The Senate Ag Committee held a hearing April 26 to review and discuss transparency and oversight within cattle markets.
Producers and economic experts testified as part of an industry wide panel and numerous cattle and farm organizations, such as American Farm Bureau Federation (AFBF), submitted written comments on the Cattle Price Discovery and Transparency Act (S 4030).
The bill establishes regional mandatory minimum thresholds of negotiated cash and negotiated grid trades based on a region’s 18-month average trade.
AFBF’s written comments outlined the organization’s opposition to mandatory minimum thresholds included in the bill, which was authored by Sen. Deb Fischer (R-Nebraska) and Chuck Grassley (R-Iowa).
“AFBF remains opposed to the provisions included in Section 2 and Section 7 specific to the establishment of federal mandatory minimum thresholds under which certain percentages of cattle are purchased. We are also concerned that there is a lack of economic evidence that suggests mandatory negotiated pricing raises prices for producers,” AFBF President Zippy Duvall wrote.
Mandatory minimum negotiated trade regulations have been a primary concern throughout the industry over the last several years.
“Texas Farm Bureau (TFB) members have been focused on this issue since the Kansas packing plant fire in the summer of 2019,” Laramie Adams, TFB’s National Legislative Director, said. “It’s an important topic and TFB members have been engaged in developing broadly supported policy and regulatory items to improve cattle market transparency on state and national levels.”
The hearing comes after the bill authors reworked the bill in response to opposition from cattle producers across the U.S. passing policy that opposes mandated cash trade.
“TFB crafted and passed national policy at the AFBF convention in January that opposes any mandatory purchase minimums through cash bids,” Adams said. “The senators took note of that but fell short of removing such language from S. 4030. Many studies from top economists at renowned universities say this bill, as written, will hurt the very cattlemen and women it is intended to help. We must not ignore the facts. We will keep working on this issue, but we must ensure the legislation that passes actually helps producers.”
Economic analysis from industry experts have repeatedly shown that these provisions, no matter how well intentioned, are likely to cost the industry and decrease the value of calves.
A report released by the Agricultural and Food Policy Center at Texas A&M University concluded negotiated trade mandates are expected to have negative effects on short-term cattle and calf prices. The economists noted the report showed the region that includes Texas would see the greatest negative impact from the imposition of mandatory trade minimums.
TFB and AFBF remain committed to working with Congress to find solutions to cattle market legislation with broad industry support.
“As discussions surrounding cattle markets and producer profitability continue, AFBF looks forward to working with the bill’s sponsors and the Senate Agriculture Committee to identify reasonable solutions that benefit cattle producers nationwide,” Duvall wrote. “AFBF encourages the committee to consider alternative language that promotes transparency and price discovery without a federal mandate.”