Cattle groups react to introduction of legislation to address problems with cattle markets

Tuesday, Senator Deb Fischer (R-NE) introduced the Cattle Market Transparency Act of 2020.

Fischer’s bill follows the introduction of a bipartisan bill introduced in mid-May by Senators Chuck Grassley (R-IA) and Jon Tester (D-MT), and subsequent introduction of a companion bill in the U.S. House by Representative Cindy Axne (R-IA). The earlier Senate bill (S. 3693) and earlier House bill (H.R. 7501) were efforts to administer triage to the cattle market by restoring robust competition in the ultra-thin fed cattle cash market. The bills would accomplish this by requiring the largest beef packers to purchase at least 50% of their cattle needs from the fed cattle cash market and to slaughter those cattle within 14 days. These bills were never scheduled for a hearing by the U.S. Senate agriculture committee.

“We are pleased that Congress is taking the dysfunctional cattle market seriously as evidenced by the bill introduced September 22, 2020, by Senator Fischer,” commented R-CALF USA CEO Bill Bullard. He says the bill is in response to packer concentration and the lack of competition in U.S. cattle markets, an ultra-thin price discovery market for fed cattle, and the U.S. Department of Agriculture’s non-disclosure of pricing information in regions with too few fed cattle buyers.

Fischer’s bill differs from the earlier Senate and House bills by proposing that minimum purchase volumes in the fed cattle cash market be established not on a national level by Congress; but rather, on a regional level to be established sometime in the future by the USDA.

In addition, the Fischer bill goes beyond addressing the ultra-thin cash market by borrowing a concept first raised in the 2010 proposed rule that R-CALF USA supported and that would have required packers to submit a sample copy of each unique type of cattle purchasing contract or agreement to the USDA. The Fischer bill adopts this concept through its requirement that packers submit their various contracts to the USDA, which would then maintain a library of those submitted contracts.

The Fischer bill also addresses the USDA’s current non-disclosure of pricing information in states and regions where the USDA believes there are too few buyers. It does this by requiring the USDA to disclose to the public all pricing information that it collects under the Livestock Mandatory Reporting Act.

Another provision of the Fischer bill will mandate that packers report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days.

“We appreciate and welcome Senator Fischer’s bill and hope that even more bills will be introduced so our industry can choose from among the very best solutions to restore robust competition to our shrinking U.S. cattle industry,” Bullard said adding, “And one of those new bills must include the requirement that all beef sold in the U.S. be labeled with its country of origin.”

“Price discovery is an issue of critical importance to cow/calf producers, stockers, backgrounders, and feeders across the United States, and more negotiated trade is needed throughout the cattle feeding regions to ensure sufficient price discovery. That is why all of NCBA’s 46 state affiliate organizations unanimously adopted a fed cattle price discovery policy at our 2020 Summer Business Meeting. This policy directs NCBA to pursue a voluntary approach to price discovery that includes triggers established by a working group of producer members which, if tripped due to a lack of regionally sufficient negotiated trade, would prompt NCBA to seek legislative or regulatory solutions—such as those outlined in Sen. Fischer’s bill—to achieve robust price discovery.

“Since the adoption of this policy, that producer group has been diligently working to establish these triggers and identify a path to increase negotiated trade across all cattle feeding regions. We anticipate that the subgroup will meet the October 1st deadline set by the policy to establish regional triggers.

“Sen. Fischer’s bill explores many avenues to improve transparency in the cattle markets. The creation of a cattle contracts library and clarification of confidentiality rules will provide crucial data to cattle producers as they seek to make informed marketing decisions. However, our policy dictates that the voluntary framework we are developing be allowed the opportunity to succeed or fail before we can lend our support to regional mandatory minimums for negotiated trade. We welcome a continued dialogue with Sen. Fischer and her colleagues on ways to achieve robust price discovery for all cattle producers.”

United States Cattlemen’s Association reaction:

“As a Nebraska cattle producer, I echo the same sentiments expressed by Senator Fischer on the impacts to our livelihood of increased packer competition, decreased competition, and a declining cash market,” said board member Lee Reichmuth. “This bill builds off the recommendations provided by the U.S. Department of Agriculture in its Boxed Beef and Fed Cattle Price Spread Investigation Report and discussions producers across the U.S. are having in response to historically low cattle prices and a dysfunctional marketplace.

“USCA has led on this conversation, through our work on Capitol Hill and bringing folks together in the countryside via events like the 2020 Winter Thaw. The USCA Marketing and Competition Committee is currently reviewing the legislation in its entirety and will report its findings in the days ahead.”