Bill Overview
Title: Cattle Price Discovery and Transparency Act of 2022
Description: This bill requires the Department of Agriculture (USDA) to take various actions to address transparency in contract terms and pricing in the cattle industry. Among these requirements, USDA must maintain a publicly available library or catalog of contracts entered into between meat packers and livestock producers for the purchase of cattle, including any schedules of premiums or discounts associated with the contracts and other specific details. USDA must make this information available to producers and other interested parties in a monthly report. The bill further requires USDA to establish five to seven regions encompassing the entire continental United States that reasonably reflect similar fed cattle purchase practices for processing plants and establish mandatory minimums for each region (i.e., the minimum percentage of cattle purchases that are required to be made through approved pricing mechanisms from producers that are not packers). Under the bill, approved pricing mechanisms are generally purchases of fed cattle made through a negotiated purchase, through a negotiated grid purchase, at a stockyard, or through trading systems or platforms where multiple buyers and sellers can regularly make and accept bids and offers. The bill also establishes a maximum penalty for mandatory minimum violations by covered packers. Under the bill, a covered packer is a packer that has slaughtered an average of 5% or more of the number of fed cattle slaughtered nationally during the immediately preceding five calendar years.
Sponsors: Rep. Axne, Cynthia [D-IA-3]
Target Audience
Population: People involved in and affected by the cattle industry (globally)
Estimated Size: 1000000
- This bill primarily affects stakeholders in the cattle industry, including livestock producers, meat packers, and cattle traders.
- According to 2021 USDA data, there are approximately 913,000 cattle and calf operations in the United States which includes ranchers and feedlots.
- Meat packers covered by this bill are USDA inspected facilities that engage in processing cattle. In 2021, US packers processed around 33 million head of cattle.
- Beyond direct stakeholders, the legislation could impact ancillary industries such as freight, feed suppliers, and equipment manufacturers, as these industries support cattle producers and meat packers.
- Global impacts may occur but are less direct. Countries importing US beef will see changes in supply and transparency which might affect international trade dynamics.
- Consumers, both domestically and internationally, could be indirectly impacted due to changes in pricing strategies adopted by packers as a response to legislative requirements.
Reasoning
- The policy is primarily aimed at improving transparency and fairness in the cattle industry, which directly affects thousands of cattle producers, meatpackers, and ancillary industries.
- A large portion of the impacted population will be livestock producers who may benefit from better price discovery and less opaque contract terms with meatpackers.
- Meatpackers might face challenges with increased regulation and transparency requirements, which could impact their operational costs and pricing strategies.
- Ancillary industries such as trucking and feed suppliers may indirectly benefit through more stable and predictable cattle market operations.
- The estimates of impact were based on size and direct involvement in the cattle industry.
Simulated Interviews
Cattle Rancher (Texas)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I think this policy is a necessary step. We, as producers, have long suffered due to non-transparent pricing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Feedlot Manager (Nebraska)
Age: 39 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- Having more transparent pricing will help us forecast needs and pricing more accurately, which is vital for our operation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Meat Packer Executive (Kansas)
Age: 52 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 5/20
Statement of Opinion:
- The increased regulatory burden concerns me. It may increase operational costs and affect our competitiveness.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 7 |
| Year 2 | 5 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Beef Cattle Trader (California)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I think the policy could open new opportunities in the market and level the playing field for traders like myself.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Veterinarian (Florida)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- I believe more transparency in the industry could indirectly benefit cattle health, as healthier cattle generally correlate with better managed operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Agricultural Economist (Iowa)
Age: 28 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 7/20
Statement of Opinion:
- Increased transparency in cattle markets is likely to benefit economic research and help develop more equitable market models.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Freight Company Owner (Colorado)
Age: 40 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- While cattle market transparency is good, higher regulation costs could indirectly affect our business through trickle-down effects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Beef Distributor (Illinois)
Age: 55 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Transparency can be a double-edged sword; while it might stabilize purchasing, it can also lead to increased costs due to compliance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Stockyard Manager (Oklahoma)
Age: 36 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- I'm optimistic. More negotiated trades could mean more business for stockyards, making us a pivotal part of the new mechanisms.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Cattle Equipment Manufacturer (Montana)
Age: 50 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- A healthy cattle industry means more demand for equipment, but new costs for packers may squeeze margins that could affect us.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Cost Estimates
Year 1: $45000000 (Low: $35000000, High: $55000000)
Year 2: $30000000 (Low: $25000000, High: $40000000)
Year 3: $30000000 (Low: $25000000, High: $40000000)
Year 5: $25000000 (Low: $20000000, High: $35000000)
Year 10: $25000000 (Low: $20000000, High: $35000000)
Year 100: $5000000 (Low: $4000000, High: $6000000)
Key Considerations
- Monitoring and enforcement mechanisms will require robust development to ensure compliance with the new transparency requirements.
- The effectiveness of regional purchase practices hinges on cooperation between varied market participants.
- Long-term impacts on market dynamics and auxiliary industries need further study as the act is implemented.