Miller: Cattle Market Reform Necessary for a Sovereign, Secure Food System
More than one hundred years have passed since the last major regulatory action on the U.S. meatpacking industry. The Packers and Stockyards Act of 1921 was enacted at a time when the National Packing Company, a conglomeration of three of the largest meat processors at the time, controlled 45 percent of the nation’s total slaughter capacity, and 97 percent of slaughter capacity in the West.
Today, the “Big Four” meatpacking corporations – Tyson, JBS, Cargill, and National Beef Packing – control around 85 percent of U.S. steer and heifer slaughter, more than twice the market share that spurred Congress to action in 1921.
The game has changed, but the rules have remained the same. Without bold action, the United States risks losing its independent livestock producers.
U.S. Senator Deb Fischer, Chuck Grassley, and Jon Tester’s Cattle Price Discovery and Transparency Act would be the first time in over one hundred years that a referee, with a whistle, would be placed back on the playing field. And for each violation of the Act, packers would pay a $90,000 fine.
Under the bill, USDA would establish 5-7 regions covering the continental United States based on similar fed cattle purchases. Packing companies controlling five or more percent of fed cattle slaughter in these regions would then be required to participate in the cash market. The bill would establish minimum levels of purchases through approved pricing mechanisms like negotiated cash, negotiated grid, at stockyards, and through trading systems where multiple buyers can make and accept bids.
The initial established mandatory minimum may not be less than the average of that region’s negotiated trade for the two-year period of 2020-2021. However, this is just the floor of what USDA can establish – USDA can choose to set minimum purchase levels higher. In fact, they are required to consider a number of factors including the proportion of negotiated purchases in that region relative to the number of AMAs that use negotiated purchases to determine their base price.
The bill would also require USDA to review levels of cash sales not more than two years after passage, and then periodically after that. If anything changes after the bill passes, there is a built-in mechanism to quickly make it right.
Further, the bill makes much-needed changes to Mandatory Price Reporting, including creating a publicly available library of marketing contracts, mandating box beef reporting to ensure transparency, expediting the reporting of cattle carcass weights, and requiring packers to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days.
And what would happen if the bill is not passed? A study compiled by Texas A&M’s Agricultural and Food Policy Center, at the behest of the Senate Agriculture Committee, forecasted that without the Cattle Price Discovery and Transparency Act, negotiated trade in Texas-Oklahoma-New Mexico is expected to fall to zero percent by 2026.
This isn’t a discussion over whether producers should or should not be able to market their cattle through Alternative Marketing Agreements, or AMAs. This is a discussion about how we can place solid ground back under producers’ feet by establishing a floor of minimum weekly negotiated purchases. Without these purchases, there would be no way to determine a base price for the majority of AMAs.
The U.S. Cattlemen’s Association (USCA) stands with the 20 Senate cospsonors of the bill on the need to pass the Cattle Price Discovery and Transparency Act. A new Congress will begin on January 3, 2023 – and with it, all of our work on cattle market reform legislation will be wiped clean. Time is not on our side – but momentum is. Let’s get this bill across the finish line and bring true price discovery back to the cattle marketplace.
Dr. Brooke Miller currently serves as president of the U.S. Cattlemen’s Association, a nationwide organization of independent cattle producers.
