A new price-reporting law went into effect earlier this year for the state of Missouri, which has vastly impacted the livestock markets in that state.

The Missouri Livestock Marketing Law states that packers “shall not discriminate in prices paid or offered to be paid to sellers” of slaughter livestock in Missouri. Exceptions are allowed for:

  • quality of livestock
  • premiums or discounts tied to carcass merit
  • costs related to transportation and acquisition
  • agreements to deliver at a specified date or time, providing the packer publishes a schedule of these price differentials and agrees to offer them to other sellers.

This law has reduced the number of bids and the price being offered for Missouri livestock, says Ron Plain, University of Missouri agricultural economist. Plain says packers are unlikely to pay the same price for Missouri livestock as neighboring states when the added risk of a price discrimination lawsuit looms.

Some packers have stopped buying livestock in the state, and others have altered their buying practices to minimize the financial risks associated with this law. The primary change has been a reduction in the number of slaughter animals being purchased on a live-weight basis, says Plain.

Producers who sell on the spot market have been most adversely affected by the law, for example the St. Joseph stockyards have been averaging about $2.50 per hundredweight under the other major terminal markets since the beginning of June, says Plain. He estimates that the law will cost Missouri producers about $20 million by the time it expires on Dec. 31, 2002, with about 45 percent of the losses falling on pork producers and 55 percent on cattle producers.

While this law only adversely affects Missouri producers, it does serve as a good lesson to other states. Be careful what you wish for and keep in close contact with lawmakers to prevent similar well-intended but harmful laws from being passed in your respective states.