The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“CATTLE SPOT PRICING” mentioning the U.S. Dept of Agriculture was published in the Senate section on pages S4704-S4706 on Aug. 4, 2020.
The Department is primarily focused on food nutrition, with assistance programs making up 80 percent of its budget. Downsizing the Federal Government, a project aimed at lowering taxes and boosting federal efficiency, said the Department implements too many regulations and restrictions and impedes the economy.
The publication is reproduced in full below:
CATTLE SPOT PRICING
Mr. GRASSLEY. On another matter, Madam President, Iowa is home to 86,000 family farms and leads the Nation in the production of commodities, such as corn, where we are No. 1; soybeans, No. 2; pork, and eggs, No. 1. Iowa also ranks in the top 10 in cattle production, as many family farms raise livestock alongside their corn and soybeans.
The 2017 USDA Census of Agriculture showed over 23,000 farms in Iowa that raise cattle or calves, with annual sales of $4.7 billion. Caring for livestock takes a spirit of commitment, selflessness, and, of course, hard work. These farmers get up very, very early in the morning, work on their farms all day, and are active members of their communities. These families and their values form the foundation of what makes up our rural communities across Iowa.
However, over the years, the consolidation of the beef industry has threatened the very livelihood of these families and rural communities where they reside. From the 2012 USDA Agriculture Census to the 2017 Agriculture Census, Iowa lost nearly 1,500 cattle producers. This is not a new issue to the beef industry. The concern of fair and transparent cattle pricing has seen increased attention due to disruptions in our food supply chain. It has been very obvious during this period of the virus pandemic.
For background, the U.S. Department of Agriculture mandates price reporting for live cattle and tracks the spread between fed cattle prices--what the producer gets paid--and the boxed beef values, which is what the packing company gets paid.
For the years 2016 to 2018, this spread averaged about $21 per hundredweight. Soon I will be comparing that to a very, very big increase from that $21. However, during April and May, there were major beef supply disruptions, as large numbers of plant workers contracted COVID-19. Because there are only four companies that slaughter 80-
percent of the cattle, companies have the advantage of purchasing cattle from thousands of producers, acting as a chokepoint for the entire industry. These packers dominate the marketplace and limit opportunities for price negotiation.
During this time, in these recent months, packer profit margins topped out at a spread of $279 per hundredweight compared to the $21 that I previously mentioned. This was the largest spread between the price of fed cattle and the price of boxed beef since the inception of the mandatory price reporting law of 2001. So while all the packers were making record profits, the independent producer had nowhere even to market his livestock.
It is important to note that the impact of consolidation doesn't just hurt producers. It hurts consumers. We have seen the price of ground beef and steaks--a staple in many American diets--double or triple recently. Grocery stores also limited the amount of meat that families could buy. All this has made it very clear that the cattle market is broken and real action is needed to fix it.
Thankfully, the Trump administration stepped up to this cause. It has responded with two decisive actions to address the country's cattle market. First, the U.S. Department of Agriculture and the Department of Justice are both investigating the practices of these packing companies, particularly the four that dominate the market. While this will take time, President Trump has personally asked for these investigations and said he did it because he wants to protect the family farmer.
Second, on July 22, the USDA issued a significant report that lays out a roadmap to fix the cattle marketplace. The U.S. Department of Agriculture mentions 12 different ways to create additional price discovery, increase marketplace competition, and have a more transparent relationship between the price of live cattle and the beef products that the consumer buys.
This investigation and report are very much a breath of fresh air, particularly for this Senator who has been bringing this issue to the attention of Agriculture Department and Justice Departments under both Republican and Democratic administrations for a long period of time. We have had multiple administrations from Democrats to Republicans ignoring independent cattle producers and the broken cattle market. So I am very grateful that President Trump and Secretary Perdue take this issue seriously, when so many others before them have ignored this problem.
In the report issued by Secretary Perdue, one of the considerations for Congress is to create a mechanism to mandate negotiated cash trades. I am getting to one of the very key reasons why I am on the floor today, because I see some of the actions in this report from Secretary Perdue as almost an endorsement of the Grassley-Tester 50/14 concept.
The Grassley-Tester bill will require half of packers' weekly volume of beef slaughter to come as a result of purchases made on the cash market. The fact is that without a mandated amount of cash trade, independent producers become residual suppliers and then lack the leverage to fairly negotiate with packing companies.
Besides the Grassley-Tester bill, Congress has the responsibility to fully vet the 11 other considerations that the Trump administration lays out in its report. The Agriculture, Nutrition, and Forestry Committee should hold hearings on this road map. We should bring a diverse set of stakeholders, government officials, business executives, and subject matter experts to explain the challenges that cattle producers are facing. The hearings would allow the committee to properly vet proposals to improve mandatory price reporting, which needs to be reauthorized by September 30 of this year.
The beef industry employs hundreds of thousands of hard-working men and women who work each day to help feed our country and, because we export so much, you can say feed the world.
As the U.S. Department of Agriculture Census shows, we are losing producers due to consolidation. We need to show these men and women that Washington, DC, is listening. We need to show our rural communities that we want them to survive. We must develop solutions to the problems that they are facing.
I will continue to be the voice for independent producers. Today, I am asking my colleagues and Congress to be that voice with me. Support my bill with Senator Tester and bring competition and price transparency back to the cattle markets. While I am at it, I want to reemphasize something I previously said. The Ag committee should hold a hearing on these issues and do it very soon.
