LAWMAKERS SHRUG AT GRASSLEY CALL FOR LIVESTOCK REFORM
Iowa Sen. Chuck Grassley urged reauthorization of mandatory price reporting, telling the House Agriculture Committee on Thursday that it is the ideal vehicle for ensuring cattle producers get a fair price from meatpackers. But few committee members got on board with the idea, preferring to switch topics and complain that the USDA’s proposals for fair play in the marketplace would boomerang and mean lower sale prices.
Ranch and farm groups have complained throughout the pandemic that beef prices in the grocery store have not translated into stronger prices for slaughter cattle. The National Farmers Union said in July that Congress and federal regulators needed to intervene to assure meatpackers offer producers a fair price or, “if need be, bust them up.” Four packers dominate beef processing.
During a rare moment — a senator testifying at a House hearing — Grassley said, “It is now time for Congress to do our part” and enact “real reform” in the cattle market. “The reauthorization of Mandatory Price Reporting is the vehicle available where we can add additional price transparency and price discovery measures,” he said. Grassley is a sponsor of S 949, the so-called 50/14 bill, which would require packers to buy 50% of their cattle on the cash market no more than 14 days before slaughter.
House Agriculture chairman David Scott said he was working with Republicans on a long-term extension of the price-reporting law, originally due to expire on Sept. 30 but extended through Dec. 3. “I think we can agree that our farmers should have access to free and fair markets,” he said.
Cash sales are a small portion of cattle sales, but spot prices are often the starting point for sales made under pricing agreements. Cattle activists say a larger volume of cash sales is needed to assure fair prices. The Grassley bill has been idled in the Senate Agriculture Committee since it was introduced in March.
Only a couple of House Agriculture members spoke up for Grassley’s approach. Republicans tended to warn that USDA proposals to give farmers more leverage in dealing with packers would backfire, an argument also made by a meat industry witness. “This proposal will invite litigation. That won’t help anyone,” said one. In particular, Republicans pointed to a proposal that would make it easier for producers to win a complaint of unfair treatment by processors. The change in standards might overturn contracts and other arrangements that pay a premium to producers who, for example, raise cattle yielding high-quality beef, they said.
“The goal is to assure there is a fair price for producers,” said Agriculture Secretary Tom Vilsack, who followed Grassley as a witness. Vilsack said he sought a balance so that “as we try to provide greater transparency, we don’t necessarily sacrifice the benefits of the existing system in terms of efficiency.”
The USDA is working on three regulations on livestock marketing. A revision of the rules covering the so-called tournament system used to pay poultry farmers could be sent to the White House for review in the next couple of months. That would be followed by the proposal on “undue preferences” by processors, and then a proposal on the standard of proof required to show mistreatment. At present, a producer must show harm to the market. Under the USDA proposal, a producer would need to show harm to his or her operation from a practice by a processor.
A similar set of regulations was drafted a decade ago, but Congress has repeatedly blocked implementation. Livestock and farm groups differ on the issue. The National Farmers Union said producers face “a dramatic imbalance of power” in dealing with packers. It has called for reforms to improve price transparency.
“The message I’m here to deliver today is that complex problems rarely have simple solutions,” said Todd Wilkinson, vice president of the National Cattlemen’s Beef Association, the largest group speaking for ranchers. “Lawmakers should adopt a multipronged approach to bring relief to cattle producers, transparency to the markets, and resiliency to the supply chain.” The so-called alternative marketing arrangements are “very important to the fed-cattle trade,” he said, but so is an adequate volume of cash sales.
To watch a video of the House Agriculture hearing, click here.
The written testimony of witnesses is available here.