Here we go again: more market-making legislation, this time from Cory Booker, the vegan Democratic senator from New Jersey, and Ro Khanna, also a Democrat, from California. Seems like the blue coasts have a lot of interest in the packing industry. This nearly 100-page bill, the Protecting America’s Meatpacking Workers Act of 2021, is more about protecting workers’ rights.

In the findings portion, the authors give an emotional appeal regarding meatpacking workers’ civil rights. They want USDA to look at line speed hazards, amputation hazards, ergonomic issues, bathroom breaks, use of chemicals like antimicrobials and working in hot and cold temperatures. This is pro union, but most large packers are already union shops.

They also want the Government Accountability Office to investigate the fragility of the meatpacking industry and the comptroller general to report on racial ethnic disparities in the meatpacking industry. 

It does have a section regarding livestock marketing. The bill would ban the nation’s largest packers from owning and feeding cattle more than seven days before slaughter. It would require each plant owned by the largest packers to purchase at least 50 percent of their cattle needs on the negotiated cash market each day and to slaughter those within seven days. It also prohibits any conduct by packers that adversely affects competition, regardless of any business justification claimed by packers.

The bill clarifies that showing harm to competition is not necessary for producers to protect themselves from anticompetitive conduct by packers. It restores mandatory country-of-origin labeling, which will include dairy products. Then it allows producers to collect attorney fees in cases filed under the Packers and Stockyards Act.

This bill hasn’t been formally introduced yet, and if it gets anywhere, it would be terribly damaging to the industry. Bill Bullard at R-CALF USA called the bill a silver bullet, but this bill would destroy any efficiencies that the formula arrangements have created for both feeders and packers. 

Can you imagine trying to purchase half of your fed cattle needs on the negotiated cash market? Roughly 550,000 fed cattle are processed weekly, and packers would need to buy 275,000 head each and every week—the logistics of the fed cattle-packer relationship would go to pot.

The cattle industry has been asking the government for help restoring some balance to fed cattle markets. I think we should wait patiently and see what the Department of Justice comes up with after their apparently extensive investigation into the cattle and beef industry.

We have had way too much legislation proposed to help the industry, but whether it would help the fundamentals of supply and demand is questionable. We’re seeing the power of capitalism and supply/demand market forces at work before our very eyes.

Cattle markets have responded over the past three weeks, and cattle feeders have dug in a bit because they know when they can. You don’t have much leverage when you must get rid of market-ready cattle. It took the industry about 18 months to recover from black swan and COVID-19 events. Packers were processing more cattle the past two weeks than they have since around 2017.

Boxed beef values are coming down with the added beef supplies. Packers have holiday orders to fill and need the cattle to fill their formula sales to retailers. They contract 90 days out to deliver beef, and right now, everyone in the beef supply chain is focused on the market. For the most part, retailers don’t want to offer a special on prime ribs and not have the supplies to satisfy consumer demand.

These proposed bills will do more harm than good. The dairy industry has regulated milk markets, and I have never heard from a content dairyman about market prices. There are no agricultural or commodity markets that are regulated because supply and demand can change quickly. We are seeing it in our everyday lives: $3.40 for gasoline, $3.50 for diesel. You can’t farm or transport many products to consumers without cheap diesel fuel.

I don’t know why these politicians who know absolutely nothing about agriculture want to try and move the needle. Nearly all of these other proposals have a much better chance of getting passed. I will be surprised if the Build Back Better bill sees the light of day. I will always say the less the government knows about your business, the happier you’ll be, especially when it comes to markets. — PETE CROW

What do you think?

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