WASHINGTON — With beef and cattle prices nearing record highs and US lawmakers looking to intervene in those markets, the North American Meat Institute (NAMI) expressed its disapproval of the Meat and Poultry Special Investigator Act and the Cattle Price Discovery and Transparency Act (Grassley-Fischer bill).
“Just last week, one cattle marketing analyst described the high prices as ‘stratospheric,’” said Julie Anna Potts, president and chief executive officer of NAMI. “As many industry economists have said, the beef and cattle markets are continuing to behave predictably given supply and demand and do not need government mandates and intervention.”
Economists at Texas A&M University’s Agricultural and Food Policy Center estimated that the Grassley-Fischer bill, S. 4030, would cost producers more than an earlier estimate of $112 million over five years ($50 a head on 2.3 million head). They said the mandate would benefit Iowa at the expense of other regions, namely the Texas-Oklahoma-New Mexico region, Kansas and Nebraska.
“The Grassley-Fischer bill being marked-up in the Senate Agriculture Committee this week will cost producers in the largest cattle producing region millions of dollars, and producers around the country will lose the ability to market their cattle as they choose,” Potts said.
“The fact that most producers and packers choose to sell cattle using alternative marketing arrangements suggests they see benefits in this form of marketing in the form of increased certainty, lower transactions costs and supply chain coordination,” said Jayson Lusk, professor and head of the Department of Agricultural Economics at Purdue University, in his testimony before the House Agriculture Committee Subcommittee on Livestock and Foreign Agriculture. “Mandating a certain percent of cattle be sold on a negotiated basis would entail some producers and packers foregoing a marketing method they currently find more desirable. That is a cost.
“Moreover, strengthening of consumer demand for beef over the past couple decades has occurred over a period in which there was increased use of formula pricing that rewarded quality improvements. Eroding the ability of consumers, retailers and packers to incentivize quality through formulas and vertical coordination may have detrimental impacts on demand.”
Referencing the Meat and Poultry Special Investigator Act, NAMI said the bill calls for a new government office, known as the Special Investigator for Meat and Poultry, that will duplicate the existing authority of the US Department of Agriculture and Department of Justice.
The new USDA special investigator will have a team of investigators working to prevent anticompetitive practices and enforcing antitrust laws. They will cooperate with the Department of Justice and the Federal Trade Commission (FTC) in effort to bridge the USDA with the Department of Homeland Security.
“The Meat and Poultry Special Investigator bill would establish a Special Investigator at the same time the US Department of Agriculture is proposing to change the longstanding rules under the Packers and Stockyards Act,” Potts said. “Establishing a new enforcement office at the same time USDA is changing the rules to be enforced is ill conceived: the regulated community would be subject to increased enforcement simultaneously with legal uncertainty.”
Both the Cattle Price Discovery and Transparency Act and the Meat and Poultry Special Investigator Act have passed out of the Senate Agriculture Committee and are eligible for a final vote on the Senate floor.
“Iowa cattle producers have struggled to receive a fair price for years — long before inflation hit a 40-year high,” said Sen. Chuck Grassley, sponsor of both bills. “It’s past time for Congress to stand with independent cattle producers and put an end to the cozy relationship between large meat packers and big cattle feedlots."