Q&A: Iowa Cattlemen's Cora Fox on the Cattle Price Discovery and Transparency Act
With the Cattle Price Discovery and Transparency Act top of mind for many cattle producers, director of government relations at the Iowa Cattlemen's Association, Cora Fox, shares her insights on the bill.
Q: What parts of the Cattle Price Discovery and Transparency Act do you feel will be most beneficial to cattle producers?
A: There are several provisions within the bill that I believe will benefit cattle producers. This is my perspective based on countless conversations with the members I represent at the Iowa Cattlemen’s Association.
First, let’s discuss the requirement for packers to participate in the cash market. This is incredibly valuable to cattle feeders who are shut out from the market for a litany of reasons: market disruptions (big and small), captive supply, labor challenges, etc. The COVID-19 pandemic is the most severe example, but Iowa cattle feeders who utilize the cash market have been told they can’t get their cattle killed during random weeks throughout the year, too. When you’ve got market-ready cattle, every extra day in the yard is lost revenue. It’s even worse when we’ve got $7-8/bu. corn to feed. It’s not like these producers are being compensated for the packer building too much captive supply or failing to take a look at the calendar. Guaranteeing some level of activity in negotiated trade keeps cattle moving in all parts of the beef belt on a regular basis.
Furthermore, we must recognize the value of negotiated trade as it pertains to price discovery. There is consensus amongst the entire cattle industry that price discovery is valuable. The cattlemen I work with believe that price discovery is a shared responsibility of all market participants. It shouldn’t be a burden carried only by producers in Iowa/Minnesota and Nebraska when it’s a benefit to all.
Finally, I don’t think there’s any dispute that this bill will provide more information to producers which will help them make better informed marketing decisions. Knowing how many cattle are scheduled to be delivered for the next two weeks will help producers estimate slaughter numbers and packers’ demand. Access to the base price, net price, and premiums on formula contracts offered and utilized will bring more awareness to producers as they attempt to negotiate with buyers. And receiving average carcass weights in a more timely manner will give producers an idea of the beef going out for further processing or retail. The packers know all of those details, but most producers don’t. Knowledge is power. If we want to change the current dynamic and reduce the imbalance of leverage between packers and producers, there’s got to be more publicly available information. Remember, Livestock Mandatory Reporting was developed to facilitate open, transparent price discovery for all market participants, not just a few.
Q: In Iowa, what percentage of cattle are sold on negotiated trade vs. AMA?
A: In 2021, the Iowa/Minnesota reporting region sold 57.7 percent of cattle via cash or negotiated grid. This is the highest percentage of negotiated trade reported within the beef belt.
Q: Have these numbers changed in the past decade?
A: We’ve witnessed a decline in cash trade in every reporting region over the past decade. In Iowa, we’re trading roughly 14 percent less cash since 2011. Negotiated grid transactions went from 10.2 percent to 5.7 percent in 2014, but we’ve since returned to more than 10 percent in 2021.
Q: Do you foresee any ‘unintended consequences’ to this bill?
A: Aren’t there very real consequences of doing nothing? The “slow game” on cattle market reform–denying any problems and delaying the development of real solutions–has not been beneficial for independent cattlemen.
I don’t have to speculate what the lack of price discovery, transparency, and competition in the fed cattle market are doing to Iowa cattlemen. A little time spent reading market reports, talking to producers, and sitting in a salebarn shows the immediate need for reform.
I understand this bill, if enacted, is going to create change. But change can make a positive difference. And if this change happens to keep more cattle producers in business, then I think we’ve accomplished what’s really at the heart of this discussion: the ability to pass on a legacy to the next generation of producers.
The mandate provision of the Cattle Price Discovery and Transparency Act, which is the sticking point for some, allows for public input. Producers in Iowa, Nebraska, Kansas, Texas, and beyond will have the opportunity to tell USDA what’s working, what isn’t, and what can be improved upon. This is important, as there is no such thing as a perfect bill or silver bullet solution.
Q: Do you have any reservations of getting the government involved in the beef industry to this extent, specifically with marketing beef?
A: It was a difficult decision for Iowa cattlemen to make when we decided to ask Sen. Chuck Grassley (R-Iowa) to pursue legislation. I think most Iowa cattlemen, including myself, prefer to keep Uncle Sam out of our back forty. However, we’d be remiss if we ignored reality. Producers have no leverage with packers. We’re lucky if we have one or two buyers in our salebarns or at the gate. Some weeks we have no competitors, and when the market disruptions hit, we struggle to get our high-quality, market-ready cattle sold.
Congress allowed many of the problems we have in the meatpacking industry to develop over the past century, and I believe Congress has a responsibility to address them. We’re grateful to have a united front from Iowa’s congressional delegation on cattle market reform.
Q: If you could add/change anything to this bill to better suit cattle producers, what would it be?
A: I think the bill would benefit from a provision that would enforce 14-day delivery for negotiated cattle. By definition, cattle sold via negotiated means should be delivered within two weeks. Unfortunately, this isn’t always the case. I routinely hear from cattle feeders that they are being asked to extend their delivery date or plan on their cattle getting slaughtered in 3-4 weeks. There’s no reason why negotiated cattle can’t be put on the calendar just as cattle sold via AMAs.
I also think tightening up the time period which covered packers will be required to meet mandatory minimum requirements is important. One week is significantly different than one month. Give an inch and they’ll take a mile.
If signed into law, I’d also like to see USDA act with a sense of urgency. The bureaucratic process often moves at the pace of a snail; a commitment to implement the provisions of this bill on a shorter timeline than directed by Congress would be appreciated by many.
Q: After the recent hearings, do you feel the best interest of the independent cattle producer was voiced and heard in the presented testimonies?
A: There have been several hearings over the past couple of years–maybe six? Between all of them, various perspectives have been shared. Recognizing my bias, I think it would’ve been beneficial to have more representation from Iowa. Much of what’s being discussed in terms of cattle market reform came from the minds of Iowa cattle feeders.
Q: What point of view do you feel was missed?
A: I think it’s pretty obvious that representation from the regions who drive price discovery and provide the most information to the entire beef belt were missing: Iowa/Minnesota and Nebraska. The statements shared by Sen. Deb Fischer and Chairman David Scott in recent hearings explain why those perspectives were missing, and it’s incredibly disheartening.
Q: If there is another hearing in the future, who would you recommend to testify?
A: It would behoove Congress to focus less on headlines in the paper and continue to work with associations who represent the interests of cattlemen. Who can best answer the questions so Congress can determine next steps? I’ll always advocate to have an Iowa cattleman at the table where decisions are made, but I know there are other important voices to include in a hearing. Agency officials, economists, cattle producers from other states–they all deserve the opportunity to share their perspective. Lastly, cutting the partisan noise and staying germane to the purpose of the hearing would make better use of everyone’s time.
Other Perspectives:
