Stockyards Act has figured prominently in such news and probably will continue to do so.

However, it is apparent that a great many producers, whom the Act is supposed to protect, are rather vague as to what it’s all about.

What is the Act? How does it affect livestock marketing? Why are so many people, including a large percentage of auction operators who are not now "posted" under it, and other auction operators and terminal market agencies who are already posted, so opposed to it?

And here’s a question that bothers a host of private traders who deal almost entirely in the country:

How long will it be until our operations, too, are controlled by the Act?

All these questions can’t be answered here or anywhere else, but some of them are answered in fairly plain English in the 1953 Yearbook of Agriculture, published by the USDA.

The Packers & Stockyards Act was enacted in 1921 as a result of congressional investigations into the operations of meat packers, whom producers’ groups and others had accused of unfair, monopolistic practices that abused producers.

"Soon after the Act was passed, marketing agencies and dealers at public stockyards challenged its constitutionality as it applied to their operations," the Yearbook explains. "In a test case (Stafford vs. Wallace), the Supreme Court held that all livestock being handled at markets meeting the definition of a ‘stockyard,’ as given in section 302 (a) of title III of the Act, is in the current or flow of interstate commerce and, therefore, market agencies and dealers operating at such markets are subject to Federal regulation.

"The Act and regulations issued under its authority provide, in effect, "that the services and facilities furnished consignors of livestock to public stockyards shall be adequate, "that the yardage, commission, feed, and other charges assessed by stockyard companies and market agencies shall be reasonable and applied on a non-discriminatory basis, "that all livestock consigned to public markets shall be offered on the open market and sold under competitive bidding conditions, "that the weighing of such livestock shall be accurate," "that full and correct accountings shall be furnished consignors and buyers of livestock for whom the market agencies act as selling or buying agents," "that meatpackers shall not engage in any act for the purpose of manipulating or controlling livestock prices or meats and meat food products in commerce," "and that stockyard companies, market agencies, dealers, and packers subject to the provisions of the Act shall not engage in unfair, deceptive, unjustly discriminatory, or monopolistic practices."

"A stockyards, to be subject to the provisions of the Act, must have an area of 20,000 square feet or more (exclusive of alleys) normally available for handling livestock, must be operated for compensation as a public market, and must be engaged in handling interstate shipments of livestock. At such yards, notices are posted to inform operators and the public that they are subject to the Act. They are commonly known thereafter as ‘posted stockyards.’"

The Yearbook goes on to explain that all agencies and dealers doing business at posted markets must register with the Secretary of Agriculture. Market agencies are defined as "individuals or firms that offer selling, buying, or other services to the public on an agency basis. They are commonly known as commission firms."

Dealers are "individuals or firms that buy and sell livestock for their own accounts or for the account of others on other than a commission basis. Dealers are also known as ‘traders’ and ‘speculators.’"

Dealers and commission firms operating on posted markets are forced to make bond.

The Act also empowers the Secretary of Agriculture to determine the "reasonableness" of yardage and commission charges. Some market operators think this means they will be told exactly what to charge for, say, feed; but the Act allows them to charge shippers for feed according to "inventory cost plus reasonable margins to cover the handling, storage and delivery."

"All livestock consigned for sale must be offered on the open market and sold at the highest bid obtainable. Turn systems in bidding, speculation in consigned livestock by market agency personnel, consistent selling of consigned livestock to one dealer or packer, and other methods of selling that tend to restrict competitive trading are prohibited and action taken to prevent their recurrence when discovered…

"In administering the packer provisions of the Act the most emphasis has been placed on eliminating from buying by packers at public markets and at other points, any practices that are unfair or have the effect of limiting or restricting competition in bidding between buyers."

So much for highlights of the Packers & Stockyards Act. As you can see, it recognizes and restricts just about everybody doing business on a public market — except consignors.

The underlying purpose of the Act, as stated and implied, is to protect livestock producers from being mistreated by unscrupulous operators — packers or anybody else — at "public markets and at other points."

How effectively the Act is accomplishing this purpose is a question whose debate can generate a great deal of heat at times. For example, whereas packers are supposedly prohibited, in buying at "public markets and at other points," from engaging in "any practices that are unfair or have the effect of limiting or restricting competition in bidding between buyers," you can hear no end of argument as to whether packers exert undue influence on the market through such practices as feeding large numbers of their own sheep and cattle, and through buying directly from producers in the country, etc.

Presumably, if the Packers & Stockyards Act were enforced to the letter, restrictions on packers could be extended to everything they do in the country as well as on posted markets.

By the same token, every country transaction made by agencies and dealers operating on public markets could be restricted. As said before, the fundamental purpose of the whole Act is to "protect the producers." If the producer requires protection when dealing with buyers connected with packers or posted markets, does he not also need protection when dealing with others?

Is a country order buyer any more or any less solicitous of the producer’s welfare than a man operating on a posted market?

That’s the red hot question. And this is not the first time it has been asked. Someday it may be answered by the extension of P&S Act restrictions to every livestock trade that’s made, whether it be at Chicago, at a small local auction, or an isolated railroad shipping pen.

The reason is this: some people resent a law that prevents them from being dishonest because such a law implies they might be dishonest if the law didn’t exist; they also insist that if they be restricted by such a law, then everybody else in the same business be similarly restricted. That they have a certain basis for feeling that way cannot be denied.

And as for a law administered by people who say their sole object is to protect the seller, this question might be posed: who is going to protect the order buyer?

You don’t have to go far to find farmers in the Corn Belt who’ve bought feeder livestock through legitimate order buyers only to find that the stock shrank a disgraceful amount en route; or livestock that actually showed a big death loss because the original seller filled them up too much before they were weighed.

Apparently the government expects the buyer to exercise the old practice of "caveat emptor," which means "let the buyer beware," and yet doesn’t give the seller credit for sufficient wisdom to exercise similar caution. — (S.F. 02/07/57)