Despite attempts by the meatpacking industry to quash meaningful cattle market reform, support for the Cattle Price Discovery and Transparency Act remains strong in the countryside. There’s no shortage of support on Capitol Hill, either.
The Senate bill, led by Sens. Chuck Grassley, R-Iowa, and Deb Fischer, R-Neb., has 16 total cosponsors who represent 13 states. Nearly half of the Senate Agriculture Committee supports this legislation. The House bill, introduced by Reps. Cindy Axne, D-Iowa, and Randy Feenstra, R-Iowa, is supported by seven total representatives.
This bipartisan legislation is the only comprehensive solution that’s being discussed in Congress at this time, and it’s seen as a real threat to the meatpacking industry. That is why a national organization representing packers and economists from Tyson Foods’ home state are fighting so hard to maintain the status quo.
Let it be known that packers are not concerned with price discovery, and have no incentive to participate in the cash market. Their sole focus is to build a pipeline of supply for their plants. Packers are not concerned with where they get their cattle from; it’s just a numbers game. But the numbers aren’t adding up for producers who struggle to meet their breakevens or sell their livestock due to lack of competition.
There is a disproportionate share of cash trade taking place in the Iowa/Minnesota and Nebraska cattle feeding regions. We have more than enough cash activity to provide the price discovery needed. The lower half of the beef belt, particularly Texas/New Mexico/Oklahoma, does not trade enough cash cattle to have price discovery. This has created a “free-riding” dynamic that benefits only a select few.
Many large and/or corporate feeders are rewarded for the quantity of cattle they sell, which provides efficiency to cattle buyers as they procure cattle for packers. This isn’t about quality, it’s about quantity. If quality was the primary focus, you’d see more lucrative formula contracts offered to producers in states like Iowa, where most cattle grade 85 percent Choice or Prime on a regular basis.
The Cattle Price Discovery and Transparency Act doesn’t pick favorites, as some have claimed. The legislation allows for public input, relies on historical data, and provides flexibility to adapt regional mandatory minimums for negotiated and negotiated grid transactions every two years.
And while the bill makes no mention of price determination, we know that more competition in the cash market would be beneficial to independent cattle producers.
This legislation will help to ensure that independent cattle producers who sell via negotiated means are no longer shut out of the market by packers with every hiccup (big or small) in the supply chain. Despite raising some of the highest-quality cattle in the nation, we’re often treated as residual suppliers because of our operating capacity. We cannot continue to be singled out by packers every time there is a fire at a shoddy plant, a computer hack, or a labor challenge. And we shouldn’t be shut out of the market for weeks or months at a time so the packers can work through their captive supply.
Remember, the North American Meat Institute is the oldest and largest trade association representing U.S. packers and processors of beef, pork, lamb, veal and turkey. They do not care about independent producers. They are not interested in price discovery or transparency. And if they care about the consumer as much we’re told, they’d focus their efforts on strengthening the beef supply chain. The complete and utter failure to maintain supply on the shelves of retailers for consumers during the pandemic should’ve been a wake-up call.
Brad Kooima is president of Kooima Kooima Varilek Trading. He has been a commodity broker for over 40 years and has been feeding cattle since 1974. Kooima grew up on a family farm in northwest Iowa and is still involved in the operation alongside his son. He is an active member of the Iowa Cattlemen's Association and National Cattlemen's Beef Association. Kooima is passionate about working for the independent cattle producer and is working hard toward policy that ensures that those cattlemen have the opportunity to maintain their business and way of life.For more opinions and ag news, go to: www.Agri-Pulse.com.