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.
