Senator Introduces Cattle Plan

Sen. Fischer's Bill Would Allow USDA to Establish a Regional Minimum Cash Trade for Cattle

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A Nebraska senator's plan for restoring transparency to cattle markets would have USDA set regional minimum cash trade for fed cattle sales. That's comparable to plans introduced by another pair of senators earlier this year. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- A Nebraska senator has introduced a bill responding to cattle markets that would establish minimum cash trade in regional markets for fed cattle as one of the tools to "restore transparency and accountability in the cattle market."

Sen. Deb Fischer, R-Neb., a member of the Senate Agriculture Committee, announced her bill, the Cattle Market Transparency Act of 2020, on Tuesday. The bill comes as Congress is considering a continuing resolution that would extend the Livestock Mandatory Reporting Act through Dec. 11.

The act right now is set to expire at the end of the month, but neither the House nor Senate Agriculture Committees have advanced a bill to reauthorize or change provisions under the act. But lawmakers such as Fischer have introduced bills as their own markers for any future bill.

Fischer's bill is the second attempt by senators on the Agriculture Committee to introduce legislation that would establish a minimum cash trade. Sens. Chuck Grassley, R-Iowa, and Jon Tester, D-Mont., introduced a bill earlier this year calling a minimum 50% cash trade in each state.

Fischer's bill would put the onus on the Secretary of Agriculture to determine regional mandatory minimum negotiated cash trade levels regionally across the country. USDA would seek public comment then implement a plan.

Under Fischer's bill, meatpackers would be required to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days -- a requirement Fischer noted already exists in the pork industry. USDA also would create and maintain a library of marketing contracts between packers and producers and require packers to provide that information.

Cattle markets have stabilized in recent months, but the pandemic and market reactions earlier this year raised concerns throughout the industry about price discovery. As cattle producers received less for their livestock due to packing houses idling, the packers themselves were getting record prices for boxed beef. A year ago, a similar circumstance happened when a fire forced a temporary shutdown of a Tyson beef plant in Holcomb, Kansas.

USDA released a report on the Holcomb fire and pandemic market back in July. The report concluded USDA could not find any violations of the Packers and Stockyard Act, but USDA also highlighted the Livestock Mandatory Price Reporting law. One of the problems with price discovery right now, USDA states, "is the declining number of participants in the negotiated cash market." USDA continues to review a proposed rule that would establish whether an undue or unreasonable preference has occurred in livestock markets.

The U.S. Cattlemen's Association, which has been advocating for greater negotiated cash trade language in the livestock reporting law, credited Fischer's bill with offering the regional negotiated cash trade proposal as well as providing more information to producers.

"As a Nebraska cattle producer, I echo the same sentiments expressed by Senator Fischer on the impacts to our livelihood of increased packer competition, decreased competition, and a declining cash market," said Lee Reichmuth, a board member for USCA.

The National Cattlemen's Beef Association stressed its policy "directs NCBA to pursue a voluntary approach to price discovery" based on policies from a working group set up by the organization. NCBA stated its working group will come out with some plan on negotiated cash trade, possibly when the group meets again Oct. 1.

NCBA added, "Sen. Fischer's bill explores many avenues to improve transparency in the cattle markets. The creation of a cattle contracts library and clarification of confidentiality rules will provide crucial data to cattle producers as they seek to make informed marketing decisions. However, our policy dictates that the voluntary framework we are developing be allowed the opportunity to succeed or fail before we can lend our support to regional mandatory minimums for negotiated trade. We welcome a continued dialogue with Sen. Fischer and her colleagues on ways to achieve robust price discovery for all cattle producers."

NCBA's Nebraska state affiliate, the Nebraska Cattlemen, issued a statement as part of Fischer's news release on the bill. Ken Herz, president of the Nebraska Cattlemen, said in the statement that Fischer's library on contracts would add in increasing transparency in cattle markets.

"Additionally, directing USDA-AMS to establish regionally negotiated cash plus negotiated grid marketing volume minimum thresholds will enhance price discovery goals and commitments for the betterment of all cattle producers," Herz said.

Fischer's recommendations also align with details from a Cattle Markets Task Force report released Monday by the Nebraska Farm Bureau.

"The past few years have been very difficult for producers, due to tough conditions and big market disruptions such as the Holcomb plant fire and the outbreak of COVID-19," Fischer said. "My legislation seeks to bring transparency and accountability to the cattle market. It will ensure there are a sufficient number of cash transactions to facilitate price discovery and equip producers with more price information to assist them with their marketing decisions."

Still, Fischer's bill and the Grassley-Tester bill would need movement from the Senate Agriculture Committee. The committee has not scheduled any further hearings or meetings on the future of the Livestock Mandatory Price Reporting Law. House Agriculture Committee leadership last month called for extended studies by USDA on livestock markets, but House Aggies have not scheduled any hearings or meetings on the legislation, either.

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Chris Clayton