Source: United States Senator for Nebraska Deb Fischer
WASHINGTON, D.C. – U.S. Senator Deb Fischer (R-Neb.), a member of the Senate Agriculture Committee, today participated in the committee’s hearing on pricing and transparency in the U.S. cattle market. At the hearing, which Fischer worked to make happen, she spoke with witnesses about ensuring that cattle producers are equipped with the market information they need:
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A partial transcript of Senator Fischer’s questions is below:
Senator Fischer: Mr. Gardiner and Mr. Tonsor, I appreciate your testimonies. In Nebraska, I represent every segment of the supply chain. Cow-calf operations, backgrounders, feedyards of every size, and packers of every size, including 3 of the Big 4 packers. I understand that every region is different, what works in one state might not work in the other.
So, I see the merit in AMAs and understand why they may be more popular in certain regions. I understand they provide greater economic returns as well as operational efficiencies both for packers and feedyards. In fact, that is why I have included a contract library in my legislation—to provide all producers who want to diversify their marketing, but who were not lucky enough to have a seat at the negotiating table Mr. Gardiner references in his testimony, can have access to examples of what already exists in the market place.
Mr. Tonsor, as the economist on the panel, I’m interested in your opinion on Mr. Gardiner’s testimony, where he states his customers on average have earned $92.71 per head in premiums above live base market price because of his use of a value based system. Later in the testimony, he states that “cash trades” can be interpreted as the base price. If there were no publicly reported cash price for Mr. Gardiner to use as his base, he would not be able to determine that his cattle are worth $92 more per head than his neighbor’s cattle. Mr. Tonsor, you highlight the value of AMAs to market participants who choose to utilize them. How do you foresee these market participants setting the base price for these agreements in the future if the pool of cash participants continues to shrink?
More information:
Senator Fischer is an advocate for increased cash sales and more transparency in the cattle market, and urged Senate Agriculture Chairman Debbie Stabenow (D-Mich.) and Ranking Member John Boozman (R-Ark.) to hold a hearing on this issue.
Earlier this year, Senator Fischer and Senator Ron Wyden (D-Ore.) introduced the bipartisanCattle Market Transparency Act of 2021. The legislation will:
- 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.
- Require 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 makes clear that USDA must report all LMR information, and they must do so in a manner that ensures confidentiality.
- Mandate that a packer report to USDA the number of cattle scheduled to be delivered for slaughter each day for the next 14 days and require USDA to report this information on a daily basis.
Reauthorization for Livestock Mandatory Reporting (LMR), the rule established in 1999 mandating price reporting for livestock including cattle, expires on September 30 of this year and is an opportunity to address these issues in the cattle industry.
Click here for a summary of the bill. Full text of the legislation is available here.