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Cattle contract bill is first market reform to win House panel backing

On a voice vote, the House Agriculture Committee approved a bipartisan bill on Thursday to create a cattle contract library at the USDA, with one proponent saying it would “inject much-needed transparency back into the marketplace.” The bill was the first market reform to gain traction in Congress this year despite complaints by ranchers that meatpackers have an unfair advantage in an opaque sales system.

A handful of packers dominate beef processing, and just a fraction of cattle are sold on the cash market. Most are fed under contract or delivered under formulas that set the price, often with cash sales as a factor.

Under the library bill, HR 5609, the USDA would issue weekly or monthly reports on the terms of contracts between producers and packers, and on the number of head that would be delivered for slaughter in the following six and 12 months. The reports would include tallies of animals committed to delivery to a specific packer and animals that are not bound to a single packer.

The information would help ranchers and cattle feeders by outlining the payments that packers offer and by giving them a general idea of the competition they will face when their cattle go to market. Independent cattle feeders say packers turn to the cash market only when they lack enough head to run their plants at full capacity.

“This is just one piece of a larger puzzle we must address,” said Rep Angie Craig, a Minnesota Democrat.

In May, the two largest U.S. farm groups and three cattle organizations called for more transparency in cattle prices, the development of new independent packers to expand processing capacity, and a report from the Justice Department on the market power held by the big packers.

Four of those groups — the American Farm Bureau Federation, the National Farmers Union, the National Cattlemen’s Beef Association (NCBA), and the U.S. Cattlemen’s Association — support the contract library bill. The fifth, R-CALF USA, said the bill did not expressly cover packer-owned cattle and that hybrid agreements that blur the line between contracts and packer-owned cattle also might be exempt.

R-CALF prefers the so-called 50/14 bill, which would require packers to buy half of their cattle on the cash market within 14 days of slaughter. The legislation is stalled in committee.

“After more than a year of upheaval, facing everything from extreme drought to supply chain disruptions, many cattle producers have been backed against a wall,” said NCBA president Jerry Bohn. The contract library bill has broad support, he said, “and it will help our producers command more leverage in negotiations with the packers.”

The federal law that requires meatpackers to report purchase prices of livestock is due to expire on Dec 3. House Agriculture chairman David Scott has said he is working with Republicans on a bill to extend the reporting law for one year.

A video of the Agriculture Committee meeting is available here.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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