The Iowa Cattlemen?s Association recently announced it cannot support the Cattle Market Transparency Act of 2021 that has been reintroduced in the U.S. Senate.
The latest legislation ? reintroduced by Nebraska Senator Deb Fischer and Oregon Senator Ron Wyden ? attempts to restore transparency and improve price discovery in the fed cattle market by establishing regional mandatory minimum levels of cash trade and providing more market information to producers.
As ICA director of government relations Cora Fox explains, the organization recognizes the bill?s proactive provisions such as the creation of a contract library, reports on the number of cattle scheduled for delivery, and the requirement that USDA report all information mandated by Livestock Mandatory Reporting. However, she says ICA disagrees with the concept of using a three-year average of negotiated cash and negotiated grid purchases to determine a required baseline.
?In Iowa, Minnesota and even Nebraska, we have really robust price discovery,? Fox said. ?We know the true value of our cattle and that?s because we have a strong cash market. In fact, we?re probably trading too much cash and a lot of that has to do with opportunities and the types of operations we have within the state. The further south you go, you see much more use of alternative marketing arrangements such as formula contracting and less cash trade. In some weeks in the southern feeding region, the cash trade is so low that we?re not getting much information reported out to the public.?
Fox says the Iowa Cattlemen?s Association is concerned this initial requirement provision within the bill is not changing the dynamic and not advantageous to feeders in Iowa, Nebraska and Minnesota.
?The Iowa Cattlemen?s Association is committed to working to find a solution here together,? Fox said. ?We?ve been working with Senator Grassley here in Iowa and his team. We actually want both senators to come together and call for some House and Senate Ag Committee hearings on this legislation. That door is open for communication and negotiating what would be the best solution for our industry. But in its current state, the Iowa Cattlemen?s Association cannot support this because it does not change the status quo across the entire beef belt.?
Fox noted ICA?s criticism of the initial requirement based on a three-year average does not negate the value of the aforementioned provisions in the legislation. She adds they firmly believe the responsibility for robust price discovery should be shared by all participants in the fed cattle market.
