Largest U.S. farm group opposes cattle market quotas

While supporting more transparency in cattle prices, the American Farm Bureau Federation draws the line at requiring meatpackers to buy slaughter cattle on the cash market, said president Zippy Duvall. Mandatory purchases are a prime feature of the leading Senate bill for cattle market reform.

Two sponsors of the Senate bill, Republicans Deb Fischer of Nebraska and Chuck Grassley of Iowa, said the Farm Bureau supported the overall goals of the bill — more competition and fair prices — despite its call for revisions to, or even elimination of, the language allowing the USDA to set regional mandatory minimum thresholds for cash and related "grid" purchases.

Their bill, S 3229, also would create a cattle contract library and require packers to report how many cattle are scheduled for slaughter in each of the next 14 days. Backers say those provisions would help producers know if they are being offered fair terms for their stock and the best time to ship cattle to market.

"We support the majority of this legislation, but we cannot support mandatory cash sales," said Duvall in a statement. "We are committed to working with the sponsors of the bill to make revisions to ensure it aligns with the priorities outlined by our membership."

Delegates at the Farm Bureau's annual meeting voted earlier this month against "government mandates that force any livestock slaughter facility to purchase a set percentage of their live animal supply via cash bids."

Nationwide, an estimated one in every five fed cattle are sold for slaughter on the cash market, compared to as many as three of every five head a couple of decades ago. Cash sales are far more common in states such as Nebraska than in Texas and Oklahoma, so there is a regional split over the issue.

Activist rancher groups and their allies in Congress say a robust volume of cash sales are crucial to assuring fair prices for cattle. "Spot" sales often are the foundation in setting the value of cattle sold under other arrangements. So-called alternative marketing agreements, such as formula pricing, are promoted as a way for producers to be rewarded for top-quality carcasses or for following specific production protocols.

"Robust negotiated cash sales are integral to facilitating price discovery in the market," said Fischer, one of four sponsors of S 3229. "We will continue to advance this proposal to ensure a fair and transparent cattle market for our nation's cattle producers."

Fellow sponsor Grassley said, "[T]he market clearly isn't working," since beef prices are rising at the grocery store at the same time meatpackers limit the ability of independent cattle producers "to negotiate a fair price … I understand that the cartel of four meatpackers, which controls 85 percent of the beef market, is pressuring others in the ag community to oppose this bill."

To date, the only cattle market reforms to gain momentum in Congress are proposals for a contract library and for USDA to issue reports on the number of cattle meatpackers have scheduled for delivery for slaughter in coming weeks or months. The House passed a cattle contract library bill, HR 5609, on Dec. 8 and sent it to the Senate.

Sponsors say 16 of the 100 senators support S 3229, including as many as 10 of the 22 members of the Senate Agriculture Committee. The bill was filed in mid-November and was referred to the Agriculture Committee. A companion bill, HR 5992, was sent to the House Agriculture Committee. Neither has been called for action.