Senators Expect Cattle Price Discovery and Transparency Act to Move from Committee

The Cattle Price Discovery and Transparency Act would establish mandatory thresholds of negotiated cash and grid trades based on a region’s 18-month trading average.
The Cattle Price Discovery and Transparency Act would establish mandatory thresholds of negotiated cash and grid trades based on a region’s 18-month trading average.
(Paige Carlson)

In recent AgriTalk segments, host Chip Flory visited with Senators Deb Fischer (R-Neb.) and Chuck Grassley (R-Iowa) regarding the current stage of the Cattle Price Discovery and Transparency Act.

“If we're going to have a strong market, and if we're going to have a strong economic segment in the cattle industry, from cow-calf producers to large and small feedlots to our packers, and help the consumer get a good steak, we want to make sure every segment of the industry is going to be successful," Fischer says. "For that to happen, I believe there has to be transparency. There has to be information available, and in order to do that, we have to know what the negotiated price is.”

Sen. Grassley continues: “The negotiated price ought to have a little bit of room every day to kill. It's not fair that the big feedlots of Texas, Kansas and Colorado take up about 90% of the daily kill. We need a fair market and certainty for delivery. The government ought to be a referee in the free market system. The government shouldn't run the marketplace, but they ought to encourage competition.”

The Cattle Price Discovery and Transparency Act would establish mandatory thresholds of negotiated cash and grid trades based on a region’s 18-month trading average. Minimums will be set and implemented in each region. It would also require USDA to establish a cattle contract library and update mandatory reporting from packers.

With bipartisan support, Sen. Fischer believes this bill has already encouraged more cash trades to occur in recent months. However, without a mandated minimum threshold, this practice will remain as an exception to the rule.

“The great thing about Senator Fisher's bill is that it looks at historical data of what was traded in the past. It allows for public input, and it provides flexibility because there’s opportunity to make a change within two years," says Lee Reichmuth, U.S. Cattlemen’s Association director. “We need to have a minimum [threshold]. We need to have price discovery and a strong cash market.”

Echoing the same sentiment, Zippy Duvall, American Farm Bureau Federation president, said in a recent press release: “The Cattle Price Discovery and Transparency Act takes positive steps toward ensuring fairness for America’s farmers and ranchers as they work to feed this country’s families. We support the majority of this legislation, but we cannot support mandatory cash sales.”

Expressing a different opinion, Julie Anna Plotts, North American Meat Institute’s president and CEO, said in a November press release: “Beef and cattle markets are dynamic. This fall prices cattle producers received for their livestock have risen without any government interference. In a rush to do ‘something,’ this bill would replace the free market with government mandates and harm those it is intended to protect: livestock producers.”

The Senate Ag Committee working on this bill has received technical support from USDA, Committee Chair Sen. Debbie Stabenow (D-Mich.) has been supportive and both Fischer and Grassley believe the bill is ready to move from committee.

 

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