Cattle Producers Grapple With Market Reform

 

By Greg Henderson, Drovers 

November 18, 2020

 

Cattle markets whipsawing in volatile fashion from two black swan events in less than nine months left cattle producers united with a common conclusion in 2020 — market reforms are needed. Proposals for reforms, however, are as diverse as the industry groups who champion them.

 

Discussion is drawn around a single, yet critical component of proposed market reform: voluntary versus mandatory. The National Cattlemen’s Beef Association (NCBA) pushes for a voluntary fix, first, calling for regulatory or legislative action later should voluntary efforts fail. Others favor legislation that would force change into the weekly marketplace where packers buy cattle.

 

In May, Senators Chuck Grassley, R-Iowa, and John Tester, D-Mont., introduced legislation, referred to as the 50/14 rule, that would require “large-scale meatpackers to increase the proportion of negotiable transactions that are cash, or “spot,” to 50% of their total cattle purchases.” That proposal, covering facilities that slaughter over 125,000 head of cattle each year, is intended to “improve the accuracy of formula pricing… and increase transparency for producers and feeders.”

 

In September, Senator Deb Fischer, R-Neb., a member of the Senate Agriculture Committee, introduced the Cattle Market Transparency Act of 2020, legislation she says would restore transparency and accountability in the cattle market by establishing regional negotiated cash minimums and equipping producers with more market information.

 

A companion bill to the Cattle Market Transparency Act of 2020 was introduced by Missouri Rep. Vicky Hartzler, R-Mo., which the Congresswoman says enables mechanisms for greater price discovery and transparency within the cattle market.

 

Missouri Cattlemen’s Association president Marvin Dieckman says the Cattle Market Transparency Act “gets us closer to where we need to be to achieve robust price discovery and to ensure market transparency. This legislation does so in a methodical way without a one-size fits all, heavy handed approach.”

 

Hartlzer’s bill would direct the USDA to... 

 

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