Sens. Deb Fischer (R-Nebraska) and Ron Wyden (D-Oregon) recently introduced the Cattle Market Transparency Act of 2021 in the Senate. Fischer, a member of the Senate Ag Committee, first introduced this legislation in 2020. She said the primary goals of the new legislation are establishing regional cash minimums and equipping producers with more market information. “It will help facilitate price discovery and provide cattle producers with the information they need to make informed marketing decisions,” Fischer said in a statement. “I am committed to working across the aisle to advance the bill forward this Congress.”
The reintroduced legislation will:
1. Establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades to enable price discovery in cattle marketing regions. It will require the secretary of agriculture, in consultation with the chief economist, to establish regionally sufficient levels of negotiated cash and negotiated grid trade, seek public comment on those levels, then implement.
2. Require the USDA to create and maintain a publicly available library of marketing contracts between packers and producers in a manner that ensures confidentiality.
3. Prohibit the USDA from using confidentiality as a justification for not reporting and makes clear that the USDA must report all Livestock Mandatory Reporting (LMR) information, and they must do so in a manner that ensures confidentiality.
4. Mandate that a packer report to the USDA the number of cattle scheduled to be delivered for slaughter each day for the next 14 days and require the USDA to report this information on a daily basis.
The cash market and lack of price discovery issue is not a national issue, but a regional one. This is illustrated in the decline of participants in the negotiated cash market. Many producers are turning to alternative marketing arrangements like formula pricing, but this varies by region. An example of this is found in the 40% drop in cash sales in the Texas/Oklahoma/New Mexico cattle region between 2005 to 2018, while in the Iowa/Minnesota region, cash market transactions dropped only 16% during the same time period.
As quoted in the bill’s one-pager, “Any solution that seeks to restore sufficient levels of cash trade must be based on regional need, not national. This legislation does just that by requiring the secretary to establish regionally sufficient levels of negotiated cash trade, seek public comment on those levels, then implement. … The legislation states that in their initial ruling, [the] USDA may not set minimums that are less than a three-year average percentage of negotiated and negotiated grid transactions by region. Under this new program, packers, on a plant-by-plant basis, will be required to procure a certain amount of cattle from the cash market in order to facilitate price discovery.”
A summary of the bill and its full text can be found here: Fischer Wyden introduce cattle market transparency act of 2021
