Iowa Ag Connection - R-CALF Rejects Compromised Cattle Market Bill

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R-CALF Rejects Compromised Cattle Market Bill
Iowa Ag Connection - 11/19/2021

The board of directors of the nation's largest producer-only cattle association, R-CALF USA, voted unanimously to reject the Senate compromise reached between S.949, the spot market protection bill or 50/14 bill introduced by Senators Chuck Grassley (R-Iowa) and Jon Tester (D-Mont.), and S.543, the Cattle Market Transparency Act of 2021 introduced by Senators Deb Fischer (R-Neb.) and Ron Wyden (D-Ore.). The compromise bill is Senate Bill 3229 (S.3229).

"The compromise bill is a completely inadequate response to the serious market crisis U.S. cattle producers have faced for going on seven years," said R-CALF USA President Gerald Schreiber who added, "Before its finalization, we offered specific recommendations for improving the price discovery provisions in the compromise bill to ensure that immediate improvements could be made to our broken markets, but those recommendations were ignored."

The group said the compromise proposal exempts over half the packing plants owned by JBS, the world's largest beef packer, and a third of the plants owned by each of the other two largest beef packers in the United States, Tyson and Cargill, from any requirements to purchase fed cattle in the negotiated cash or negotiated grid markets.

"Senate Bill 949 imposed minimum volume levels on all 24 plants owned by the Big 4 beef packers, but this S.3229 compromise bill now excludes 9 of them," said R-CALF USA CEO Bill Bullard who added, "The interests of America's independent cattle producers are not being served by a reform measure that excludes nearly 40% of the packing plants in dire need of reform."

The group also expressed concern regarding the compromise's delegation of authority to the U.S. Department of Agriculture (USDA) to take up to two years before implementing any minimal purchase requirements, and the further authorization to establish minimum volume levels as low as the average volume levels measured during the previous 18 months.

"This means after waiting up to two years for any improvements to today's ultra-thin cash market volume, the USDA is authorized to retain the same low levels they've been at during the past 18 months, and we know that too many cattle producers are already exiting our industry under these conditions," said R-CALF USA Vice President Kyle Hemmert.

Between Nov. 11 and 12, R-CALF USA submitted three memoranda to the negotiators of the compromise urging specific modifications to the original compromise language. The first memorandum expressed grave concerns for the negotiator's adoption of a regional rather than national approach to imparting market reforms. Despite such concerns, the group nevertheless conveyed its willingness to offer suggestions for improving the original compromise draft, which it subsequently did in memoranda Parts 2 and 3.

In its Part 2 memorandum, the group offered four specific recommendations for the price discovery provisions in the compromise bill, including a request that the bill establish immediate minimal volume levels in statute and then authorize USDA to later increase those minimal requirements through rulemaking.

In the Part 3 memorandum, the group offered five specific recommendations to the transparency provisions in the compromise bill, including a request that the bill capture all known cattle procurement contracts such as cost-plus contracts and any additional compensation paid to certain feedlots such as end-of-month bonuses based on the number of cattle delivered each month.

"Even though we don't agree with the regional approach favored by the negotiators, we nevertheless put forth a good faith effort to help them improve that approach, but they rejected our efforts," Schreiber said.

"This crisis is too severe, and the need for meaningful reforms too great for R-CALF USA to settle for a proposal we know is inadequate to serve the interests of America's cattle producers," he concluded.

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