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More government in cattle markets?

Jacqui Fatka Grassley Fischer.jpg
FIGHTING FOR CATTLE PRODUCERS: Sen. Chuck Grassley, R-Iowa, and Sen. Deb Fischer, R-Neb., have introduced several variations of their Cattle Price Discovery and Transparency Act over the course of the last year to strike the right balance between government intervention and the cattle markets. Both questioned witnesses at a April 26, 2022 hearing on Capitol Hill.
A look at whether government intervention is needed to address the ongoing struggles in the cattle market.

I often say my love for agriculture started when I was 10 years old helping my dad tag newborn baby calves during a very wet spring. I “earned” my boots that year when he purchased me a pair of muck boots that finally fit, instead of the hand-me-downs from my older brother, because I kept getting stuck in the mud.  

Fast forward another 10 years, and I found myself in Washington, D.C. where many farmers could joke has plenty of mud. I was selected as an intern in Sen. Chuck Grassley’s press office. One of the major bills Grassley was promoting that year was a bill to require 25% spot market purchases in the hog and cattle markets that were increasingly becoming more concentrated.  

This week I was back in Washington, D.C. and sat in to listen in on the Senate Agriculture Committee’s hearing on a variation of that Grassley bill he first introduced over 20 years ago that would mandate cash sale levels. Grassley identifies as a farmer himself and always takes great pride in ensuring he’s fighting for farmers and independent producers.  

Grassley called on members to pass both the Cattle Price Discovery and Transparency Act and the Meat Packing Special Investigator Act to restore fairness in the cattle market. 

“While we also hear from producers who do not want any government intervention, the bill doesn’t go far enough for some organizations, and it goes too far for some others. For that reason, we have something that ought to fly here,” Grassley explains during the Senate hearing. 

But that government intervention is exactly what some cattle producers testified as concerning this week. National Cattlemen’s Beef Association President Don Schiefelbein begged members of the House Agriculture Committee and the government: “Stay out of our markets.” 

He expressed concerns that if the government is injected into the marketplace in a certain manner, in this case limiting the use of specific marketing arrangements, then it may become more challenging to get the government back out.  

Yet, Coy Young, a cow-calf producer from Missouri., also testified at the House hearing about the challenges he faces as a cow-calf producer, as well as the increasing rate of suicide among farmers who feel they have nowhere else to turn.  

“The American cattle farmers and ranchers are tired,” Young says. “Tired of being taken advantage of and losing money year after year, while watching the Big Four post record profits every single quarter.” 

But by inviting the government to mandate cash sales and eliminating a tool that some cattle producers use to manage risk, is that what this industry needs to fix its problems? 

Instead of focusing on controversial matters, NCBA has encouraged Congress to support policies with wide industry backing. “Broadly supported proposals have seen tremendous legislative success in this chamber recently,” says Schiefelbein. “However, repeatedly belaboring the same divisive issues has detracted from that collaborative work to the benefit of no one. It is time to move on and focus on areas where agreement can be reached.” 

This is where the focus should be: adding more capacity, getting answers from the Department of Justice on anticompetitive claims before setting up an entirely new office at USDA to do just that, and establishing a cattle contract library. 

To expand processing capacity and return leverage to the side of the producer, USDA has pledged $1 billion of investments in launching and expanding small to medium-sized processing plants. The Butcher Block Act introduced in the House would establish loan and grant programs for new processing facilities. 

Over the years overregulation, red tape and lack of oversight created the fewer small to mid-size processors there are today.  

Many members and witnesses called for more oversight of the meatpacking sector and called for the swift competition of a Department of Justice investigation into possible anticompetitive practices by the big meatpackers. But the Senate’s Meat Packing Special Investigator Act may actually create more duplicative actions and government bureaucracy instead of addressing the problem with the tools already available.  

“It seems like the wheels at the Department of Justice are moving slower and slower, and justice takes time and progress is slow,” Schiefelbein says. “But you cannot have a system in place to protect if the timing on the process can put people out of business.” 

Schiefelbein says cattle producers are demanding answers from DOJ as well as why the Packers and Stockyards Act isn’t preventing anticompetitive actions. He says producers might be more understanding if they knew what occurred and why it occurred. “Our lives are on the line,” he says. But in adding a new oversight agency, the “reality is from a government standpoint get the one you’ve got working first.” 

That’s the challenge before the government and the farmers’ voices being shared. Cattle producers especially are known for their independent-minded approach to fixing problems. But if the government tries to come in and fix the wrong problem, it may actually leave producers worse off today than they were before. And then they will be stuck in the mud.  

TAGS: Farm Policy
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