Building on cattle producers’ grassroots effort to seek truer price discovery, a bill has been introduced into the Senate to mandate negotiated cash trade.
Sens. Chuck Grassley (R-IA) and Jon Tester (D-MT) introduced S. 3693 on May 12 with the following five bipartisan cosponsors: Sens. Joni Ernst (R-IA), Cindy Hyde-Smith (R-MS), Mike Rounds (R-SD), Tina Smith (D-MN) and Steve Daines (R-MT).
The Livestock Mandatory Reporting program will expire this fall on Sept. 30. The bill would amend the Agricultural Marketing Act of 1946 to “foster efficient markets and increase competition and transparency among packers that purchase livestock from producers.”
In order to do this, the bill would require processing plants that slaughter more than 125,000 cattle per year to buy 50 percent of their weekly volume of beef slaughter on the spot market.
Purchases would exclude dairy-bred, dairy-bred cross, cattle older than 30 months of age, or foreign-born cattle. Cattle would then be delivered and slaughtered within 14 days of sale date.
The industry has had mixed reactions for the bill’s introduction. United States Cattlemen’s Association (USCA) and Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) both applauded the legislation.
“This bill would allow the Livestock Mandatory Reporting system to be better utilized as a mechanism for accurate and transparent reporting, which will advance price discovery and shore up the fundamentals of the CME cattle futures contracts,” read an official release from USCA.
R-CALF also commended the bill: “Our industry is grateful for the swift action by Senators Grassley, Tester and others to halt the ongoing erosion of our cattle industry’s most critical market—the competitive cash market where beef packers purchase cattle for beef production and where price discovery occurs for the entire cattle industry.”
However, National Cattlemen’s Beef Association (NCBA) released their opposition to the bill. “Government mandates, like that being proposed by Senator Grassley, would arbitrarily force many cattle producers to change the way they do business,” NCBA Policy Division Chair Todd Wilkinson said.
“Any solution must not restrict an individual producer’s freedom to pursue marketing avenues that they determine best suit their business’ unique needs,” he said.
A week prior to the bill’s introduction, NCBA released a letter sent by Dr. Stephen R. Koontz of Colorado State University, who analyzed a marketing mandate could have negative impacts on the cattle industry.
The letter was in response to a proposal circulating around the industry to mandate negotiated cash trade at 30 percent, otherwise called the 30-14 proposal.
Koontz said such a proposal could cost the cattle and beef industry millions, possibly billions of dollars a year, and proposed alternatives to a mandate.
“We entered 2020 knowing protein supplies would be abundant most of the year,” Koontz’s letter read. “None of these [market] issues are related to price discovery.”
More than 4,000 individual producers had signed onto a letter supporting the 30-14 proposal. — Anna Miller, WLJ editor
