WASHINGTON – Four US Senators have created a compromise bill to bring transparency to cattle markets. Key elements of the proposed Cattle Price Discovery and Transparency Act would:

  • Establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades based on each region’s 18-month average trade to enable price discovery in cattle marketing regions. In order to establish regionally sufficient levels of negotiated cash and negotiated grid trade, the secretary of agriculture, in consultation with the chief economist, would seek public comment on those levels, set the minimums, and then implement them. No regional minimum level can be more than three times that of the lowest regional minimum, and no regional minimum can be lower than the 18-month average trade at the time the bill is enacted.
  • Require the US Department of Agriculture (USDA) to create and maintain a publicly available library of marketing contracts between packers and producers in a manner that ensures confidentiality.
  • Prohibit the USDA from using confidentiality as a justification for not reporting and make clear that USDA must report all Livestock Mandatory Reporting information, and they must do so in a manner that ensures confidentiality.
  • Require more timely reporting of cattle carcass weights as well as requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days.

US Senators Deb Fischer (R-Neb.), Chuck Grassley (R-Iowa), Jon Tester (D-Mont.) and Ron Wyden (D-Ore.) announced the compromise cattle market proposal.

The US Cattlemen’s Association (USCA) applauded the legislation. Lee Reichmuth, director of USCA Region VII (Nebraska and Iowa), said, “The Cattle Price Discovery and Transparency Act will deliver on its promise to restore robust price discovery and provide market participants with the information they need to make savvy marketing decisions. It also mandates that every packer required to report to USDA AMS is also required to participate in the cash market each week.

“We commend Senators Fischer, Grassley, Tester, and Wyden for coming together on a bipartisan solution that has broad support from both lawmakers and producer groups,” Reichmuth said. “Reforming the cattle marketplace to drive transparency and true price discovery is a core tenet of how we can strengthen the US cattle producer’s bottom line, and we look forward to working with Members of the Senate and House Agriculture Committees to quickly advance this bill.”

Lawmakers believe a regional approach is needed to address the declining negotiated cash market to balance the shift to alternative marketing arrangements — such as formula pricing, forward markets and longer-term marketing agreements — from cash sales which has been more dramatic in certain regions.

“For example, from 2005 to 2018, there has been a 40% decrease in cash sales in the Texas/Oklahoma/New Mexico cattle region,” according to a fact sheet explaining the how the Cattle Price Discovery and Transparency Act would address the changes in the negotiated cash market. “Meanwhile, in the Iowa/Minnesota region, transactions in the cash market have dropped only 16% during the same time period. Absent government intervention, or any way to enforce a voluntary approach, cash market volumes are unlikely to return on their own — despite the fact that both parties in an AMA rely heavily on the information that is produced by cash market participants.”

“Robust price discovery ensures that all members of the beef supply chain — cow-calf producers, feeders, packers, and consumers — can be successful,” said Fischer, a member of the Senate Agriculture Committee. “The foundation of price discovery in the cattle market is negotiated cash sales. One or two regions of the country should not have to shoulder the burden of price discovery and that’s exactly what has been happening. Furthermore, even regions that primarily use alternative marketing arrangements (AMAs) such as formula contracts predominantly rely on negotiated cash sales to set their base prices. Our compromise proposal takes regional differences into account and ensures fairness for every segment of the supply chain.”