CFR Part 206 - Swine Contract Library

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PART 206—SWINE CONTRACT LIBRARY

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Register using Regula­
tions.gov.

Contents
§206.1 Definitions.
§206.2 Swine contract library.
§206.3 Monthly report.
Authority: 7 U.S.C. 198­198b; 7 U.S.C. 222.
Source: 75 FR 16642, Apr. 2, 2010, unless otherwise noted.
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§206.1 Definitions.
The definitions in this section apply to the regulations in this part. The definitions in this section do
not apply to other regulations issued under the Packers and Stockyards Act (P&S Act) or to the P&S Act
as a whole.
Accrual account. (Synonymous with the term “ledger,” as defined in this section.) An account held by a
packer on behalf of a producer that accrues a running positive or negative balance as a result of a pric­
ing determination included in a contract that establishes a minimum and/or maximum level of base
price paid. Credits and/or debits for amounts beyond these minimum and/or maximum levels are
entered into the account. Further, the contract specifies how the balance in the account affects pro­
ducer and packer rights and obligations under the contract.
Base price. The price paid for swine before the application of any premiums or discounts, expressed in
dollars per unit.
Boar. A sexually­intact male swine.
Ceiling price. The maximum market price that will be paid for swine. Adjustments may be made to the
base price if the market price rises above this price.
Contract. Any agreement, whether written or verbal, between a packer and a producer for the pur­
chase of swine for slaughter, except a negotiated purchase (as defined in this section).
Contract type. The classification of contracts or risk management agreements for the purchase of
swine committed to a packer, by the determination of the base price and the presence or absence of an
accrual account or ledger (as defined in this section). The contract type categories are:
(1) Swine or pork market formula purchases with a ledger,
(2) Swine or pork market formula purchases without a ledger,

(3) Other market formula purchases with a ledger,
(4) Other market formula purchases without a ledger,
(5) Other purchase arrangements with a ledger, and
(6) Other purchase arrangements without a ledger.
Floor price. The minimum market price that will be paid for swine. Adjustments may be made to the
base price if the market price falls below this price.
Formula price. A price determined by a mathematical formula under which the price established for a
specified market serves as the basis for the formula.
Ledger. (Synonymous with “accrual account,” as defined in this section.) An account held by a packer
on behalf of a producer that accrues a running positive or negative balance as a result of a pricing
determination included in a contract that establishes a minimum and/or maximum level of base price
paid. Credits and/or debits for amounts beyond these minimum and/or maximum levels are entered
into the account. Further, the contract specifies how the balance in the account affects producer and
packer rights and obligations under the contract.
Negotiated purchase. A purchase, commonly known as a “cash” or “spot market” purchase, of swine by
a packer from a producer under which:
(1) The buyer­seller interaction that results in the transaction and the agreement on actual base price
occur on the same day; and
(2) The swine are scheduled for delivery to the packer not later than 14 days after the date on which
the swine are committed to the packer.
Noncarcass merit premium or discount. An increase or decrease in the price for the purchase of swine
made available by an individual packer or packing plant, based on any factor other than the character­
istics of the carcass, if the actual amount of the premium or discount is known before the purchase
and delivery of the swine.
Other market formula purchase. A purchase of swine by a packer in which the pricing determination is
a formula price based on any market other than the markets for swine, pork, or a pork product. This
includes a formula purchase where the price formula is based on one or more futures or options con­
tracts.
Other purchase arrangement. A purchase of swine by a packer that is not a negotiated purchase, swine
or pork market formula purchase, or other market formula purchase, and does not involve packer­
owned swine. This contract type includes long term contract agreements, fixed price contracts, cost of
production formulas, and formula purchases with a floor, window or ceiling price.
Packer. Any person engaged in the business of buying swine in commerce for purposes of slaughter, of
manufacturing or preparing meats or meat food products from swine for sale or shipment in com­
merce, or of marketing meats or meat food products from swine in an unmanufactured form, acting as
a wholesale broker, dealer, or distributor in commerce. The regulations in this part apply only to a
packer that meets the conditions in either paragraph (1) or (2) of this definition:
(1) A packer purchasing at least 100,000 swine per year and slaughtering swine at one or more feder­
ally inspected processing plants that meet either of the following conditions:
(i) A swine processing plant that slaughtered an average of at least 100,000 head of swine per year
during the immediately preceding 5 calendar years, with the average based on those periods in which
the plant slaughtered swine; or

