November 12, 2021
US senators converge on plan to tackle price disparity of cattle, beef
US Senator Deb Fischer of Nebraska, the United States, and a bipartisan group of senators have come together on a plan intended to address the growing disparity between the price that ranchers are paid for their cattle and what consumers pay for beef.
The Nebraska Republican and the other lawmakers said on November 9 that their compromise measure would require meatpackers to acquire more of their cattle through open bidding and also promote more transparency in the US' cattle markets.
Fischer said it's important that everyone along the beef supply chain — cow-calf producers, feeders, packers and consumers — be treated fairly. That starts with robust cash sales for cattle, she said.
"We are looking for ways that everyone can profit, and for consumers to be able to benefit from getting good beef," Fischer said in an interview. "I'm hearing from people all over the country, not just Nebraska, on the importance of getting this done."
While consumers are paying record prices for beef — and packers are often making record profits — farmers and ranchers have endured years of declining prices for their cattle. Many producers blame the market conditions on the extreme consolidation in the nation's meatpacking industry.
Today, 85% of fattened cattle are slaughtered by just four big packers. And those packers are obtaining the vast majority of their cattle not by cash bidding in live cattle auctions but through marketing agreements with individual producers.
As a result of those market conditions, cattlemen said the cash price for cattle is often decided at auctions where only one or two packers come to bid. Those limited bid sales tend to set the price for all cattle, including those sold through marketing agreements.
Fischer and Senator Chuck Grassley earlier introduced competing proposals to try to boost cash sales.
Grassley's bill would have required that a minimum of 50% of a packer's weekly cattle volume be purchased through market bidding. Fischer's did not set a universal threshold, but instead would have required the United States Department of Agriculture to set regional minimums that would vary across the US.
That's because the percentage of cattle sold at auction currently differs widely by region. According to USDA figures, it's about 41% in Nebraska and 60% in Iowa and Minnesota. But in the region that includes Texas and Oklahoma, it's less than 10% sold at auction.
This week, Fischer, Grassley and Democrats Ron Wyden of Oregon and Jon Tester of Montana announced they had reached agreement on a "Cattle Price Discovery and Transparency Act."
The compromise largely keeps Fischer's provision for USDA to set regional minimums for cash sales. But it also seeks to limit the regional disparities by requiring that no regional floor can be more than three times that of the lowest. It also states that no regional minimum can be set below current levels.
That would require a significant reduction in the current 6-1 disparity of cash sales between the Iowa region and Texas region.
The bill would also require USDA to create and maintain a library of the marketing contracts between packers and producers, increasing price transparency. And it would require a packer to report the number of cattle it has scheduled to be delivered for slaughter each day for the next 14 days.
The proposal is already facing strong opposition from the North American Meat Institute, which represents meatpacking companies. Its leader blasted the proposal as a government intervention in markets that will have unintended consequences hurting both livestock producers and consumers.
"In a rush to do 'something,' this bill would replace the free market with government mandates and harm those it is intended to protect: livestock producers," said Julie Anna Potts, president and chief executive officer of NAMI.
She said economists and some producers oppose such interventions. In addition, she noted, cattle prices are already rising this year.
But USDA figures show that packer revenue per pound of beef and consumer beef prices also have continued their multiyear rise.
Fischer called the packer criticism "politics" and encouraged cattlemen to study the bill's provisions.
The Nebraska senator is expecting numerous additional co-sponsors from all over the US by the time the measure is formally introduced in the Senate. She is also working with allies in the House of Representatives, with hopes of getting legislation passed by the end of the year.
The bill already has the endorsement of the American Farm Bureau, US Cattlemen's Association and National Farmers Union.
"Now is the time to move this important piece of legislation forward to ensure our nation's cattle industry maintains a bright economic future," said Mark McHargue, president of the Nebraska Farm Bureau Federation.
- Omaha World-Herald