August 25, 2023

LMA Members,

Last week, the USDA Packers and Stockyards Division (PSD) sent a letter to all livestock auctions regarding their tariff policy. The letter, dated August 14, addresses the handling of insurance coverages including livestock, payment protection, and animal health and transit. The letter also discusses checkoff deductions, credit card fees, and other administrative fees included on the tariff.

Livestock Marketing Association (LMA) staff was unaware this letter was being sent until informed by auctions who received it. We share our members’ frustrations with the lack of notice by the agency and the lack of clarity in the letter. Our team has been working with PSD leadership to get further clarification on PSD’s new tariff guidance. Additionally, PSD leaders have committed to sharing with LMA in advance any future policy guidance regarding tariffs or other topics.

Based on these clarifying conversations with PSD, LMA can confirm the following:

• PSD believes administrative fees are part of ongoing business operations that will no longer be permitted to be passed through to livestock consignors as their own tariff item.
• For state and federal Checkoff deductions the following or similar language is acceptable: Checkoff money will be collected as stated by Federal and State law. There is no need to list specific rates for these checkoffs.
• For brand inspection, the following or similar language is acceptable: The schedule of charges on brand inspection, as authorized by the INSERT BRAND INSPECTION AUTHORITY NAME, will be posted by the Brand Inspector, and does not include any charges retained by the market.
• For veterinary services, the following or similar language is acceptable: The schedule of charges for veterinary services will be posted and does not include any charges retained by the market.
• For credit card processing fees, they must be listed on the tariff and can approximate the actual fee charged by the credit card issuing bank. It is recognized that different institutions charge different fees, so markets are allowed to select a “reasonable” processing fee that does not create a profit for the market.
• Livestock and payment protection insurance rates are required to be split out on the tariff. Other questions relating to tariff deductions for insurance are unique to each auction and your Region Executive Officer would be glad to work through that with you.

The deadline for tariff updates to comply with these changes is November 4, 2023. Changes to tariff assessments must be submitted to PSD and publicly posted 10 days in advance of the changes taking effect. LMA has long provided a service of supporting our members by creating, formatting, and editing tariffs to make changes as simple as possible. For tariff assistance, email or fax a copy of your existing tariff, marked up with requested changes, to Cathy Collett, Membership Services Coordinator, at ccollett@lmaweb.com or faxed to 816-629-5040. The information above is based on current information provided by PSD leadership and we expect we could see variations in interpretation from resident agents. As always, if you have issues stemming from a PSD audit, please contact us for further guidance and support.

Sincerely,

Your LMA Region Executive Officer