(ii) A swine processing plant that did not slaughter swine during the immediately preceding 5 calendar
years that has the capacity to slaughter at least 100,000 swine per year, based on plant capacity infor­
mation.
(2) Any packer purchasing an average of at least 200,000 sows, boars, or any combination thereof, per
year and slaughtering at least 200,000 sows, boars, or any combination thereof at one or more feder­
ally inspected processing plants during the immediately preceding 5 calendar years, with the average
based on those periods in which the plant slaughtered swine.
Producer. Any person engaged, either directly or through an intermediary, in the business of selling
swine to a packer for slaughter (including the sale of swine from a packer to another packer).
Sow. An adult female swine that has produced one or more litters.
Swine. A porcine animal raised to be a feeder pig, raised for seedstock, or raised for slaughter.
Swine or pork market formula purchase. A purchase of swine by a packer in which the pricing mecha­
nism is a formula price based on a market for swine, pork, or pork product, other than any formula
purchase with a floor, window or ceiling price, or a futures or option contract for swine, pork, or a
pork product.
Window price. The range of market prices that will be paid for swine. Adjustments may be made to the
base price if the market prices fall outside this range. The window price contains both the floor and
ceiling prices.
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§206.2 Swine contract library.
(a) Do I need to provide swine contract information? Each packer, as defined in §206.1, must provide
information for each swine processing plant that it operates or at which it has swine slaughtered that
has the slaughtering capacity, alone or in combination with other plants, specified in the definition of
packer in §206.1.
(b) What existing or available contracts do I need to provide and when are they due? Each packer must
send, to the Grain Inspection, Packers and Stockyards Administration (GIPSA), an example of each
contract it currently has with a producer or producers or that is currently available at each plant that
it operates or at which it has swine slaughtered that meets the definition of packer in §206.1. This ini­
tial submission of example contracts is due to GIPSA on the first business day of the month following
the determination that the plant has the slaughtering capacity, alone or in combination with other
plants, specified in the definition of packer in §206.1.
(c) What available contracts do I need to provide and when are they due? After the initial submission,
each packer must send GIPSA an example of each new contract it makes available to a producer or pro­
ducers within 1 business day of the contract being made available at each plant that it operates or at
which it has swine slaughtered that meets the definition of packer in §206.1.
(d) What criteria do I use to select example contracts? For purposes of distinguishing among contracts
to determine which contracts may be represented by a single example, contracts will be considered to
be the same if they are identical with respect to all of the following four example­contract criteria:
(1) Base price or determination of base price;
(2) Application of a ledger or accrual account (including the terms and conditions of the ledger or
accrual account provision);

