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Livestock auction investments allowed under A-PLUS bill

USDA photo by Preston Keres Cattle salebarn USDA.jpg
Bipartisan House bill permits livestock auction market owners to own or invest in small and regional packers.

The administration, Congress and the livestock industry agree there is a need for increased packer competition and additional shackle space, and a new bill would help in those efforts. Currently, livestock auctions are not able to own, invest or participate in the operation of a packing plant or meat marketing business due to current Packers and Stockyards Act regulations.

Rep. Vicky Hartzler, R-Mo., alongside Rep. Jimmy Panetta, D-Calif., introduced the Amplifying Processing of Livestock in the United States (A-PLUS) Act, which would fix regulatory roadblocks to increasing meat processing capacity and allow livestock auction market owners to invest in small and regional packing facilities.

“The meatpacking sector continues to be the bottleneck in the cattle and beef supply chain,” says National Cattlemen’s Beef Association Senior Director of Government Affairs Tanner Beymer. “Opening more small and medium-sized processing facilities increases opportunities for producers to market their cattle and helps balance leverage in pricing negotiations.”

This legislation directs the secretary of agriculture to amend the Packers and Stockyards Act to allow livestock auction market owners to hold ownership in, finance, or participate in the management or operation of a meat packing entity with a cumulative slaughter capacity of less than 2,000 animals per day or 700,000 animals per year. This cap would exclude investment in the top 10 meat packers.

Livestock auction markets, called marketing agencies selling on commission, are not currently able to own or invest, or participate in the management or operation of a packing plant or meat marketing business due to a Packers and Stockyards Act regulation.

“For decades, livestock auction markets have played by an outdated and restrictive book of rules which limited capacity and created a system where large meat packer behemoths literally and figuratively slaughtered the competition,” Hartzler says. “The A-PLUS Act would even the playing field and fix these regulations for the benefit of our livestock auctions and small packers.”

Panetta says allowing for livestock auction market investments in regional packing facilities will support small businesses, increase competition and drive down costs for consumers.

“As the livestock industry continues to deal with supply chain disruptions, the federal government needs to remove any unnecessary barriers that are hurting our producer’s ability to compete in a global marketplace. This bipartisan legislation will remove outdated regulations from the early 1900s and better reflect the needs of our modern-day livestock producers,” he says.

Clint Berry, chairman of NCBA’s Livestock Marketing Council, says the need for new packing facilities has become a critical issue for the cattle industry.

“Huge amounts of capital are required to get new facilities up and running. Understanding the need for these new facilities, producers themselves have invested in these efforts but outdated regulations still prevent livestock markets from having ownership in packing facilities, Berry says. “The A-PLUS Act paves the way for the marketing segment of the cattle industry to be included as investors in these facilities, helping reduce dependence on major packers and improving the competitiveness of the live cattle market.”

Livestock Marketing Association President Larry Schnell says A-PLUS Act would reduce a regulatory barrier that currently prohibits livestock auction owners like himself from investing in much-needed packing capacity expansion. “This is a great bill that will spur additional capacity and especially additional packers to increase competition and improve profitability for producers,” he says.

United States Cattlemen’s Association President Brooke Miller notes that the Packers & Stockyards Act is over 100 years old. “It’s time to modernize parts of this historic legislation that no longer make sense in the modern world,” Miller says. “Today’s livestock auctions are often family-owned and regionally based. If one of these entities wanted to invest in a local processing facility to increase processing capacity for producers in their area, there shouldn’t be an outdated regulation holding them back from doing so.” 

Rep. Dusty Johnson, R-S.D., who is the ranking member on the House Agriculture Committee’s livestock subcommittee, says Congress should continue to partner with the livestock industry to find creative ways to increase cattle processing capacity. “The A-PLUS Act accomplishes that goal and prioritizes investment for our producers,” he says.

 

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