WASHINGTON – On May 12, a group of US Senators including Chuck Grassley (R-Iowa), Jon Tester (D-Mont.), Tina Smith (D-Minn.), Joni Ernst (R-Iowa), Mike Rounds (R-SD), Cindy Hyde-Smith (R-Miss.) and Steve Daines (R-Mont.) introduced legislation intended to advance market efficiency, transparency and competition among meat packers purchasing livestock from independent producers. The bill will require packers to purchase at least 50% of their beef for slaughter on the open or spot market.
Grassley and former Senator Russ Feingold originally introduced this bill in 2002. When constituents recently began to voice concerns about current inconsistencies in inflated supermarket prices and a simultaneous decrease in cattle prices, Grassley and his colleagues reintroduced the bill.
“The lack of transparency in cattle pricing isn’t a new problem, but the negative effects of the fire in Holcomb, Kan., and COVID-19 have highlighted the need for additional price transparency measures to ensure producers are getting a fair price for the hard work of raising cattle,” Grassley said. “Food doesn’t come from the grocery store; it comes from tens of thousands of farmers and independent producers who work, day and night, to ensure families across the country have an abundant supply of food. Independent producers deserve to be paid what their beef is worth.”
Senator Tester cited market consolidation in the livestock industry as another reason to institute the legislation. He said the bill will force processors to engage in more spot transactions and raise formula prices, making them more accurate.
“Even before COVID-19 hit our country, we had serious concerns about price discrepancies in the cattle market,” Senator Rounds said. “Cattle prices in South Dakota are affected by the average negotiated cash trade nationwide which has dropped dramatically over the past 15 years. The decrease in cash trades has reduced price discovery. In order to establish a fair cattle market for cattle producers, real, vigorous price discovery is needed. Our legislation will provide much-needed transparency to the cattle industry to make sure producers are paid fairly for their product. This is only one piece of what needs to be fixed in the cattle market, but it’s an important step forward.”
All the senators involved believe the bill will allow independent cattle ranchers to earn what they consider fair prices for the effort it takes to raise cattle, allow for a true price discovery process in the market and foster the overall health of the cattle production market.
“We must help livestock producers in Minnesota and nationwide get a fair and accurate price for their animals,” said Senator Smith, a member of the Senate Agriculture Committee and leader of the bipartisan Senate Rural Working Group. “It’s important to promote transparency and improve efficiency in the livestock markets, and our bipartisan bill will go a long way to achieving these goals.”