(3) Carcass merit premium and discount schedules (including the determination of the lean percent or
other merits of the carcass that are used to determine the amount of the premiums and discounts and
how those premiums and discounts are applied); and
(4) Use and amount of noncarcass merit premiums and discounts.
(e) Where and how do I send my contracts? Each packer may submit the example contracts, notifica­
tions required by this section, and Form P&SP 342, Contract Submission Cover Sheet, by either of the
following two methods:
(1) Electronic report. Example contracts and notifications required by this section may be submitted
by electronic means. Electronic submission may be by any form of electronic transmission that has
been determined to be acceptable to the Administrator. To obtain current options for acceptable meth­
ods to submit example contracts electronically, contact GIPSA through the Internet on the GIPSA Web
site (http://www.gipsa.usda.gov) or at USDA GIPSA, Suite 317, 210 Walnut Street, Des Moines, Iowa
50309.
(2) Printed report. Each packer that chooses to submit printed example contracts and notifications
must deliver the printed contracts and notifications to USDA GIPSA, Suite 317, 210 Walnut Street, Des
Moines, Iowa 50309.
(f) What information from the swine contract library will be made available to the public? GIPSA will
summarize the information it has received on contract terms, including, but not limited to, base price
determination and the schedules of premiums or discounts. GIPSA will make the information available
by region and contract type, as defined in §206.1, for public release 1 month after the initial submis­
sion of contracts. Geographic regions will be defined in such a manner to provide as much information
as possible while maintaining confidentiality in accordance with section 251 of the Agricultural Mar­
keting Act (7 U.S.C. 1636).
(g) How can I review information from the swine contract library? The information will be available
on the Internet on the GIPSA Web site (http://www.gipsa.usda.gov) and at USDA GIPSA, Suite 317, 210
Walnut Street, Des Moines, Iowa 50309. The information will be updated as GIPSA receives infor­
mation from packers.
(h) What do I need to do when a previously submitted example contract is no longer a valid example
due to contract changes, expiration, or withdrawal? Each packer must submit a new example contract
when contract changes result in changes to any of the four example­contract criteria specified in para­
graph (d) of this section and notify GIPSA if the new example contract replaces the previously submit­
ted example contract. Each packer must notify GIPSA when an example contract no longer represents
any existing or available contract (expired or withdrawn). Each packer must submit these example
contracts and notifications within 1 business day of the change, expiration, or withdrawal.
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§206.3 Monthly report.
(a) Do I need to provide monthly reports? Each packer, as defined in §206.1, must provide information
for each swine processing plant that it operates or at which it has swine slaughtered that has the
slaughtering capacity, alone or in combination with other plants, specified in the definition of packer.
(b) When is the monthly report due? Each packer must send a separate monthly report for each plant
that has the slaughtering capacity, alone or in combination with other plants specified in the definition
of packer in §206.1. Each packer must deliver the report to the GIPSA Regional Office in Des Moines,
Iowa, by the close of business on the 15th of each month, beginning at least 45 days after the initial

submission of example contracts. If the 15th day of a month falls on a Saturday, Sunday, or federal hol­
iday, the monthly report is due no later than the close of the next business day following the 15th.
(c) What information do I need to provide in the monthly report? The monthly report that each packer
files must be reported on Form P&SP­341, which will be available on the Internet on the GIPSA Web
site (http://www.gipsa.usda.gov) and at USDA GIPSA, Suite 317, 210 Walnut Street, Des Moines, Iowa
50309. In the monthly report, each packer must provide the following information:
(1) Number of swine to be delivered under existing contracts. Existing contracts are contracts the
packer currently is using for the purchase of swine for slaughter at each plant. Each packer must pro­
vide monthly estimates of the number of swine committed to be delivered under all of its existing con­
tracts (even if those contracts are not currently available for renewal or to additional producers) in
each contract type as defined in §206.1.
(2) Available contracts. Available contracts are the contracts the packer is currently making available
to producers, or is making available for renewal to currently contracted producers, for the purchase of
swine for slaughter at each plant. On the monthly report, a packer will indicate each contract type, as
defined in §206.1, that the packer is currently making available.
(3) Estimates of committed swine. Each packer must provide an estimate of the total number of swine
committed under existing contracts for delivery to each plant for slaughter within each of the follow­
ing 12 calendar months beginning with the 1st of the month immediately following the due date of the
report. The estimate of total swine committed will be reported by contract type as defined in §206.1.
(4) Expansion clauses. Any conditions or circumstances specified by clauses in any existing contracts
that could result in an increase in the estimates specified in paragraph (c)(3) of this section. Each
packer will identify the expansion clauses in the monthly report by listing a code for the following
conditions:
(i) Clauses that allow for a range of the number of swine to be delivered.
(ii) Clauses that require a greater number of swine to be delivered as the contract continues.
(iii) Other clauses that provide for expansion in the numbers of swine to be delivered.
(5) Maximum estimates of swine. The packer's estimate of the maximum total number of swine that
potentially could be delivered to each plant within each of the following 12 calendar months, if any or
all of the types of expansion clauses identified in accordance with the requirement in paragraph (c)(4)
of this section are executed. The estimate of maximum potential deliveries must be reported for all
existing contracts by contract type as defined in §206.1.
(d) What if a contract does not specify the number of swine committed? To meet the requirements of
paragraphs (c)(3) and (c)(5) of this section, the packer must estimate expected and potential deliver­
ies based on the best information available to the packer. Such information might include, for exam­
ple, the producer's current and projected swine inventories and planned production.
(e) When do I change previously reported estimates? Regardless of any estimates for a given future
month that may have been previously reported, current estimates of deliveries reported as required by
paragraphs (c)(3) and (c)(5) of this section must be based on the most accurate information available
at the time each report is prepared.
(f) Where and how do I send my monthly report? Each packer must submit monthly reports required
by this section by either of the following two methods:
(1) Electronic report. Information reported under this section may be reported by electronic means, to
the maximum extent practicable. Electronic submission may be by any form of electronic transmission
that has been determined to be acceptable to the Administrator. To obtain current options for accepta­
ble methods to submit information electronically, contact GIPSA through the Internet on the GIPSA

