As Congress Prepares for Hearing, R-CALF USA Urges Rejection of Compromised Livestock Market Reforms

Billings, Mont. – Yesterday, in preparation for the April 26, 2022, US Senate Agriculture Committee hearing on the Livestock Market Price Discovery and Transparency Act of 2022 (S.4030), R-CALF USA sent a detailed letter to the committee chair, ranking member and members requesting the rejection of the entire section of the bill that purports to reform the livestock market.

Calling the livestock market section an ineffective reform in the face of the abject market failure that has plagued the US feeder cattle market since 2015, and further stating that the reforms decisively favor the status quo, the group states that Congress gives carte blanche to the US Department of Agriculture on whether packers will be required to change their current sourcing practices and gives the USDA two years to make its decision.

The group points out that the only directives from Congress impacting the market are that the already low volumes of cattle that beef packers purchased on average in the competitive cash market in 2020-21 cannot be further reduced and that the cash purchase requirement cannot be set above 50%. He then argues that these floor and ceiling guidelines run counter to the findings of two new economic studies, one from Georgetown University and the other from Iowa State University, which clearly show that the Alternative Marketing Agreements (AMAs) that dominate the market, combined with the concentration of packers, are causing livestock prices to be low and beef prices to be high.



These new studies, the group says, should significantly change Congress’s thinking about the market reforms needed to restore competition in the livestock market. Only one of the study findings identified in the letter is that a 1% increase in the fraction of cattle purchased under AMAs is associated with a 5.9% reduction in the price of cattle on the spot market. .

In its recommendation to Congress, the group suggests that livestock market reforms be replaced by the Cash Market Protection Bill (S.949), which the group said was a better starting point for realizing more immediate and meaningful reforms.



In its conclusion, the ranch group explained why Congress needs to do more than envisioned in the Livestock Market Price Discovery and Transparency Act of 2022 to address the dire conditions facing cattle ranchers. American cattle. He said: “The protracted and chronically dysfunctional livestock market, combined with a persistent and widespread drought, and further compounded by record feed prices, will likely spell absolute disaster for the U.S. beef industry as we know it. today.

– R-CALF USA

Comments are closed.