Sen. Deb Fischer (R-NE.), a member of the Senate Agriculture Committee, introduced the Cattle Market Transparency Act of 2020 to restore transparency and accountability in the cattle market.
The act would focus on two areas, “ensuring regionally sufficient negotiated cash trade and equipping producers with more information,” the senator said in a statement.
“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. 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,” said Fischer.
The Cattle Market Transparency Act of 2020 amends the Packers and Stockyards Act of 1921, requiring the USDA to maintain a library of marketing contracts between packers and producers. The bill’s provisions address Livestock Mandatory Reporting, giving producers price transparency tools to better equip them for negotiating.
It stipulates the contracts submitted by the packers shall include the type of contract and “a description of the provisions in the contract that provide for expansion in the numbers of fed cattle to be delivered under the contract for the six-month and 12-month periods following the date of the contract.”
The information would be available in a confidential monthly report assisting producers negotiating future contracts by adding, “Nothing in this section permits the secretary, or any officer or employee of the secretary, to withhold from the public the information [required to be reported under Livestock Mandatory Reporting].”
Additionally, the act mandates packers to disclose their commitments organized by cattle type and number scheduled for delivery in the next 14 days. This provision already exists in the swine market and will help producers estimate the packers’ need for cattle.
To further facilitate price discovery and assist the cash market, the act would require the USDA to establish regional mandatory minimums. Each reporting region shall include the number of packers in the region, cattle availability, and “pre-existing contractual arrangements of packers in the reporting region.” Each mandatory minimum region would be subject to a comment period from the public, and USDA would monitor compliance by the packers with the regions.
Fischer’s press release points out the decline in cash trade to alternative marketing agreements, particularly in the Texas/Oklahoma/New Mexico cattle region, where there has been a 40 percent decline from 2005 to 2018.
Industry reaction
The National Cattlemen’s Beef Association (NCBA) adopted in the 2020 Summer meeting “a voluntary approach to price discovery that includes triggers established by a working group of producer members.” If tripped, it would prompt NCBA to pursue legislation such as the Fischer bill if the lack of regionally negotiated cash trade should occur.
“Senator 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 said in a released statement.
Bill Bullard, CEO of the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA), indicated he was pleased Congress is submitting legislation addressing the “dysfunctional cattle market.”
“We appreciate and welcome Senator Fischer’s bill and hope that even more bills will be introduced so our industry can choose from among the very best solutions to restore robust competition to our shrinking U.S. cattle industry,” Bullard said in a press release.
Nebraska Cattlemen welcomed the legislation addressing transparency in the market and price discovery with regional negotiated cash trade and grid marketing minimums, stating they are “for the betterment of all cattle producers.”
“We sincerely thank Senator Fischer for her work on this important issue to Nebraska Cattlemen members,” said Ken Herz, president of Nebraska Cattlemen. — Charles Wallace, WLJ editor
