Compromise Bill gains attention: S. 3229 has all the cattle groups weighing in

This week the House of Representatives passed a standalone cattle contract library bill introduced by South Dakota Congressman Dusty Johnson with a vote of 411-13.

The House also voted 418-9 to advance H.R. 5290, introduced by House Agriculture Committee Chairman David Scott (D-GA). This legislation would extend authorization for livestock mandatory reporting (LMR) through September 30, 2022.

The National Cattlemen’s Beef Association cheered the House passage of both pieces of legislation, saying they secured the introduction of the Johnson bill.

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“The fact that House Agriculture Committee Chairman Scott and Ranking Member Thompson have both been vocal champions for LMR reauthorization is yet another indication of the broad-base support this measure has among producers across the country. LMR is absolutely essential to fair, competitive, and transparent cattle markets. We appreciate Chairman Scott’s leadership, and the heavy engagement we have seen from both sides of the committee on this issue. We also thank Rep. Johnson and Rep. Cuellar for their work to equip producers with vital market data through a cattle contract library,” said NCBA President Jerry Bohn.

The producer share of the retail beef dollar has dropped from about 50 percent in 2015 to about 37 percent today, and the industry continues to discuss how and if to work toward a reversal of that trend. There was an effort by Iowa Republican Senator Charles Grassley and others to include a 50-14 spot market regulation in the reintroduction of LMR but R-CALF USA Region III director said this fell flat after this summer’s House Ag Committee hearing. He believes the hearing was orchestrated to diminish support for 50-14. Recently a “compromise bill” was introduced by Grassley and Republican Senator Deb Fischer of Nebraska which does not include 50-14 or any nationwide cash or spot market minimum.

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“The thrust of that hearing, other than a few rare exceptions, was normalizing what has gone on since 2014 and making it appear that if we just knew more about captive supply that we would like it and we would be able to be profitable again. It was a smoke show that was meant to change the emphasis of the cattle business’s problem from captive supply to transparency,” Kenzy said.

Transparency is good but it’s not a full answer, he said. “The answer is more cash trade coupled with the transparent reporting of that cash trade.”

“Who said 50-14 was too heavy of a lift? Who was demanding we give it up?” asks Iowa cattle feeder Eric Nelson.

He calls the compromise bill a “feel good thing,” saying that a friend of his who worked as a hog marketing agent in 2009 told him recently that the hog contract library didn’t preserve the small hog producers, but rather, it hastened their decline.

The 50-14 regulation would have required the bigger packers to purchase 50 percent of their needs on the cash or “spot” market and to take delivery within 14 days. The industry is in agreement that the cash market has gotten too thin to accurately determine the value of market-ready cattle in a timely manner.

The compromise bill would require USDA to implement a cattle contract library, instate regional cash trade minimums and maximums, inhibit packer confidentiality claims which would increase reporting, and require more timely reporting of cattle carcass weights and require packer to report the next 14 days’ slaughter numbers.

Kenzy said that with 10 sponsors on Grassley’s 50-14 bill, and 5 sponsors on Fischer’s original cattle contract library bill, it is curious why the industry dropped support for 50-14, and said the bill isn’t a true “compromise” since very little if any of the Grassley bill is included.

Several groups have voiced support for Fischer and Grassley’s S.3229, the Cattle Market Compromise Bill, though. The American Farm Bureau, American Farmers Union, U.S. Cattlemen’s Association, South Dakota Stockgrowers Association, Iowa Cattlemen’s Association and possibly more groups have endorsed the bill.

James Halverson, whose South Dakota Stockgrowers Board of Directors voted 15-10 to support the bill, said his group wasn’t satisfied with the regional cash minimums offered in the bill and that they will continue to push for more. “This gives us a platform to work off of. We still absolutely support 50-14,” he said.

“Our policy states that we are in favor of more cash trade. It’s not locked in at a specific number. This bill puts a minimum on it. I would equate this bill to more cash trade,” he said.

