HOUSE OF REPRESENTATIVES

H.B. NO.

1206

THIRTY-FIRST LEGISLATURE, 2021

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO FOOD SECURITY.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. Hawaii's historic ranching and cattle industry has been recently rejuvenated by the efforts of local companies and demand from local consumers who prefer locally sourced foods and have an interest in encouraging Hawaii's food self-sufficiency. Hawaii grown beef is now readily available at restaurants and local grocery stores across the State. Despite growing demand for Hawaii grown beef by local consumers, the limited capacity of meatpacking plants severely limits the ability of Hawaii ranchers to process Hawaii grown beef for local consumption on a larger scale.

Significant concentration of control of the meatpacking industry increases the opportunity for anti-competitive behavior, which could harm the cattle producers, consumers, and the local economy, and ultimately discourage the continued growth of burgeoning industry. The benefits of import-substitution can also lead to export-led growth, future sources of job creation, economic independence, and increased food security. Encouraging competition and ensuring the involvement of all stakeholders will facilitate the growth of local beef production by favoring fair pricing for both the producers and consumers.

There have been federal efforts to discourage anti-competitive behavior and increase transparency for all participants in the cattle industry. The Livestock Mandatory Reporting Act (7 C.F.R. 59 et seq.), requires large meat packers to report prices and other information on purchases of cattle on a daily and weekly basis.

This information is published by the United States Department of Agriculture (USDA) to provide all buyers and sellers of cattle with accurate and objective market information to determine competitive pricing. The Livestock Mandatory Reporting Act terminated on September 30, 2020, but the USDA continues to collect this information. All Hawaii participants who were federally required to make such reports are encouraged to continue reporting pertinent information to the USDA.

The Packers & Stockyards Act of 1921, as amended, is intended to assure fair competition and fair-trade practices among stakeholders in the meatpacking industry. Recently published revised regulations (9 C.F.R. 201 et seq.) prohibit in relevant part, any undue or unreasonable preference or advantage to any person or locality that cannot be justified as a reasonable business decision.

In Hawaii, there are meatpacking plants in Kapolei, Oahu and Paauilo, Hawaii. The operator of these two plants currently controls seventy per cent of the beef cattle processing capacity in the State and ninety per cent of the beef cattle processing capacity on Hawaii island.

The purpose of this Act is to:

(1) Increase Hawaii's food security;

(2) Maintain and facilitate local job creation by encouraging the production of locally raised cattle and locally processed beef; and

(3) Institute safeguards to prevent anti-competitive practices in the meatpacking industry.

SECTION 2. Chapter 159, Hawaii Revised Statutes, is amended by adding a new section to part V to be appropriately designated and to read as follows:

"159-   Limitation of meat processors; accounts and records of business; trade practices. (a) Lessees and operators of State-owned meat processing establishments shall:

(1) Limit slaughter and meat processing capacity to no more than fifty per cent for house-branded meat products that are owned or controlled by the lessee and operator of the State-owned meat processing establishment; and

(2) Annually report to the department its efforts to invoke stakeholders in ensuring that the vision and direction of the meat processing establishment is in the best interest of the State and its food security, sustainability, and safety goals. The report shall include the lessee or operator's business plans showing existing and projected markets and sources of cattle supply.

(b) Lessees and operators of State-owned meat processing establishments shall:

(1) Not use any unfair, unjustly discriminatory, or deceptive practice or device;

(2) Not make or give any undue or unreasonable preference or advantage to any particular person or locality, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage; and

(3) Shall provide slaughter and meat processing services without requiring customers, including ranchers and other producers, to surrender title to the animals to be slaughtered and processed. If the title is retained by the customer, then slaughter and meat processing services shall be provided and not limited to only slaughter services.

(c) Lessees and operators of State-owned meat processing establishments shall not hold or control, either directly or indirectly, more than seventy per cent of meat processing capacity statewide unless a market study is commissioned and reviewed by the board with a finding of adequate market competition.

For the purposes of this subsection, "meat processing capacity" shall be measured by the number of head annually at the time of ownership changes, lease assignments, renewals, or extensions.

(d) The department may require lessees and operators of State-owned meat processing establishments that are required to purchase bonds under the Packers and Stockyards Act of 1921, as amended, and report live cattle price information similar to reports required under the Livestock Mandatory Reporting Act to:

(1) Provide timely, accurate, and reliable market information;

(2) Facilitate more informed marketing decisions; and

(3) Promote competition in the meat processing industry.

Such information shall include but not be limited to the average price for cattle, average quantity of cattle delivered and committed to the meat processor, and slot allocations by producers to house-brands controlled by the meat processor and customer brands controlled by ranchers and other producers."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

 

INTRODUCED BY:

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Report Title:

Food Security; Meat Processing Industry; Fair-trade Practices

 

Description:

Initiates reporting requirements and safeguards to prevent anti-competitive practices in the meat processing industry.

 

 

 

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