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Cattle market legislation compromise

Nebraska Senator Deb Fischer, a Republican announced on Nov. 9, 2021, that a new compromise cattle market bill was in discussion.

The bill would be known as the Cattle Price Discovery and Transparency Act and would be sponsored by herself and Chuck Grassley (R-Iowa), Jon Tester (D-Mont.), and Ron Wyden (D-Ore.).

While the bill has not yet been released, it is expected to be a compromise between the Grassley/Tester 50-14 bill and Fischer/Wyden’s Cattle Market Transparency Act.



According to a Fischer news release, the senators intend to introduce the new Act soon, and the legislation is expected to make several changes (see sidebar).

“The senators plan to introduce the Cattle Price Discovery and Transparency Act in the coming days. The legislation will:

 

Establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades based on each region’s 18-month average trade to enable price discovery in cattle marketing regions. In order to establish regionally sufficient levels of negotiated cash and negotiated grid trade, the Secretary of Agriculture, in consultation with the Chief Economist, would seek public comment on those levels, set the minimums, and then implement them. No 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.

Require the U.S. Department of Agriculture (USDA) to create and maintain a publicly available library of marketing contracts between packers and producers in a manner that ensures confidentiality.

Prohibit the USDA from using confidentiality as a justification for not reporting and make clear that USDA must report all Livestock Mandatory Reporting information, and they must do so in a manner that ensures confidentiality.

Require more 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.”

While the language of the bill is not yet released, it is expected to be a departure from the 50-14 concept, and has been endorsed by the American Farm Bureau Federation, the National Farmers Union and the U.S. Cattlemen’s Association.



R-CALF USA Director Herman Schumacher has concerns that the bill will not work quickly enough or make enough meaningful change to packer buying practices to significantly change the rate at which independent cattle feeders are going out of business.

“I want to know when this would be put into effect. If there are no changes made for the next two years, we will continue to lose our small, family feeder, who is so crucial to upholding the market for feeder calves,” said the Herried, South Dakota feeder and former owner of Herried Livestock.

“Also, I’m concerned that if the regional mandatory minimums only apply to those packers within the 5 area reporting areas, that many large packing companies will continue to buy their cattle through undisclosed agreements. Plants in Pasco, Washington; Joslin, Illinois; Hyram, Utah; could actually operate with 100 percent captive supply cattle if only the 5 area weekly weighted average states are included in the rules,” he said.

The five area weekly weighed average regions are currently the areas that USDA uses for Livestock Mandatory Reporting, sometimes known as mandatory livestock reporting. Those areas are: Texas/Oklahoma/New Mexico; Kansas; Nebraska; Colorado; Iowa/Minnesota. When cattle from these regions sell, they are reported under that region, and it’s been discussed that these same regions would be used for the packer cash purchase minimums.

“I’m concerned that if they decided to leave outlier plants unregulated, that it will be an incentive for packing companies to pick up and move to other states to avoid federal regulation,” he added.

In an AgriTalk interview, NCBA’s Ethan Lane said the information available about the bill indicates that it would be a significant departure from Grassley and Tester’s 50-14 legislation which called for all packing companies that own more than one packing plant to buy 50 percent of their weekly needs on the cash market and to take delivery within 14 days.

“This bill seems to take a different approach,” said Lane.

“It’s still a mandate,” he said and pointed out that NCBA members don’t have policy to support a mandate, “although we support the rest of the bill,” he said.

The thresholds that cap all regions at 300 percent of the lowest region in terms of cash trade “seems like it will set up a system to redistribute AMA (alternative marketing arrangement) use rather than discourage it,” said Lane. “He (Grassley) has spent so much time villianizing AMAs that it feels different to us,” he said.

“If the intent is to increase cash trade across the board, why cap it? Why put an artificial ceiling on it? if more cash trade is always better…why cap it in the mid-30s? That’s what it looks like with the numbers I’m looking at,” he said.


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