Packers and Stockyards Administration:

Oversight of Livestock Market Competitiveness Needs to Be Enhanced

RCED-92-36: Published: Oct 16, 1991. Publicly Released: Oct 16, 1991.

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Pursuant to a congressional request, GAO reviewed the Packers and Stockyards Administration's (PSA) role in monitoring and regulating the livestock and meat packing industries, focusing on: (1) how the livestock and meat packing industries have changed since the Packers and Stockyards Act of 1921; and (2) what role PSA plays in monitoring anticompetitive practices by meat-packing firms in their procurement of livestock.

GAO found that: (1) the percentage of the total number of livestock slaughtered by the largest meat packing firms has increased and there are fewer packing plants, but existing plants are larger; (2) the number of livestock producers has decreased and packers now purchase the majority of their livestock directly from sellers without the services of large centralized stockyards; (3) current PSA monitoring methods include responding to complaints and initiating its own investigations, and do not provide the agency with sufficient information to effectively determine the existence or extent of anticompetitive behavior by packers in procuring livestock; (4) PSA devotes a majority of investigative resources to ensuring prompt and accurate payment to livestock sellers; and (5) PSA also enforces trade practice regulations, but industry representatives believe that the regulations have become outdated due to changes in livestock marketing.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: Agriculture has modified its monitoring approach.

    Recommendation: To enable PSA to adequately fulfill its responsibilities under the Packers and Stockyards Act, the Secretary of Agriculture should determine a feasible and practical approach for monitoring the activity in regional livestock markets. In defining the relevant markets, PSA must determine the types of data and analysis it needs and the cost-effectiveness of obtaining and analyzing those data. Additional industry data required may include: (1) actual transaction prices relative to the quantity and quality of livestock and location of buying plant; (2) transportation costs associated with transactions; and (3) information on vertical coordination arrangements, by the type of transaction, and location of buyer and seller.

    Agency Affected: Department of Agriculture

 

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