Report on US Cattle Market Published for Congress
By: Sydney Sheffield
The Agriculture and Food Policy Center (AFPC) at Texas A&M University recently published The U.S. Beef Supply Chain: Issues and Challenges. The book is a culmination of items presented and discussed during an AFPC workshop on cattle markets held in June 2021. The book was requested by the 2020 House Agriculture Committee and the United States Department of Agriculture (USDA). AFPC conducts analyses of the impacts of government policy proposals and implementation procedures on farmers, agribusinesses, taxpayers, and consumers.
“This is the product of a collaboration between the AFPC and the Office of the Chief Economist at the USDA,” said Bart Fischer, co-director of AFPC and one of the book’s editors. “The work originated from a request by the bipartisan leadership of the Committee on Agriculture in the U.S. House of Representatives during the 116th Congress.”
The book, almost 200 pages in total, had several noteworthy findings pertinent to Congress. One of the most significant findings was regarding government mandates included in proposed legislation by Members of Congress, referred to as the 50/14 or 30/14 proposals. These proposals require large-scale meatpackers to increase the proportion of negotiable transactions that are cash, or ‘spot,’ to 50% of their total cattle purchases in hopes of price transparency. According to AFPC, there are negative impacts of the minimum negotiated cash proposals.
“The short-term impact for a policy most like that being considered is a $2.5 billion negative impact in the first year and a cumulative negative impact of $16 billion over 10 years, inflated to 2021 dollars. This cost is leveled mainly on cattle producers,” Dr. Stephen R. Koontz, professor in the Department of Agricultural and Resource Economics at Colorado State University, stated in the analysis. “The 50/14 proposal would have these negative impacts, and the 30/14 would have similar negative impacts albeit approximately halved.”
Shortly after the publication of the book, the House Agriculture Committee held a hearing regarding the livestock industry. Senator Chuck Grassley (R-IA), one of the creators of the 50/14 plan, suggested it as a solution. Representative Dusty Johnson (R-SD) noted the AFPC book and how experts in the field felt differently about the proposal, citing Koontz’s analysis.
Those in the livestock industry appreciate the expert insight and hope government officials listen to the advice. “The Texas A&M book went one step further and examined current legislative proposals and found these proposals’ unintended consequences will harm those they are meant to protect: cattle producers,” Julie Anna Potts, President, and CEO of the Meat Institute said. “This book should be required reading for Members of Congress who want to help livestock producers and consumers.”
While Congress still searches for the answers, AFPC included a warning in the book’s introduction for members to consider. “In the meantime, we would urge extreme caution in making changes to a system that has grown organically over time to reward high-quality beef production in a way that acknowledges regional differences throughout the country.”