Ag Policy Blog

Cattle Groups Differ Over Grassley-Tester Spot Market Bill

Jerry Hagstrom
By  Jerry Hagstrom , DTN Political Correspondent
Under a bill introduced by senators on Wednesday, the largest meatpackers would have to buy at least 50% of their cattle on the cash market, such as at an auction. Like a lot of issues within the industry, cattle groups are divided over the bill. (DTN file photo)

Sens. Jon Tester, D-Mont., and Chuck Grassley, R-Iowa, on Wednesday introduced a bill to require each U.S. meat processing facility that slaughters more than 125,000 head of cattle yearly to purchase 50% of their weekly volume of beef slaughter on the open or “spot” market.

Other co-sponsors of the bill include Senate Agriculture Appropriations Subcommittee ranking member John Hoeven, R-S.D., and Sens. Tina Smith, D-Minn.; Ron Wyden, D-Ore.; Cory Booker, D-N.J.; Joni Ernst, R-Iowa; Mike Rounds, R-S.D.; and Steve Daines, R-Mont.

The bill is nearly identical to legislation Grassley and Tester drafted last year during the height of the pandemic that led to a record spread between cash prices for producers and boxed-beef prices for packers.

“The lack of transparency in cattle pricing isn't a new problem. Unfortunately, the COVID-19 pandemic has only highlighted the need for additional price transparency measures to ensure producers are getting a fair price for the hard work of raising cattle,” Grassley said in a news release. “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.”

Tester said in a joint release with Grassley, “Montana livestock producers have made it clear: There needs to be more transparency in the cattle market to ensure ranchers get a fair shake, especially as market consolidation continues to rise. This bill is about putting Montana family ranchers first, instead of tying their bottom lines to the whims of multi-national corporations.”

Grassley had told reporters earlier this week that the legislation has a greater chance of being considered in the Senate Agriculture Committee with the change in leadership this year. The bill and similar legislation that has been introduced will likely be considered as Congress takes up a reauthorization of the Livestock Mandatory Price Reporting Act. That legislation is due for renewal before the end of September.

U.S. Cattlemen's Association (USCA) President Brooke Miller commended Grassley for continuing to champion the legislation and said USCA also supports the Cattle Market Transparency Act of 2021 introduced by Sen. Deb Fischer, R-Neb.

“As Congress looks to the reauthorization of the Livestock Mandatory Reporting Program (LMR) prior to its expiration on September 30, 2021, USCA appreciates any and all efforts to reform the program,” Miller said. “LMR must be better utilized as a mechanism for accurate and transparent reporting in order to advance price discovery and shore up the fundamentals of the CME cattle futures contracts.”

But the National Cattlemen's Beef Association (NCBA) said the Tester-Grassley bill is the wrong answer for the industry.

“NCBA has and will continue to work alongside our affiliates, Congress, and USDA to increase price discovery and improve the business climate for producers across the country,” NCBA Vice President of Government Affairs Ethan Lane said in a news release.

“However, simply put, Sen. Grassley's bill misses the mark. The industry – from leading livestock economists to NCBA state affiliates – agrees that any legislative solution to increased price discovery must account for the unique dynamics within each geographic region. As we have seen in other sectors, a one-size-fits-all government mandate rarely achieves the intended goal. Per our grassroots policy, NCBA supports a voluntary approach first to increased negotiated trade. If a voluntary approach is unsuccessful, that same policy provides guidance toward a legislative solution that more closely resembles Sen. Fischer's Cattle Market Transparency Act. We will continue to work toward a more level playing field for producers, and we invite Sen. Grassley to join the majority of stakeholders in reaching a collaborative solution.”

NCBA affiliates, though, have backed these cattle marketing bills. The Iowa Cattlemen's Association immediately announced its support for the Grassley-Tester bill, calling it “a step in the right direction.”

“The Iowa Cattlemen's Association is pleased to support the reintroduction of the legislation that sparked discussion on cattle market reform in 2020: 50/14. Our producer members have continually expressed that all participants in the fed cattle market share responsibility in providing price discovery and transparency," says Matt Deppe, CEO of the Iowa Cattlemen's Association.

R-CALF USA CEO Bill Bullard called on Congress to act swiftly and adopt the legislation to preserve the cattle industry's most important price discovery market.

“Though alternative solutions to the ever-thinning cash market have been offered, none will be as effective as this new bill; nor can any of the alternatives be implemented in time to reverse the catastrophic disconnect between cattle prices and beef prices that has persisted for the past six years,” Bullard said. “Congress must not wait any longer to enact this important legislation as the chronically depressed fed cattle prices cannot sustain the critical mass of independent cattle feeders necessary to sustain a robustly competitive market for America's cow/calf producers, backgrounders and stockers.”

DTN Ag Policy Editor Chris Clayton contributed to this report.

Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com

Follow him on Twitter @hagstromreport

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