The nation’s largest beef industry group will ask its members for fresh direction on how to approach price discovery discussions on Capitol Hill and throughout the sector.
The National Cattlemen’s Beef Association’s policy stance has been to give a voluntary price discovery framework a chance to operate. Should that plan fail to meet the group’s goals, NCBA would seek direction from its members on its approach to several possible solutions, including legislation that contained mandatory components.
The organization has been operating from that position this year and studying quarterly figures to determine if a sufficient amount of cattle are offered up through negotiated trade. Many in the beef sector are pushing for an increase in cattle sold on the cash market, which offers more price transparency than the alternative marketing agreements reached between producers and beef packers.
But in a letter to NCBA members in November, Jerry Bohn — the organization’s president — said the data they’ve seen doesn’t show what they were hoping it would. The producer participation portion of NCBA's framework met expectations; participation from the nation's beef packers, however, did not.
“Let me be clear, NCBA is not changing our position on any of the existing legislative or regulatory proposals at this time,” Bohn said. “We still oppose negotiated market mandates and we still support a cattle contract library. These stances will remain unchanged until our membership can convene to decide upon a legislative or regulatory approach.”
Simply stated, NCBA wanted to give a voluntary option the chance to fail before considering support for legislative solutions that might include mandatory trading requirements. Now, with several so-called “triggers” in the organization’s price discovery framework tripped throughout 2021, the group’s February meeting in Houston is going to include a discussion on where they go from here.
“February is when we’ll have the actual policymaking process; the conversations are already underway,” Ethan Lane, NCBA’s vice president of government affairs, said in an interview with Agri-Pulse.
One bill NCBA members will likely be studying is the Cattle Price Discovery and Transparency Act, the compromise legislation led by Sens. Deb Fischer, R-Neb., Chuck Grassley, R-Iowa, Jon Tester, D-Mont., and Ron Wyden, D-Ore. That legislation has picked up some additional Senate support since first being introduced in November and contains several provisions that are expected to receive broad industry support, in particular the creation of a cattle contract library. A companion bill has been introduced in the House.
Ethan Lane, NCBABut NCBA has stopped short of endorsing the bill and its mandated regional trade requirements. The organization’s policy currently opposes any kind of trade mandates — opting instead for a voluntary approach to increase cash trade — but Lane also pointed out some movement among NCBA's membership on that front.
“We’ve seen some state affiliates put policy in place that opposes a mandate that previously didn’t have any policy on that; we’ve seen others say ‘yeah, we think a mandate is a good idea,’” he said. “So we have a pretty continuously shifting landscape on this.”
The idea of mandating certain percentages of cash trade has long been the third-rail issue of the cattle price transparency debate. Grassley and Tester had originally proposed mandating 50% of the nation’s cattle trade occur on the cash market, whereas the compromise bill includes a formula to mandate varying percentages in different regions.
But some in the industry are still hesitant to back a cash trade mandate in any form. They point to the improvement in the quality of the average beef cattle carcass since AMAs became more prevalent in the industry. According to Don Close, a senior animal protein analyst with Rabo AgriFinance, the combined percentage of cattle grading choice or prime — the two highest classes of beef grading — is now about 80% of the total cattle here; about 20 years ago, he said that figure was “roughly 55%.”
“If we go back to mandating cattle trade on the cash market and force people to go back to selling on the average, we’re going to extract all the motivation we’ve had to make the cattle better,” Close said.
“How they merchandise cattle by area is so different, one size does not fit all,” he added. “One area could accept the cash requirements very readily, in other areas it would be very destructive. So I think we’re closer, I just don’t know that we’ve found the magic combination yet.”
As NCBA ponders its next approach, the momentum for a policy solution on Capitol Hill is growing. In addition to the Senate compromise legislation, several other bills have been introduced aimed at solving the problem.
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The industry and its producer and packer trade associations have yet to rally its full support behind any one compromise, although a closed-door meeting of producer leaders from six different organizations in May did produce a handful of consensus items that could be folded into legislation. Agri-Pulse has learned discussions are taking place about the potential for another meeting, but no date has been set.
However, if a meeting happens, it will be taking place without NCBA leaders in attendance. Lane said the group's producer leadership "doesn't feel like there's a tremendous amount of utility in going back to another meeting like that."
One of the groups in attendance, R-CALF USA, came out in opposition to a bill that would create a beef cattle contract library after the bill was introduced by Rep. Dusty Johnson, R-S.D., in October. Although calling for a contract library was one of the consensus items agreed upon during the producer meeting in May, R-CALF — which has long held differing views from NCBA on policy issues — came out against Johnson's bill, arguing broader marketplace reforms were needed to address competition concerns in the marketplace.
Lane argued NCBA has thrown its lobbying weight behind some of the other consensus areas and was frustrated that the same couldn't be said for others in the room.
"We've aggressively pursued those items since leaving that meeting," he said. "Some of the other groups in that meeting didn't hold up their end."
With NCBA opting against taking part in future dialogue, it remains to be seen if the other groups in attendance at the May meeting — the Livestock Marketing Association, American Farm Bureau Federation, U.S. Cattlemen's Association, National Farmers Union, and R-CALF — will choose to convene another gathering in their absence.
The path forward for legislation is also uncertain; the livestock mandatory reporting reauthorization the industry hopes to move through a government funding bill could be one potential avenue, but no group is willing to chance LMR’s passage with a controversial policy rider. Rob Larew, a former Hill staffer and current president of the National Farmers Union, said the issue is ripe for consideration.
“I think the momentum for real change here, whether it’s through LMR or some other vehicle, I’m very hopeful at this point that we will get something through,” he said.
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