Senators: More Cash Cattle Trade Needed

American Farm Bureau, Senate Bill Writers Reflect Divide on Mandated Cash Trade

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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A Senate bill would set up a regional system requiring packers to buy a certain volume of cattle through negotiated cash trade. The American Farm Bureau Federation stated it supports the bill's provisions for price reporting and a cattle contract library, but the group's policy book now opposes cash trade mandates. Senators who wrote the bill want to stick with their original intent. (DTN file photo)

OMAHA (DTN) -- A pair of senators are making clear they don't want to rework their cattle markets legislation after the American Farm Bureau Federation changed its policy earlier this month to oppose any mandates that would require packers to buy more cattle through negotiated cash trades.

The American Farm Bureau Federation on Friday declared its support for S. 3229, the Cattle Price Discovery and Transparency Act, as long as senators drop the biggest element in the bill -- the establishment of mandatory minimum negotiated cash sales for fed cattle.

The bill, led by Sens. Deb Fischer, R-Neb., and Chuck Grassley, R-Iowa, was a compromise introduced in mid-November that would require USDA to set regional mandatory minimum cash trade for fed cattle purchased by packers for slaughter. The bill also has other provisions that would require USDA to release daily base price information for cattle purchased through formula contracts. Other provisions would expedite the reporting of carcass weights and create a cattle contract library of alternative marketing agreements at USDA as well.

Still, the central language in the Cattle Price Discovery and Transparency Act would require packers to buy an undetermined minimum level of cattle through cash trades within 14 days of slaughter. USDA would set the regions and minimum purchase volumes.

Delegates at the AFBF annual meeting on Jan. 11 voted to change their policy book to oppose government mandates for any livestock slaughter facility to purchase a set percentage of live animal supply via cash bids. The group also maintained language, though, stating, "Any government effort to increase the amount of negotiated sales should be respectful of regional differences."

AFBF delegates were divided by their own regional differences regarding how cattle are sold to packers in individual states. Delegates from the Midwest and Southeast were more supportive of mandates on cash trade, while delegates from states such as Kansas, Oklahoma and Texas with high percentages of formula contracts eventually won out.

Farm Bureau's annual meeting also had speakers questioning the benefits of cash trade mandates, including John Newton, the chief economist for the ranking Republican on the Senate Agriculture Committee, and Stephen Koontz, a livestock marketing extension economist at Colorado State University.

"More cash trade will not result in better prices or change the market situation we've been in since 2016," Koontz said at the AFBF meeting on Jan. 10. Koontz added, "There are people who argue having more packers to bid on your cattle will raise prices. That's baloney."

AFBF came out on Friday stating the group "supports robust negotiated sales" but opposed the government mandates.

"We support the majority of this legislation, but we cannot support mandatory cash sales," said Zippy Duvall, president of AFBF, in a statement. "We are committed to working with the sponsors of this bill to make revisions to ensure it aligns with the priorities outlined by our membership."

Fischer, a cattle rancher in Nebraska's Sandhills, pointed out Farm Bureau "reiterated its support for our efforts to ensure every segment of the cattle market can succeed." Fischer then noted Farm Bureau's membership was divide on how to handle negotiated cash trade.

"Though there are differences of opinion with their own organization on a solution, family farmers and ranchers have been clear," Fischer said. "Robust negotiated cash sales are integral to facilitating price discovery in the market."

Fischer added that her bill has bipartisan support, backed by 15 other senators, including lead co-sponsors, Grassley and Sens Jon Tester, D-Mont., and Ron Wyden, D-Ore. All told, there are seven Republican and nine Democrats backing the bill, of which 10 are members of the Senate Agriculture Committee.

Grassley made a point of declaring that the "complete" bill is needed to improve market access for independent cattle producers. Grassley stated he is "pleased to see that the American Farm Bureau is reaffirming their support for the goals of our bipartisan bill to improve competition and market access for livestock producers." Grassley said he is confident the bill would advance out of the Senate Agriculture Committee if it were brought up for a vote.

However, Grassley said he based the bill "on what I'm hearing directly from Iowa's independent cattle producers." Grassley added, "When packers limit their ability to negotiate a fair price, especially when consumers are seeing prices skyrocket at the grocery store, the market clearly isn't working. I understand the cartel of four meat packers, which controls 85% of the beef market, is pressuring others in the ag community oppose this bill. However, I remain focused on providing the most complete solution to improve price transparency and market access to the independent producers I hear from each day."

So far, the Senate Agriculture Committee has not set any hearings or business meetings to discuss advancing the bill.

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Chris Clayton