Grassley, Tester introduce bill for transparency in cattle pricing | TheFencePost.com
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Grassley, Tester introduce bill for transparency in cattle pricing

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, Sen. Jon Tester, D-Mont., and other senators on May 12 introduced legislation to require that a minimum of 50% of a meat packer’s weekly volume of beef slaughter be purchased on the open or spot market.

“The lack of transparency in cattle pricing isn’t a new problem, but the negative effects of the fire in Holcomb, Kan., and COVID-19 have highlighted the need for additional price transparency measures to ensure producers are getting a fair price for the hard work of raising cattle. Food doesn’t come from the grocery store, it comes from tens of thousands of farmers and independent producers who work day and night to ensure families across the country have an abundant supply of food. Independent producers deserve to be paid what their beef is worth,” Grassley said, noting that he first introduced the bill in 2002 with former Sen. Russ Feingold, D-Wis.

“Market consolidation in the livestock industry is making it harder and harder for producers to meet their bottom lines, especially as large packers rely on fewer spot transactions to purchase live cattle at the farm gate,” Tester said. “This bill will force meat packers to engage in more spot transactions, bringing up formula prices and making them more accurate while giving Montana producers and feeders more flexibility and transparency when they bring their livestock to market.”

“The lack of cash negotiated sales in recent years has decimated price discovery and undercut the fundamentals of the CME cattle futures contracts,” the U.S. Cattlemen’s Association said in a statement. “This bill would allow the Livestock Mandatory Reporting system to be better utilized as a mechanism for accurate and transparent reporting, which will advance price discovery and shore up the fundamentals of the CME cattle futures contracts.”


USCA President Brooke Miller said, “The Livestock Mandatory Reporting program will expire on Sept. 30, 2020. As Congress and industry stakeholders work together on needed changes to the program in the months ahead, we expect this bill will play a large role in those conversations.

“We would like to thank the nearly 4,400 individual producers and state and local organizations for undertaking this truly grassroots effort in support of #FairCattleMarkets,” Miller added. “USCA will be calling on these advocates in the near future to continue pushing forth a workable solution.”

R-CALF USA CEO Bill Bullard said, “Our industry is grateful for the swift action by Senators Grassley, Tester and others to halt the ongoing erosion of our cattle industry’s most critical market – the competitive cash market where beef packers purchase cattle for beef production and where price discovery occurs for the entire cattle industry.

“The largest beef packers have progressively shifted large numbers of cattle out of the competitive cash market and into contract arrangements where no price discovery can occur. However, the beef packers continue tying the price they pay for their contracted cattle to the razor-thin cash market that is no longer capable of establishing a competitive price for cattle.

“This has contributed to the disconnect between the prices that cattle producers receive for their cattle and the prices that consumers are now paying for their beef.

“Today, consumers are paying near-record to record prices for beef while cattle producers are receiving seriously depressed prices for their cattle. This is an indication of market failure, and Senator Grassley’s and Tester’s bill represents one of the first meaningful steps that Congress and the president must take to begin restoring competition to our broken markets.

“We are further encouraged by the non-preemption provision in the bill that allows individual states to require an even higher percentage of cattle to be procured from the cash market as this empowers states to get more involved in their respective cattle industries.”

NCBA opposed

The National Cattlemen’s Beef Association announced May 13 it is opposed to the bill.

NCBA Policy Division Chair and South Dakota rancher Todd Wilkinson said in a news release, “Currently, cattle producers utilize a multitude of methods to market their livestock, including the cash market. Increased price discovery will benefit all segments of the cattle industry — that is why NCBA has been closely working with key stakeholders, industry experts, and our partners in academia to develop tangible means to meet that end. Any solution must not restrict an individual producer’s freedom to pursue marketing avenues that they determine best suit their business’ unique needs. Government mandates, like that being proposed by Sen. Grassley, would arbitrarily force many cattle producers to change the way they do business. We will continue to work toward a more equitable solution and invite Sen. Grassley, and other lawmakers interested in this conversation, to join us in the search for an industry-led solution based in free market principles.”

Grassley acknowledged to reporters Tuesday NCBA had opposed the legislation in the past. ❖




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