1.This Act may be cited as the
Captive Supply Reform
Act
.
2.Limitation on
use of forward contracts
(a)Section 202 of the Packers and Stockyards Act, 1921
(7 U.S.C.
192), is amended—
(1)by striking
to:
and inserting to—
;
(2)by redesignating
subsections (a), (b), (c), (d), (e), (f), and (g) as paragraphs (1), (2), (3),
(4), (5), (7), and (8), respectively, and indenting appropriately;
(3)in paragraph (7)
(as redesignated by paragraph (2)), by designating paragraphs (1), (2), and (3)
as subparagraphs (A), (B), and (C), respectively;
(4)in paragraph (8)
(as redesignated by paragraph (2)), by striking subdivision (a), (b),
(c), (d), or (e)
and inserting paragraph (1), (2), (3), (4),
(5), or (6)
;
(5)in each of
paragraphs (1), (2), (3), (4), (5), (7), and (8) (as redesignated by paragraph
(2)), by striking the first capital letter of the first word in the paragraph
and inserting the same letter in the lower case;
(6)in each of
paragraphs (1) through (5) (as redesignated by paragraph (2)), by striking
or
at the end; and
(7)by inserting
after paragraph (5) (as redesignated by paragraph (2)) the following:
(6)use, in
effectuating any sale of livestock, a forward contract that—
(A)does not contain
a firm base price that may be equated to a fixed dollar amount on the day on
which the forward contract is entered into;
(B)is not offered
for bid in an open, public manner under which—
(i)buyers and
sellers have the opportunity to participate in the bid;
(ii)more than 1
blind bid is solicited; and
(iii)buyers and
sellers may witness bids that are made and accepted;
(C)is based on a
formula price; or
(D)provides for the
sale of livestock in a quantity in excess of—
(i)in the case of
cattle, 40 cattle;
(ii)in the case of
swine, 30 swine; and
(iii)in the case of
other types of livestock, a comparable quantity of the type of livestock
determined by the
Secretary.
.
(b)Section
2(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 182(a)) is amended by
adding at the end the following:
(15)
(A)The term formula price means any price term
that establishes a base from which a purchase price is calculated on the basis
of a price that will not be determined or reported until a date after the day
the forward price is established.
(B)The
term formula price does not include—
(i)any price term
that establishes a base from which a purchase price is calculated on the basis
of a futures market price; or
(ii)any adjustment
to the base for quality, grade, or other factors relating to the value of
livestock or livestock products that are readily verifiable market factors and
are outside the control of the packer.
(16)The term forward contract means an oral or
written contract for the purchase of livestock that provides for the delivery
of the livestock to a packer at a date that is more than 7 days after the date
on which the contract is entered into, without regard to whether the contract
is for—
(A)a specified lot
of livestock; or
(B)a specified
number of livestock over a certain period of
time.
.