Spot market purchases of livestock by packers

The Packers and Stockyards Act, 1921, is amended by inserting after section 202 (7 U.S.C. 192) the following: 202A. Spot market purchases of livestock by packers (a) Definitions In this section: (1) Covered packer (A) In general The term covered packer means a packer that is required under subtitle B of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635 et seq.) to report to the Secretary 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. (B) Exclusion The term ‘covered packer’ does not include a packer that owns only 1 livestock processing plant. (2) Nonaffiliated producer The term ‘nonaffiliated producer’ means a producer of livestock— (A) that sells livestock to a packer; (B) that has less than 1 percent equity interest in the packer; (C) that has no officers, directors, employees, or owners that are officers, directors, employees, or owners of the packer; (D) that has no fiduciary responsibility to the packer; and (E) in which the packer has no equity interest. (3) Spot market sale (A) In general The term spot market sale means a purchase and sale of livestock by a packer from a producer— (i) under an agreement that specifies a firm base price that may be equated with a fixed dollar amount on the date the agreement is entered into; (ii) under which the livestock are slaughtered not more than 7 days after the date on which the agreement is entered into; and (iii) under circumstances in which a reasonable competitive bidding opportunity exists on the date on which the agreement is entered into. (B) Reasonable competitive bidding opportunity For the purposes of subparagraph (A)(iii), a reasonable competitive bidding opportunity shall be considered to exist if— (i) no written or oral agreement precludes the producer from soliciting or receiving bids from other packers; and (ii) no circumstance, custom, or practice exists that— (I) establishes the existence of an implied contract (as determined in accordance with the Uniform Commercial Code); and (II) precludes the producer from soliciting or receiving bids from other packers. (b) General rule Of the quantity of livestock that is slaughtered by a covered packer during each reporting day (as defined in section 212 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635a)) in each plant, the covered packer shall slaughter not less than the applicable percentage specified in subsection (c) of the quantity through spot market sales from nonaffiliated producers. (c) Applicable percentages (1) In general Except as provided in paragraph (2), the applicable percentage shall be 50 percent. (2) Exceptions In the case of a covered packer that reported to the Secretary in the 2020 annual report that more than 60 percent of the livestock of the covered packer were committed procurement livestock, the applicable percentage shall be the greater of— (A) the difference between the percentage of committed procurement livestock so reported and 100 percent; and (B) (i) during calendar year 2026, 20 percent; (ii) during each of calendar years 2027 and 2028, 30 percent; and (iii) during calendar year 2029 and each calendar year thereafter, 50 percent. (d) Nonpreemption This section does not preempt any requirement of a State or political subdivision of a State that requires a covered packer to purchase on the spot market a greater percentage of the livestock purchased by the covered packer than is required under this section..