Cattle Market Compromise Ensures Transparency, Eliminates Confidentiality

A group of U.S. senators is expected to propose the new Cattle Price Discovery and Transparency Act yet this week. 

The Senators – Deb Fischer (R-Neb.), Chuck Grassley (R-Iowa), Jon Tester (D-Mont.), and Ron Wyden (D-Ore.) – joined forces to establish the new legislation ahead of the Mandatory Price Reporting Dec. 3, 2021, expiration.

Iowa had a three-year rolling average prior to the Cattle Price Discovery and Transparency Act. With this new legislation based off 18-month averages, the numbers are closer to the real, current price. 

The joint press release for the Cattle Price Discovery and Transparency Act says the regional minimum level can be more than three times that of the lowest regional minimum, and no regional minimum can be lower than the 18-month average trade at the time the bill is enacted. Deppe says for a state like Iowa, this doesn’t mean your cattle inventory always has to be traded on cash negotiated, grid-type basis, rather, “It kind of hinges off of the lowest average in the country.”

In the Cattle Price Discovery and Transparency Act, the USDA will be prohibited from using confidentiality as a justification for not reporting contracts, and the USDA must report all Livestock Mandatory Reporting information in a manner that ensures confidentiality. Deppe says this provision will hinder consolidation and ensure market transparency.

“For our producers, confidentiality often gets in the way of understanding par value based on percentage of formula marketing versus cash negotiated, or grid-type marketing,” says Iowa Cattlemen’s Association CEO Mike Deppe, who discussed the situation with AgriTalk’s Chip Flory on Tuesday. “Our association recognizes this confidentiality needs to be softened to help our producers.”   

Bullet point number four in the joint press release requires timely reporting of cattle carcass weights as well as requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. Deppe says this was a hot-button topic at the 2019 Cattlemen’s Leadership Summit.

“If a steer is harvested in a plant anywhere in the country, that carcass weight does not show up on the AMS reports for two weeks,” says Deppe. “We took a position on this, did some investigating, and decided that Congress is certainly going to need to legislate this.”

The pork industry obtains market ready animal data the morning following harvest. Deppe doesn’t see the cattle industry being able to provide next-day data, but his team is certain they can minimize the current two-week gap.

Deppe says his team has been working with Sens. Fischer and Grassley since August, emphasizing the all-inclusive detail of the bill that requires every plant participate in charting currency of feed yard inventory. “That’s always been our policy position, and we certainly see other organizations like the Iowa Farm Bureau, American Farm Bureau, Farmers Union, and U.S. Cattlemen’s Association on this in terms of our endorsements,” says Deppe.

Sen. Grassley demonstrated his support for the cattle industry, stating, “I pushed for hearings in the Senate’s Agriculture and Judiciary committees to shine a light on the market unfairness and now have partnered with a bipartisan group of senators to develop a solution.”