The Senate Ag Committee was busy last week approving more market legislation: S. 3870, the Meat and Poultry Special Investigator Act, and S. 4030, the Cattle Price Discovery and Transparency Act. Now they need to present it to the Senate for a full vote—I would expect to see the Senate pass it with a few amendments attached.
Then the House of Representatives passed H.R. 7606, the Lower Food and Fuel Costs Act, which creates a food supply chain task force and something for precision agriculture and contains several of the House legislation proposals like the Meat and Poultry Special Investigator Act, the Butcher Block Act and the Low Carbon Biofuel Credit Act.
Why does USDA need a special investigator when they have the Packers and Stockyards Division to already investigate the industry? It seems redundant to me. Then S. 4030 is a bill that would mandate some level of negotiated cash trade, like the proposal to force packers to buy 50 percent of their plant requirements on the negotiated cash markets and have those cattle delivered inside of 14 days.
Do you really think that the government is going to improve the market for cattle? I wouldn’t bet the farm on it. The transparency part of the bill is to allow you to see those detailed alternative marketing agreements (AMAs). This bill will not add 50 cents a pound to your fed cattle—the supply of cattle will take care of that. I think we are going to see the smallest national cow herd ever over the next few years.
I honestly can’t believe part of this industry wants the government involved in managing a commodity market. The dairy industry jumped into a government-controlled milk market 80-plus years ago and now they want the federal milk marketing order adjusted.
This legislation has been controversial to say the least and has split the industry. The irony is that it has more of an effect on fed cattle trade. Feeder cattle are for the most part still sold at auction, which is the ultimate form of negotiated cash trade. Auction markets are where feeder cattle start the consolidation process into the big feedlots, and they provide a very important function in our cattle marketing system.
It’s interesting how folks can have such diverse opinions on cattle marketing. The folks from the United States Cattlemen’s Association feel that “this bill is one of the much-needed solutions to an increasingly consolidated meat industry. Studies have shown that without government intervention, negotiated trade in the U.S. marketplace will fall to zero percent by 2026 in parts of the country. When producers don’t have the ability to negotiate a fair price for their cattle based on current market conditions, it results in a vertically integrated corporate controlled beef supply chain. This threatens the livelihoods of producers and the security of our national food system.”
When it comes to supporting research, each side seems to come up with a university-sponsored document supporting their side’s point of view. Very little of this bogus research is used in crafting a final decision. In this case, I don’t think a good decision can be made. The government never belongs in a free market.
Then the National Cattlemen’s Beef Association says, “The Cattle Price Discovery and Transparency Act would subject every cattle producer in the country to a business-altering government mandate. The bill would severely restrict the use of AMAs, which provide stability to producers and allow them to invest in creating higher-quality and specialty products that command a premium. The bill fails to consider the unique ways producers raise cattle in different regions of the country.”
Now the Senate will have to vote, and from what I’m hearing, there isn’t a lot of interest or time on the Senate schedule to do much. August recess is around the corner, and then campaign season is on for many senators up for reelection.
Frankly, I’m surprised these bills got as much traction as they did. Cattlemen will get a few things out of this legislative package, but I doubt they will get any market-making provisions like the 50/14 plan.
Cattle markets are doing well right now—feedlots are current, packers don’t have a lot of cattle around them, slaughter levels have been robust and July is just around the corner. We’re moving into summer in pretty good shape. Now we just need to keep praying for rain. — PETE CROW
