When the pandemic hit last year about this time, retail meat prices went through the roof. But the cattle producers were paid as little as 10% of the retail prices of almost all cuts of meat.
Inequity in the marketplace is always a ripe target for well-meaning politicians. This situation has them coming from all directions. The result is that two US Senate bills have been introduced that aim to put transparency into the meat supply chain. Each comes at it from a different angle.
The Cattle Market Transparency Act authored by a bipartisan team, Senators Deb Fischer (R-Nebraska) and Ron Wyden (D-Oregon) was the first to appear a year ago. Recently, Fischer was quoted as saying about her bill: “I am reintroducing this bill with bipartisan support. It will help facilitate price discovery and provide cattle producers with the information they need to make informed marketing decisions. I am committed to working across the aisle to advance the bill forward in this Congress.”
Meanwhile, Sens. Chuck Grassley (R-Iowa) and Jon Tester (D-Montana) have put forth a bill that varies from the Transparency Act. It is often referred to as the “50-14” bill because it includes regulation of a 14-day window for the delivery of cattle.
“The bill is to foster efficient markets while increasing competition and transparency among meat packers who purchase livestock directly from independent producers,” Grassley said.
“The lack of transparency in cattle pricing isn’t a new problem. Unfortunately, the COVID-19 pandemic has only highlighted the need for additional price transparency measures to ensure producers are getting a fair price for the hard work of raising cattle.”
The response to the two bills, each of which seeks to “fix” the broken cattle market, is a division among the ranks of producers. Terry Fankhauser, executive vice president of the Colorado Cattlemen’s Association told the Montrose Daily Press last week that his group leans toward the Transparency Act saying that it has the best options for allowing cattlemen to get the data they need.
“Our data collection and reporting system in Colorado works well in reporting the data regarding cattle sales,” Fankhauser said. He said that getting the data out of the state system needs to be easier. He said the Grassley bill doesn’t allow for the grassroots, self-correction that the Transparency Act does. Cattle producers have to be able to see what is happening in the market and be able to see who is buying what and how much is being paid.
When the pandemic was declared a year ago, the retail market price of beef spiked to high levels, all the while, it was learned that cattle producers were selling fed cattle at substantial losses. Producers didn’t learn what was happening in the supply chain, which set them up to make contracts that were tilted in the packer’s favor. Both the producers and end retailers were left short.
“We are going to support and provide input on both bills,” he said. Fankhauser commented that this situation we have now didn’t happen in just the last year and that it is not going to be solved with one quick action. “The cattle market has had pricing inequity for 25 or 30 years and we have to solve the problems, but it will take a while.”
While the United States Cattlemen’s Association says it is supporting both bills, Iowa and some other individual state producers like the Grassley option. The Iowa cowmen like the balance of the “50-14” bill. This bill would require that at least half of the meat packers’ weekly business volume comes from the purchase of cattle on the open or spot market.
“Our producer members have continually expressed that all participants in the fed cattle market share responsibility in providing price discovery and transparency,” Matt Deppe, CEO of Iowa Cattlemen said. “This legislation better balances the distribution of responsibility across US fed cattle inventories.”
Even so, Deppe thinks that now is the time for both bills to be put on the table, “With two bills on the table and a dialogue set to recommence, now is the time to work together to negotiate the best possible solution for the cattle industry.”
The strongest language in the renewed debate has come from the National Cattlemen’s Beef Association (NCBA) and its executive Ethan Lane, who has said that he absolutely favors the Transparency Act.
“NCBA has and will continue to work alongside our affiliates, Congress, and USDA to increase price discovery and improve the business climate for producers across the country. However, simply put, Senator Grassley’s bill misses the mark,” Lane said.
“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.”
Lane says that any one-size-fits-all legislation is usually a wrong approach. NCBA usually approaches these matters with a grassroots policy, supporting voluntary action on trade negotiation. Lane says the NCBA will continue to work with all concerned on this important issue.