Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
Cattle Producers are Counting on us
Wednesday, March 24, 2021

 
Over the years, the consolidation of the beef industry has threatened the livelihood of Iowa farm families and the rural communities where they reside.
 
I have been working since 2002 to increase producers' leverage against processors, improve market price discovery and better situate independent Iowa cattlemen in the fed cattle markets.
 
This past year these issues became even more apparent and urgent with the COVID-19 pandemic.
 
While the cattle industry has internally looked for ways to increase the amount of cash trade, it has not been able to find a solution.

Unfortunately, this means government intervention is needed as it is past time for a solution.
 
From the 2012 USDA Agriculture Census to the 2017 Census, Iowa lost nearly 1,500 cattle producers.
 
While we don’t have USDA data from the past two years, the release of the 2022 USDA Agriculture Census will likely see an even more dramatic loss of producers because of the pandemic.
 
I know this because of the many conversations I have with independent cattle producers from nearly every county in Iowa.
 
During my meetings in all 99 Iowa counties, cattle market transparency and my bill last Congress with Senator Tester mandating 50 percent of negotiated cash trade in the cattle markets, is one of the most mentioned topics.
 
The aid that Congress offered via the USDA Coronavirus Food Assistance Program provided over $7 billion in assistance to cattle producers, so far.
 
However, this assistance is merely a band-aid covering up a gaping wound.
 
Congress must step up again, and instead of providing payments to producers, make sure that producers have access to fair and transparent markets.
 
From the Holcomb, Kansas, fire at a Tyson’s facility, to the widely-reported closures of processing plants due to Coronavirus outbreaks, we continue to see a wide disparity between the cash-price of fed cattle and the price for boxed beef.
 
Normally, the packer spread between the price of live cattle and boxed beef is $21 per hundredweight.
But USDA’s Report on the Coronavirus shutdowns showed that last May this spread was $279 per hundredweight – the highest since reporting began in 2001.
 
It is just part of a pattern that has evolved during my time in the Senate – farmers getting a smaller amount of the overall dollar for their food production.
 
I appreciated the leadership from Secretary Perdue in issuing their USDA report last August.
 
Beyond just highlighting problems, Perdue also offered recommendations one of which was for Congress to consider a mechanism to mandate a level of negotiated cash trade.
 
This is not a new issue to the beef industry. In fact, I first introduced a bill that would mandate cash trade in 2002.
 
And today, on behalf of Iowa’s independent cattle producers, I’m proud to re-introduce my bill with Senator Tester to would mandate negotiated cash trade at 50 percent.
 
Without a mandated amount of cash trade, producers will continue to be residual suppliers and will lack the leverage to fairly negotiate with packing companies.
 
Earlier this month, Sens. Deb Fischer introduced the Cattle Market Transparency Act of 2021.
 
There are some excellent provisions in Senator Fischer’s bill such as the creation of a contract library and new required reports on the number of cattle scheduled for delivery.
 
These provisions will add transparency and increase price discovery; they are important to Iowans.

However, when it comes to the negotiated amount of cash trade, Senator Fischer’s bill only mandates a regional minimum. This means price discovery would still be reliant upon cattle producers who already are negotiating.
 
What is price discovery?
 
Simply put, price discovery, is where a buyer and a seller agree on a price and a transaction occurs.
 
Cattle producers of all sizes and in all regions recognize that price discovery is a public good.
 
These producers also realize that the thinning of the cash market is a serious problem for all market participants.
 
Producers in the Midwest reporting regions already provide ample price discovery by putting in hard work and selling cattle using negotiated means at nearly 60 percent.
 
They do this while producers who sell with formulas use these prices in their contracts.

That’s why something must be done.
 
Any legislative solution should address the imbalance of cash trade across the entire beef belt.
 
My bill with Senator Tester would simply shift the burden of price discovery from independent producers like those in Iowa and spread it evenly among all cattle producers.
 
I’m looking forward to working with Senator Fischer and the entire Senate Agriculture Committee to make permanent changes in mandatory price reporting, which needs to be reauthorized by September 30th of this year.
 
Cattle producers are counting on us to make changes. We can no longer take a wait and see and approach.
 
The beef industry employs hundreds of thousands of hardworking men and women who work each day to help feed our country and the world.
 
But as the USDA Agriculture Census shows, we are losing these producers.
 

I’m asking my colleagues in the Senate to cosponsor my bill with Senator Tester to ensure the strength of the beef supply chain and support our cattle producers.