Cattle auction

Legislation introduced in the U.S. Senate would require large processors to buy most of their cattle through the cash market.

WASHINGTON, D.C. — A bill that would require any U.S. meat processing facility that slaughters over 125,000 head of cattle annually to purchase 50% of its weekly volume on the open or “spot” market has been introduced in the U.S. Senate.

The bill — offered March 24 by Sens. Chuck Grassley, R-Iowa, and Jon Tester, D- Mont. — aims to increase the volume of cash trade. Such transactions set the base price for formula contracts heavily used by meatpackers and provide transparency in the cattle market. Those concerns, along with packer consolidation, are hot topics among cattle producers — with cattle groups divided on the solution.

U.S. Cattlemen’s Association and R-CALF USA were quick to support the bill, while the National Cattlemen’s Beef Association warned against a broad federal mandate.

NCBA will continue to work alongside its affiliates, Congress and USDA to increase price discovery and improve the business climate for producers across the country, Ethan Lane, NCBA vice president of government affairs, said in a statement.

“However, simply put, Sen. Grassley’s bill misses the mark. The industry — from leading livestock economists to NCBA state affiliates — agrees that any legislative solution to increased price discovery must account for the unique dynamics within each geographic region,” he said.

A one-size-fits-all government mandate rarely achieves the intended goal, he said.

NCBA supports a voluntary approach first to increase the number of negotiated trades. If a voluntary approach is unsuccessful, its grassroots policy provides guidance toward a legislative solution that more closely resembles Sen. Deb Fischer’s Cattle Market Transparency Act, he said. Fischer is a Nebraska Republican.

Fischer’s bill would establish regional minimums for negotiated cash trade to enable price discovery and provide cattle producers with more market information.

The U.S. Cattlemen’s Association commended Grassley for continuing to champion legislation to strengthen U.S. cattle producers’ bottom line.

USCA also supports Fischer’s bill.

“The two bills, while different, both focus on necessary changes and enhancements to the cattle marketplace. USCA supports both pieces of legislation and will be working with both offices on paths forward,” Brooke Miller, USCA president, said in a statement.

R-CALF USA said Congress must act quickly to pass the bill to preserve the integrity of the negotiated cash market for fed cattle.

“Though alternative solutions to the ever-thinning cash market have been offered, none will be as effective as this new bill. Nor can any of the alternatives be implemented in time to reverse the catastrophic disconnect between cattle prices and beef prices that has persisted for the past six years,” Bill Bullard, R-CALF CEO, said in a statement.

“Cattle producers now need to rally around this legislation as it is certain to be violently opposed by those seeking to maintain the perpetual imbalance of market power between the highly concentrated beef packers and widely dispersed independent cattle producers,” he said.

Co-sponsors of the Grassley-Tester bill include Sens. Tina Smith, D-Minn.; Ron Wyden, D-Ore.; Cory Booker, D-N.J.; John Hoeven, R-N.D.; Joni Ernst, R-Iowa; Mike Rounds, R-S.D.; and Steve Daines, R-Mont.

Recommended for you