I am happy to see Senator Tester on the floor, who I think is here to speak on the very same issue.
I yield the floor.
The PRESIDING OFFICER. The Senator from Montana
Mr. TESTER. Madam President, I want to thank Senator Grassley for his leadership on this issue. He has known for a long time, as I have known, that something is amiss in the competition in the cattle business.
I rise today to speak about that. It isn't talked about enough in this body or in the United States in general, but the fact is that rural America is being cast aside, and it is falling prey to corporate interests whose only concern is about making a quick buck. The truth of the matter is that the American cattle ranchers are suffering.
It is an open secret that meat packers have been taking advantage of small-scale ranchers, family ranchers, and the small and medium-sized feeders for years. While some of us have been raising the issue for some time, it is now becoming apparent and it has come into the national spotlight.
Almost 1 year ago exactly, a fire at a beef packing plant in Holcomb, KS, halted 5 percent of our country's beef distribution capacity. It caused the price of meat in grocery stores to skyrocket and caused a sharp decline in cattle prices at the farm gate. It was Montana producers and producers across this country who took the hit while the meatpacking industry reported record profits.
Following that fire, Senator Grassley and I demanded that the Department of Agriculture conduct an investigation looking into price manipulation by the largest packers. Although this investigation is ongoing, their findings thus far have been disturbing. Their findings clearly show that markets are being manipulated and the packing industry is walking all over America's ranchers and consumers.
Just when we thought that conditions for producers couldn't get much worse and as we saw cattle prices drop lower than they have been in decades, ranchers were hit with yet another disaster. That disaster was the coronavirus pandemic.
This virus forced many of the largest packing plants to shut their doors, depleting the Nation's beef capacity by nearly 40 percent. Yet again, it was our small-scale cow calf operators, along with everyday consumers, who have seen skyrocketing beef prices throughout the last year, and we have seen lower and lower prices for the cow calf operators and the small to medium-sized feeders. They are the ones taking the hit. In April and May of this year, we saw the largest ever price discrepancy between the price of boxed beef and the price received by the cattle owner, growing from $66 per hundredweight on the boxed beef to $279.
I need to repeat that, because it is nothing short of ridiculous. From early April to the middle of May, the price for what American cattle ranchers were selling for the beef shipped to stores across this country increased by 323 percent.
Mission control, we have a problem here.
Our ranchers and the American public are being taken advantage of in the midst of a global health crisis that has also driven us into an economic crisis. To top it off, cattle transactions on the cash market took a steep decline following the Holcomb Fire, allowing for even more price manipulation by the packers while the number of cows slaughtered increased by 5,000 head.
Now, it is obvious to anybody who looks at this situation that the packers are using these crises to force markets to work for them only. One of the ways the packers get away with this is by limiting transactions that take place on the spot for cash markets. Instead, they set prices with formulas that allow them to use unfair market power to put corporate profits over families, ranchers, feeders, and over consumers.
That is why Senator Grassley and I wrote a bill requiring large-scale packers to increase the proportion of spot transactions to 50 percent of the total cattle purchases. This would hold corporate packers accountable; make pricing fairer for our producers--cow-calf operators, small- and medium-size feeders; and bring more money into rural economies and into the pockets of these families who are feeding this country and the world.
I fear these words are falling on deaf ears. The fact is, we need more support from this body. We need our colleagues on both sides of the aisle to sign on to this critical legislation so that we can ensure that folks who have been raising our food for generations are able to meet the bottom lines and that families in both rural and urban areas who rely on affordable beef can keep putting food on the table. We needed you to join us yesterday because rural America needs help today. Folks across my State need help now.
I know many of my colleagues--especially those of you who are on the campaign trail--are always looking for ways to show support for rural America. I am calling on you to join Senator Grassley and me in standing up against this profiteering.
Another way you can help American ranchers today is by supporting a bill that my colleague Senator Rounds and I wrote, the New Markets for State-Inspected Meat and Poultry Act. It is a critical bill that will cut needless redtape preventing ranchers from properly utilizing State-
inspected meat facilities to be able to sell their products across State lines.
We have an opportunity to work on these commonsense bills together--
something that doesn't happen very often in this Senate. We have a critical chance to support folks who are the very reason we can enjoy a juicy burger or a tender steak.
Let me close with the words of a person who is in the cattle industry on the ground in Montana who told me about 60 days ago that we are at a crisis point in production agriculture when it comes to beef. If something is not done on this issue of packer control of prices in the marketplace, if something isn't done to ensure that capitalism isn't working here and that we need to put some sideboards on this to funnel some of the money down to the growers and the small- and medium-sized feeders, then our food chain for red meat will change. I know for the vegetarians in the crowd that might sound like a good deal, but it is not because the fact is, when the food chain in rural America goes bust--because that is what we are on the verge of--this whole country will be diminished by that.
So it is important that my colleagues here in the Senate work with Senator Grassley and me to fix this problem. It will not be fixed by not doing the things we need to do in this body. Senator Grassley and I have a bill, and Senators Rounds and King have a bill, and we need to get those two bills passed and move on to ensure fairness in the marketplace.
I yield the floor.
The PRESIDING OFFICER. The Senator from Louisiana
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