Halverson said his group’s policy also calls fore more transparency. “With the provisions for the cattle contract library, we feel that hits that right on the head,” he said.

Their northern neighbors, the Independent Beef Association of North Dakota, chose not to support the bill, though. “Our membership felt at this point that there are too many loopholes,” said Dockter.

“There are too many unanswered questions, it will take too long to implement, and plus giving more authority to USDA doesn’t sound great,” he said.

R-CALF USA stated publicly it didn’t support the bill, after submitting to the sponsors three different memos which included proposed amendments.

Kenzy said the bill “goes so far in legalizing and normalizing everything that’s occurred in this managed market. It takes a snapshot of the last 18 months and makes that the baseline. That is the poorest 18 months in the history of the cattle business. It limits the mandatory minimums of the best cash trade areas by tying them to the lowest cash trade areas.”

“My greatest opposition to this bill lies not in the idea that it does not do enough, or does not do enough quickly enough (two year implementation delay) its greatest danger is the precedent that it sets. I am fearful that if Congress deems ‘regionalization’ to be legal, it will change our industry forever. The Packers and Stockyards Act of 1921 was enacted to “protect members of the livestock, meat and poultry industries from unfair, deceptive, unjustly discriminatory and monopolistic practices….”

If regionalization is enshrined in law by this bill, we will have once again muddied the water, perhaps irreparably,” said Kenzy.

The U.S. Cattlemen’s Association voiced immediate support for the bill last month.

“The Cattle Price Discovery and Transparency Act will deliver on its promise to restore robust price discovery and provide market participants with the information they need to make savvy marketing decisions. It also mandates that every packer required to report to USDA AMS is also required to participate in the cash market each week,” said the group’s Vice President Justin Tupper.

“We commend Senators Fischer, Grassley, Tester, and Wyden for coming together on a bipartisan solution that has broad support from both lawmakers and producer groups. Reforming the cattle marketplace to drive transparency and true price discovery is a core tenet of how we can strengthen the U.S. cattle producer’s bottom line, and we look forward to working with Members of the Senate and House Agriculture Committees to quickly advance this bill.”

Tupper explained that it is crucial for the industry to gather round a bill that will pass, and to work with legislators who have proven themselves to back the cattle industry. “Grassley has worked tirelessly for 2 years on this issue. Granted, this compromise bill doesn’t have everything we want but it sets a floor,” he said.

“Booker has wanted to do away with CAFOs. He can’t have the best interests of the producer at heart,” he said, referencing an alternate bill introduced by New Jersey Democratic Senator Cory Booker. Tupper admitted he supports the cattle industry aspects of the Booker bill, but he doesn’t believe they will gain enough support to pass.

“The compromise bill has bipartisan support. It will pass if other ag groups don’t get in the way.”

In response to those who might fear that if the compromise bill passes, the industry will not get support for additional issues, Tupper says this is no concern. “When this passes, the work begins. We have to get something done. We can’t shoot for the moon like we have for 25 years. We can’t have an end all be all bill. It won’t happen,” said Tupper.

Kenzy urges all of the major livestock organizations to meet for a “Phoenix 2.0” – but this time he suggests the meeting be public so that all producers can gain an understanding of where each organization stands and why. American Farm Bureau, American Farmers Union, NCBA, R-CALF USA and USCA met last spring with the Livestock Marketing Association for a closed door meeting in Phoenix. The group discussed packer concentration, price transparency and discovery, packer oversight, Packers and Stockyards Act enforcement, level of captive supply, and packer capacity.

NCBA does not have a news release stating their position on the compromise bill and the organization did not respond to an e-mail asking for it, but in a news release, the group said: The creation of a cattle contract library and the reauthorization of LMR are both widely supported across the cattle and beef industry. When livestock groups met in Phoenix earlier this year to identify common goals and priorities, those two measures were agreed upon as urgent.

NCBA left that meeting and immediately set to work advancing these proposals. We upheld our commitment to the industry, even when R-CALF changed their tune and refused to support these viable, popular solutions.