Senate Panel to Vote on Cattle Market Bills

The Senate Ag Committee is scheduled to vote on the Cattle Price Discovery and Transparency Act this week. The cattle industry has been working with lawmakers for more than two years on a legislative reform for the cattle market.  It was introduced by farm state Senators including Chuck Grassley of Iowa and Deb Fischer of Nebraska, Jon Tester of Montana and Ron Wyden of Oregon.  It’s designed to improve competition and ensure more fairness through robust price discovery and transparency.   However, farm country is divided over the bill. 

Independent cattle producers like Craig Moss of Hull, Iowa, believe the cattle market is broken.  He says its controlled by the big four packers.  And that was never more evident than during the height of the COVID-19 pandemic.   He says, "It really displayed what happens in this part of the world.  They’ll keep their contracts flowing and the cash like I said is a residual supply.  They’ll use it when they’ll use us when they need us and its difficult to even get stuff done in a timely manner."

He says the increased competition and transparency in the Cattle Price Discovery and Transparency Act would help level the playing field.  The bill creates a cattle contract library and mandates regional negotiated cash minimums packers would have to buy on a weekly basis.  "I think the minimums is really to, I think the biggest benefit will to prevent further erosion of you know the cash trade percentage because it’s the last form of price discovery."

Cattle producer Brad Kooima of Rock Valley, Iowa, worked with Iowa Senator Chuck Grassley on the market fix that is supported by many feeders in the north.  It is the southern feedlots that are pushing back on the mandate.  "I think the transparency side of it has a lot of traction.  You know the next day weights, the formula library, that sort of thing.  The whole hangup gets to be when you get to this mandate right?  Where I mean you know nobody is going to tell us how many we’ve got to do that sort of mentality."

And those mandates are the reason Farm Bureau and the National Cattlemen’s Beef Association oppose the bill.   Ethan Lane, NCBA Vice President of Government Affairs says, "The majority of cattle producers around the country don’t support mandates.  You know these AMAs, the Alternative Marketing Agreements, are tools that the vast majority of cattle producers are using now to make more money on their cattle, they receive premiums on those cattle to be rewarded for investments in genetics and improvements in quality."

He says even cow calf producers use the AMA’s to provide signals that they are raising the right kind of cattle for the market and the for the consumer.   But Kooima says AMAs aren’t for everyone.   "I’m not saying there shouldn’t be an AMA there’s plenty of room for both of us.  Just make sure that you make some integrity that there’s enough price discovery that you actually have a market."

Lane also argues that the market provides adequate price discovery without a mandate.  "You know we’ve seen a remarkable increase in the use of cash trade over the last two years thanks to voluntary efforts from the industry and we’ve seen those packer margins that were really the source of so much concern drop by as much as 700% from the peak during COVID.  So we’ve seen the market take the moves it needs to take in order to correct."  

So, the question is what are the bill’s chances of passage?     Kooima says, "Senator Grassley himself still acts confident that its at least going to be good enough to get a chance at a vote.  I guess we’ll see what happens from there."   However, Lane says, "There’s very little support in the House for the Fischer Grassley Bill.  This is really a Senate side conversation and more specifically it’s a Senate Ag Committee conversation.  Support for this bill drops off dramatically once you leave the Senate Agriculture Committee."

Despite the headwinds, cattle producers that support the legislation say they’re fighting to protect their livelihoods. 

Kooima 5:46  My view is that if we don’t do something we’re going to continue to see this further deterioration of the negotiated trade.  Along with that the further liquidation of more of the small, medium sized people like my customers and like the way I feed cattle and my family feeds cattle.

NCBA also opposes companion legislation, the Meat and Poultry Special Investigator Act that would create a new USDA office dedicated to enforcing competition rules under the Packers and Stockyards Act.   That is also scheduled to be voted on by the Senate Ag Committee this week.