Legislation introduced in the U.S. Senate addresses price discovery for cattle.

A bill introduced on March 2 by Sens. Deb Fischer, R-Neb., and Ron Wyden, D-Ore., aims to restore transparency and accountability to cattle markets.

The Cattle Market Transparency Act would establish regional minimums for negotiated cash trade to enable price discovery and provide cattle producers with more market information.

Concerns over meatpacker concentration, dwindling cash trade and a lack of transparency in cattle marketing have been brewing in the cattle industry for some time.

But huge disparities between boxed beef prices and live cattle prices after a 2019 fire at a Tyson plant in Kansas and during the early months of the COVID-19 pandemic brought the simmering to a boil.

The problem is 80% of live fat cattle are sold on a formula contract and only 20% are sold on a cash basis. The cash price sets the base price for formula contracts, and there isn’t enough cash trade for true price discovery.

The bill aligns with American Farm Bureau Federation’s goals and policy, the organization said in a statement.

“America’s ranchers don’t control the prices they are paid for their products and those raising livestock have legitimate questions about pricing,” said Zippy Duvall, Farm Bureau president.

When the pandemic hit, meat prices at grocery stores went up while the prices paid to ranchers fell through the floor, he said.

“This legislation will ensure farmers and ranchers have fair access to markets and are fully informed on pricing so they can continue to put food on the table in homes across the country,” he said.

National Cattlemen’s Beef Association supports a voluntary approach to increase negotiated trade and has put a framework in place to establish benchmarks in different regions of the country.

It opposes mandatory minimums but will seek solutions through USDA or Congress if the voluntary effort fails.

“Leveling the playing field and putting more of the beef dollar in producer pockets remains the top priority of this association,” Ethan Lane, NCBA vice president of government affairs, said in a statement on the bill.

“NCBA shares Senator Fischer’s objectives, as do its affiliates and indeed the entire industry,” he said.

The best way to achieve those objectives, however, continues to be hotly debated by cattle producers, he said.

U.S. Cattlemen’s Association is in full support of the bill.

The association brought industry leaders together more than a year ago to brainstorm solutions to the thinning cash market, Brooke Miller, USCA president, said in a written statement.

“Those solutions are incorporated within the Cattle Market Transparency Act, and USCA stands ready to see this legislation through to the finish line,” he said.

The bill also requires USDA to create and maintain a library of marketing contracts between packers and producers and requires packers to supply that information. It also addresses confidentiality concerns with the Livestock Mandatory Reporting program.

“Confidentiality guidelines within the LMR program are currently being used to block disclosure of full market information,” said Justin Tupper, USCA vice president and chairman of its marketing committee.

That’s led to an evolution of LMR from a price-discovery tool for producers to a price-determination tool for packers, he said.

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