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: Sen. Fischer, Deb [R-NE]
Target Audience
Population: Workers and stakeholders in the cattle and meat packing industry
Estimated Size: 2000000
- The legislation focuses on the cattle industry, particularly involving cattle producers and meat packers.
- The USDA is required to maintain transparency between meat packers and livestock producers, impacting their business interactions.
- This will affect regions across the continental United States, influencing local and regional meat packing and cattle production practices, thereby impacting workers in these regions.
- The bill requires establishing five to seven regions, indicating that the impact is targeted within the U.S.
- The majority of people directly impacted include those working in cattle production, meat packing, livestock producers, and related agricultural sectors.
- There will be indirect impacts on consumers who purchase beef and related products due to potential changes in pricing and market transparency.
Reasoning
- The Cattle Price Discovery and Transparency Act will primarily affect stakeholders in the cattle industry, including cattle producers, livestock farmers, meat packers, and to some extent, consumers due to potential changes in pricing.
- Given the budget constraints, not all regions or individuals will be affected immediately in year one, and the effects may vary significantly based on location and specific role in the cattle supply chain.
- Farmers and producers might benefit from greater pricing transparency, leading to fairer negotiations and potentially improved financial stability.
- Meat packers, especially larger ones who might need to adjust to comply with new transparency and purchasing requirements, will experience a higher impact due to penalties associated with non-compliance.
- Consumers might indirectly be affected as changes in the pricing structure could influence retail beef prices.
Simulated Interviews
Cattle Farmer (Texas)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- I believe the policy will help promote fair practices between us and the big packing companies.
- There is always a bit of uncertainty when dealing with contracts; transparency will be reassuring.
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 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 9 | 5 |
Meat Packing Plant Worker (Nebraska)
Age: 38 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- I'm worried that new regulations might affect the plant's operations and our hours.
- Better transparency might mean more stable work eventually, but it's hard to say in the short term.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 4 |
| Year 20 | 6 | 3 |
Cattle Feedlot Operator (Kansas)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- This policy is helpful. It ensures that negotiations are done in an open market. It's a win for us.
- With more negotiation options, it's better for setting our cattle prices.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 9 | 6 |
| Year 3 | 9 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 10 | 6 |
| Year 20 | 10 | 5 |
Agricultural Policy Analyst (Montana)
Age: 29 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- This is a progressive policy for the industry, fostering sustainable cattle purchasing and selling.
- It sets a precedence for accountability in the agriculture sector.
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 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 8 | 6 |
Small Meat Processor (Iowa)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- This legislation seems tailored more to affect big players, but it could cascade to us.
- We hope for positive effects through market stability and fair competition.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 5 |
Consumer (Illinois)
Age: 62 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I think it's great when there's more transparency in the food production chain, especially with beef products.
- I'm hoping this leads to better pricing for consumers like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Livestock Broker (Colorado)
Age: 43 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- With better access to detailed contract information, I can offer better services to my clients.
- This policy will modernize the way we conduct transactions in this industry.
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 |
Cattle Feed Supplement Supplier (Arkansas)
Age: 34 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- I hope this transparency brings more consistency in cattle farm orders, which will be good for business.
- It might take time before the benefits affect ancillary industries like ours.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Ranch Owner (New Mexico)
Age: 48 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- It's good to have knowledge and resources about contracts; this is a step in the right direction.
- I'm cautious but optimistic to see if this levels the playing field for smaller operators.
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 | 7 | 6 |
| Year 20 | 8 | 6 |
Agricultural Economist (California)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 2/20
Statement of Opinion:
- This policy allows for an interesting case study in market transparency and price discovery in the cattle industry.
- It could set an example for other agricultural markets if successful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Cost Estimates
Year 1: $5000000 (Low: $4000000, High: $7000000)
Year 2: $5200000 (Low: $4100000, High: $7400000)
Year 3: $5400000 (Low: $4200000, High: $7800000)
Year 5: $5800000 (Low: $4500000, High: $8400000)
Year 10: $6600000 (Low: $5000000, High: $9600000)
Year 100: $9600000 (Low: $7000000, High: $14000000)
Key Considerations
- Ensuring technological infrastructure can support the demands of real-time data transparency and access.
- Avoiding unintended market consequences from increased regulation that might stymie free enterprise without achieving desired price discovery and fairness outcomes.
- Balancing transparency with the protection of proprietary business data for both producers and packers.