May 25, 2020

Cattle Pricing Transparency

Legislation introduced to increase cattle pricing transparency

On May 12th, a bill that amends the Agricultural Marketing Act of 1946 was introduced by U.S. Senators Chuck Grassley (R-Iowa) and Jon Tester (D-Montana) “to foster efficient markets and increase competition and transparency among packers that purchase livestock from producers.” Grassley and Tester are joined by Senators Joni Ernst (R-Iowa), Steve Daines (R-Montana), Mike Rounds (R-South Dakota), Tina Smith (D-Minnesota) and Cindy Hyde-Smith (R-Mississippi) on the bipartisan bill.

The bill would require U.S. beef processing facilities that slaughter over 125,000 head of cattle each year to purchase a minimum of 50% of their daily volume of beef slaughter on the open or “spot” market. The bill would affect packers who are required to report daily purchases and quantities. It omits packers that own only one plant and also excludes pork, poultry, some dairy-bred animals, beef animals over 30 months, and foreign animals.

Livestock groups such as the United States Cattlemen’s Association (USCA) support the bill. USCA President Brooke Miller stated in a press release, “We commend Senators Grassley, Tester, Ernst, Daines, Rounds, Smith, and Hyde-Smith for advancing legislation that will have a real and meaningful impact on the U.S. cattle producers’ bottom line.” Others, like National Cattlemen’s Beef Association (NCBA) Policy Division Chair Todd Wilkinson, does not agree with the bill, stating, “Government mandates, like that being proposed by Senator 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 Senator Grassley, and other lawmakers interested in this conversation, to join us in the search for an industry-led solution based on free-market principles."

Grassley, who introduced a similar bill in 2009, stated that cattle pricing transparency has been an issue in our country, and he is happy that “Lawmakers have begun to realize that in order to have a sustainable supply of meat in our country, we need to restore transparency in the marketplace and protect the market from collapsing when there are supply chain disruptions.” Grassley also warns that “Without significant action by Congress, our independent beef producers will not be able to stay in business. Failure to act is failing our independent producers.”

Read the proposed bill here.