Agricultural News
NCBA Welcomes Discussion on Cattle Market Transparency Act
Wed, 03 Mar 2021 08:08:36 CST
Senator Deb Fischer (R-NE) today introduced the Cattle Market Transparency Act in the U.S. Senate. If enacted, this legislation would direct the Secretary of Agriculture and the Office of the Chief Economist at the U.S. Department of Agriculture (USDA) to establish regional mandatory minimums for negotiated trade of fed cattle. It would also direct USDA to establish a library of cattle formula contracts, amend the definition of "cattle committed" to expand the delivery window from seven to 14 days, and clarify confidentiality rules for administering Livestock Mandatory Reporting (LMR).
"Cattle producers continue to face serious obstacles when it comes to increasing profitability and gaining leverage in the marketplace," said NCBA Vice President of Government Affairs Ethan Lane. "Leveling the playing field and putting more of the beef dollar in producer pockets remains the top priority of this association. NCBA shares Senator Fischer's objectives, as do its affiliates and indeed the entire industry. The best way to achieve those objectives, however, continues to be hotly debated by the very cattle producers this legislation would directly impact. We have worked and will continue to work alongside our affiliates, Congress, and USDA toward regionally robust negotiated trade, the establishment of a cattle contract library, and commonsense in USDA's rules of confidentiality by taking direction from our membership through the grassroots policy process."
Cattle producers make science-based, costly investments in cattle genetics and feeding innovations in order to improve the quality of their product. Formula pricing agreements pay producers a premium for this more desirable beef, allowing them to capture more of the beef dollar. The details of these agreements, however, vary widely and this lack of transparency can potentially act as a barrier to producer profitability. A cattle contract library, similar to the existing USDA swine contract library, will help producers evaluate their marketing options and make more informed decisions for their business.
USDA currently reports the number of cattle committed to meatpackers in seven-day increments. Expanding this to 14 days will help producers better anticipate packer needs for cattle and increase their leverage as prices are negotiated.
LMR is an Act of Congress which requires large meatpackers to report market information to USDA's Agricultural Marketing Service (AMS), who then release it to the public. AMS is also mandated by LMR to keep the "proprietary business information" of reporting entities confidential. In some major cattle feeding regions, like Colorado, USDA's rules of confidentiality oftentimes prevent any price information from being publicly available. Cattle producers rely upon transparent reporting of transaction prices to make marketing decisions. By clarifying Congress' intent behind LMR, USDA can equip producers with the data they need to make critical marketing decisions while still protecting sensitive business information.
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