Web site (http://www.gipsa.usda.gov) or at USDA GIPSA, Suite 317, 210 Walnut Street, Des Moines,
Iowa 50309.
(2) Printed report. Each packer may deliver its printed monthly report to USDA GIPSA, Suite 317, 210
Walnut Street, Des Moines, Iowa 50309.
(g) What information from monthly reports will be made available to the public and when and how
will the information be made available to the public? (1) Availability. GIPSA will provide a monthly
report of estimated deliveries by contract types as reported by packers in accordance with this section,
for public release on the first business day of each month. The monthly reports will be available on the
Internet on the GIPSA Web site (http://www.gipsa.usda.gov) and at USDA GIPSA, Suite 317, 210 Wal­
nut Street, Des Moines, Iowa 50309.
(2) Regions. Information in the report will be aggregated and reported by geographic regions. Geo­
graphic regions will be defined in such a manner to provide as much information as possible while
maintaining confidentiality in accordance with section 251 of the Agricultural Marketing Act (7 U.S.C.
1636) and may be modified from time to time.
(3) Reported information. The monthly report will provide the following information:
(i) The existing contract types for each geographic region.
(ii) The contract types currently being made available to additional producers or available for renewal
to currently contracted producers in each geographic region.
(iii) The sum of packers' reported estimates of the total number of swine committed by contract for
delivery during the next 6 and 12 months beginning with the month the report is published. The report
will indicate the number of swine committed by geographic reporting region and by contract type.
(iv) The types of conditions or circumstances as reported by packers that could result in expansion in
the numbers of swine to be delivered under the terms of expansion clauses in the contracts at any time
during the following 12 calendar months.
(v) The sum of packers' reported estimates of the maximum total number of swine that potentially
could be delivered during each of the next 6 and 12 months if all expansion clauses in current con­
tracts are executed. The report will indicate the sum of estimated maximum potential deliveries by
geographic reporting region and by contract type.
(h) Where and how do I file a waiver request? The waiver request must be submitted in writing and
include a statement that the packer does not procure swine using marketing agreements. The packer
must send the waiver request to the GIPSA Regional Office in Des Moines, Iowa. If the waiver request
is approved, GIPSA will inform the packer in writing that it has been granted a waiver for 12 months
following the date of receipt of the waiver request unless the status of the packer changes during that
year. The packer will be notified to submit the information required in this part if it begins using mar­
keting agreements during the waiver period or if GIPSA determines that the packer utilizes marketing
agreements.
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