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Miller-Meeks Joins Legislation to Tackle Price Transparency in Cattle Market

November 17, 2021

 

WASHINGTON, D.C.—Today, November 17th, 2021, Rep. Mariannette Miller-Meeks (IA-02) joined Reps. Randy Feenstra (IA-04) and Cindy Axne (IA-03) to introduce the Cattle Price Discovery and Transparency Act. This bipartisan legislation aims to return fairness to the cattle marketplace dominated by four major meatpackers.

This legislation is the House companion to S. 3229, which was introduced by Sen. Deb Fischer (R-NE).

“Consumers are facing higher prices in the store and producers are still losing money. For months I have been calling for investigations and legislation to take on the over-concentration in our cattle and beef markets by a handful of meatpackers,” said Miller-Meeks. “It is crucial for Iowa’s producers that there is fairness and transparency in our cattle industry. I am proud to join the entire Iowa delegation in introducing this legislation to support our farmers and ranchers.”

“Although the cost of beef continues to rise, independent cattle producers have seen prices decrease or remain stagnant for too long. It is clear the current negotiating structure puts consumers and smaller cattle operations at a disadvantage, which is why I immediately began calling for hearings and voicing concerns on the Agriculture Committee,” said Feenstra. “I am honored to lead this legislation alongside Congresswoman Axne, and I would like to thank my colleagues in the Senate, including Senator Grassley, for their persistence and hard work on this critical issue. I look forward to working together to get this bipartisan, bicameral compromise on the president’s desk.”

“For years, Iowa’s independent cattle producers have been bearing the burden of price discovery and a lack of transparency when trying to market their cattle and make ends meet,” said Axne. “All they want is fairness and equal footing and that’s exactly what this legislation would do. The Cattle Price Discovery and Transparency Act would provide meaningful and long-overdue reform to the cattle industry to ensure producers in Iowa and across this country can continue their operations for generations to come. I’m proud to have worked with Senator Grassley and my bipartisan colleagues on this issue throughout my time in Congress and will work to advance it across the finish line.”

“Iowa’s cattle producers deserve transparency and a level playing field in the market. This legislation will help our producers have access to adequate price information when selling their cattle on the spot market,” said Rep. Ashley Hinson (IA-01). “I want to thank Senator Chuck Grassley for his leadership on this important issue and I’m proud to help support this bipartisan effort in the House.”

“Robust price discovery ensures that all members of the beef supply chain — cow-calf producers, feeders, packers, and consumers — can be successful. The foundation of price discovery in the cattle market is negotiated cash sales. One or two regions of the country should not have to shoulder the burden of price discovery and that’s exactly what has been happening,” said Fischer. “Furthermore, even regions that primarily use alternative marketing arrangements (AMAs) such as formula contracts predominantly rely on negotiated cash sales to set their base prices. Our compromise proposal takes regional differences into account and ensures fairness for every segment of the supply chain.”

“I frequently hear from Iowa’s independent cattle producers about their struggle to get a fair price for their cattle while the nation’s four largest packers operate in the shadows. I pushed for hearings in the Senate’s Agriculture and Judiciary committees to shine a light on the market unfairness and now have partnered with a bipartisan group of senators to develop a solution. Our proposal takes several steps to improve cattle price transparency and will make much-needed market reforms to help independent producers in Iowa and across the country,” said Sen. Chuck Grassley (R-IA). “This bipartisan bill is the best opportunity we have to make real reform in the cattle market this year and I’ll continue to work with my colleagues to get this across the finish line.”

“While retail meat prices continue to rise, many of Iowa’s independent cattle producers who participate in the negotiated cash market are facing challenges and taking losses because they unfairly shoulder the burden of price discovery for cattle producers in other states and regions,” said Sen. Joni Ernst (R-IA). “I’m proud to support Senator Grassley and his bipartisan effort to create a more transparent, fair process and allow our independent, hardworking cattle producers in Iowa and across the country to get the best and most competitive prices for the high-quality cattle they raise.”

To read the full text of this legislation, click HERE.

Background:

In May, Miller-Meeks joined a letter urging Attorney General Merrick Garland to continue the Department of Justice’s investigation into the nation’s four biggest meatpackers. In June, Miller-Meeks partnered with Rep. Abigail Spanberger (VA-07) to introduce the Meat Packing Special Investigator Act, a bipartisan and bicameral bill that would tackle anticompetitive practices in the meat and poultry industries that threaten the American food supply and U.S. national security. In October, Miller-Meeks joined Rep. Dusty Johnson (SD-At Large) to introduce the Cattle Contract Library Act, bipartisan legislation that would create a library for cattle contacts within the U.S. Department of Agriculture’s (USDA’s) Agriculture Marketing Service Department.

A significant challenge facing the cattle industry is the declining number of participants in the negotiated cash market. In order to have robust price discovery that provides accurate information about market dynamics along the supply chain, you need a competitive cash market with multiple price discovery points. Negotiated trade, also called the “cash” or “spot” market increasingly has been replaced by formula pricing, forward markets, and longer-term marketing agreements—collectively referred to as AMAs.

Cash transactions involve a bid and ask process. The cash market facilitates price discovery, which is the process of establishing the “going rate” of cattle based on market conditions at any given time. Formula pricing, where a reference price from a published report is used as the base price for the transaction, is becoming more common. The bulk of formula pricing uses negotiated cash prices as the base in the formula—meaning information from the negotiated cash market is being heavily leveraged by nonparticipants, even as it declines in volume.

The Cattle Price Discovery and Transparency Act will:

  1. Establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades based on each region’s 18-month average trade to enable price discovery in cattle marketing regions. In order to establish regionally sufficient levels of negotiated cash and negotiated grid trade, the Secretary of Agriculture, in consultation with the Chief Economist, would seek public comment on those levels, set the minimums, and then implement them. No regional minimum level can be more than three times that of the lowest regional minimum, and no regional minimum can be lower than the 18-month average trade at the time the bill is enacted.
  2. Require the U.S. Department of Agriculture (USDA) to create and maintain a publicly available library of marketing contracts between packers and producers in a manner that ensures confidentiality.
  3. Prohibit the USDA from using confidentiality as a justification for not reporting and make clear that USDA must report all Livestock Mandatory Reporting information, and they must do so in a manner that ensures confidentiality.
  4. Require more timely reporting of cattle carcass weights as well as requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days.

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