Congress passes P&S Act updates
October 11, 2016
Campaigning for the upcoming elections this November may have Congress at a standstill right now, but the House of Representatives and the Senate were able to come to a consensus and pass H.R. 5883, the Technical and Clarifying Amendments to the Packers and Stockyards (P&S) Act of 2016.
The bill passed the U.S. House of Representatives on Sept. 26, the U.S. Senate on Sept. 29, and it was signed into law by U.S. President Barack Obama on Oct. 7. The law updates the existing P&S Act, which was originally enacted in 1921.
"With the technology changing on the ranch it is time for our laws to reflect that," said U.S. Senator Jon Tester (D-MT) in an Oct. 6 press conference. "I heard it from ranchers from Willsall to Wibaux, the livestock auction laws in our country were antiquated and outdated. Farmers and ranchers were dealing with livestock auctions stuck in the 1920s. That's why I wrote legislation to modernize the livestock auction industry."
Senator Tester co-sponsored the Senate companion bill (S. 3350) with Senator Thad Cochran (R-MS). H.R. 5883 was sponsored by Representatives Scott DesJarlais (R-TN), Andy Barr (R-KY), Trent Kelly (R-MS), Vicky Hartzler (R-MO), Thomas Rooney (R-FL), Jim Costa (D-CA), Da-vid Young (R-IA), Water B. Jones, Jr. (R-NC), Bob Goodlatte (R-VA), Steven M. Palazzo (R-MS), Mike Rogers (R-AL), and Robert Pittenger (R-NC).
“The first change applies to online and video auctions and provides similar protections to producers who sell cattle at a fixed-facility livestock market. ... The second change to the law is acceptable payment methods.” Chelsea Good, LMA vice president of government and industry affairs
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"The BARN CARD Technology Act will bring these auctions into the 21st century," said Senator Tester. "Current law only allows for payment by check and wire transfers. Thanks to this legislation, folks will be able to purchase livestock using debit and credit cards. Farmers and ranchers already face enough obstacles trying to sell their product, they shouldn't have to worry about not being able to ask cash or credit?"
The bill was supported by several agricultural commodity groups including the American Farm Bureau Federation, American Sheep Industry Association, Livestock Marketing Association, National Cattlemen's Beef Association, National Farmers Union, National Livestock Producers Association, and United States Cattlemen's Association.
"The law updates two aspects of the existing P&S Act," said Chelsea Good, Livestock Marketing Association (LMA) vice president of government and industry affairs. "The first change applies to online and video auctions and provides similar protections to producers who sell cattle at a fixed-facility livestock market."
In a nutshell, with more livestock moving through online sales, the law needed to be updated to ensure prompt payment, custodial account and bonding requirements. With many interpretations of the law, there was no clear USDA authority to ensure these protections through online sales.
"The second change to the law is acceptable payment methods," explained Good. "Currently, packers, market agencies, sale barns, professional order buyers and dealers are all required to pay by the close of the next business day. The existing law as it was written only included two methods of payment — putting a check in the mail and wire transferring funds. Updates to the law allow for modern banking tools such as Automated Clearing House (ACH) payments, debit cards and credit cards to be included as acceptable options for prompt payments."
Good says it's unlikely producers will turn to credit or debit cards as there is typically a fee involved in making transactions
"Many buyers are already using ACH payments, so this updates the law to clarify that this practice is an acceptable form of payment," said Good. "I could see online payment methods like PayPal, a type of ACH, being used for smaller transactions. Our postal service has gotten much slower, so the option of ACH funds coming from professional buyers will help immensely in auction barns that provide funds to their customers promptly, whether or not they have actually re-ceived the money. Quicker money movement reduces risk for everyone involved."
St. Onge Livestock in St. Onge, S.D. sells cattle every Friday with nearly 8,000 calves moving through the auction market each week during the fall calf run. General Manager Justin Tupper says the updates to the P&S Act will help the auction market to continue to provide timely payment to their customers.
"When you are selling that many calves in a week, prompt payment is a pretty big deal," said Tupper. "We guarantee money to our sellers, and the cattle business is still one of the few businesses where calves are on a trailer headed down the road after a simple handshake. This will streamline the process and allow for modern payment through available online technologies."
Tupper worries that the use of credit cards could get producers into trouble, especially when money is tight in a down market. However, Good says with the tight margins producers are facing, there won't be too many who want to use a credit card and have to pay a 1 percent transaction fee on a load of calves they purchase.
"Basically, the updates bring the law to fit modern times, and I definitely think it will help livestock auction barns better serve their customers," said Tupper.
"It's important to recognize that the industry is changing and modernizing, and the regulatory environment is keeping up with the times," said Good. "These updates are a good step in the right direction and made with a lot of consensus from many industry groups. It's just evidence that when we work together, there is that ability to make things better for our industry."