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Cattle reformers in Senate unite on price discovery bill

In order to increase market transparency, four senators said on Tuesday they would file legislation to require meatpackers to buy a portion of their slaughter cattle on the cash market. The bill also would create a contract library that discloses the purchase terms that packers offer for cattle, so producers might know if a fair price is being offered.

A handful of packers dominate beef processing and just a fraction of cattle are sold on the spot market. Most cattle are fed under contract or delivered to packers under formulas that set the price, often with cash sales as a factor. Some ranchers say packers have the upper hand in an opaque marketing system.

Democratic Sens. Ron Wyden of Oregon, the Senate Finance chairman, and Jon Tester of Montana and Republican Sens. Deb Fischer of Nebraska and Chuck Grassley of Iowa said they joined forces on a compromise bill. Previously, Grassley and Tester sponsored a bill to require packers to buy half of their slaughter cattle on the cash market. Fischer and Wyden backed a bill to set minimum purchase requirements by region. Neither bill was making headway in the Senate.

“Our bipartisan coalition has one aim: Level the playing field for the cattle ranchers in our states and allow them to grow their small businesses by restoring market fairness, efficiency and transparency,” said Wyden.

The contract library was the first market reform to gain traction in Congress this year. The House Agriculture Committee approved a bipartisan bill, HR 5609, on Oct. 21 for a cattle contract library at USDA. A contract library already exists for hog marketing.

Under the upcoming Senate bill, the USDA would set mandatory minimum thresholds for cash and negotiated sales in each region of the country. It would require more timely reporting by USDA of cattle carcass weights and require packers to report how many cattle it has scheduled for delivery in each of the next 14 days. “This tool can be used by producers to project estimated slaughter numbers and packers’ needs for cattle,” said an explanation of the bill.

Fischer said “robust price discovery” was essential, adding that “the foundation of price discovery in the cattle market is negotiated cash sales.”

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

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