WASHINGTON — Editor’s note: U.S. Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, and U.S. Senator John Boozman, ranking member of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry presented their opening statements on cattle market legislation: S.4030 the Cattle Price Discovery and Transparency Act of 2022 and S.3870 the Meat and Poultry Special Investigator Act of 2022.
More information can be found from the National Cattlemen’s Beef Association here, and the National Farmers Union, here.
Chairwoman Stabenow Opening Statement at Hearing to Review Cattle Market Legislation
U.S. Senator Debbie Stabenow (D-Mich.), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, today released the following opening statement at the hearing to review S.4030 the Cattle Price Discovery and Transparency Act of 2022 and S.3870 the Meat and Poultry Special Investigator Act of 2022. Live video of the hearing is available here.
Stabenow’s statement, as prepared for delivery, follows:
I call to order this hearing of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry. Today we are holding a legislative hearing on two bipartisan bills aimed at improving competition and transparency in the livestock industry. Thanks to Senators Grassley, Fischer, Tester and Wyden for leading on the Cattle Price Discovery and Transparency Act of 2022. And thanks to Senators Tester and Grassley for leading the Meat and Poultry Special Investigator Act of 2022.
The Cattle Price Discovery and Transparency Act includes several reforms aimed at improving transparency and price discovery in cattle markets. And the Meat and Poultry Special Investigator Act would further support fairness in cattle markets by creating a new USDA office dedicated to enforcing competition rules under the Packers and Stockyards Act. The last few years have made it clear that we need to create a more resilient food supply chain that is better able to withstand disruptions, whether it’s a pandemic, a cyberattack, a weather disaster, or a war in Ukraine.
Early in the pandemic, enormous shifts in consumer demand, along with COVID-19 outbreaks among processing plant workers and other disruptions, left farmers with low prices and few available markets. Consumers all saw empty shelves and sky-high prices at the grocery store, all while huge companies reaped record profits. Our food supply chain, while efficient, also proved to be highly vulnerable. Consolidation and lack of competition was a significant contributing factor.
The cattle industry is a prime example. Just four big companies control 85% of the beef slaughter in our country – and two of them are foreign-owned. At this time two years ago, upwards of 30% of beef processing capacity was offline because large plants shuttered when meatpackers failed to adequately protect their workers. In 2019, a fire in one plant reduced beef processing capacity by more than 5% for several months. And just last spring, a ransomware attack on one company shut down one-fifth of U.S. meat processing capacity.
These events have ripple effects across our economy. As we heard from our witnesses last June, consolidation and concentration hurts farmers, workers, and consumers, and stymies competition. It means producers across the country receive fewer bids when they sell their cattle. It allows the largest meatpackers to muscle out new and smaller businesses who try to compete, leaving farmers with limited local and regional processing options and long wait times.
We have heard concerns about the lack of transparency and competition loud and clear, as well as the need to ensure producers of all sizes have options and fair markets. That’s why I was pleased to see President Biden’s Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain announced early this year.
With the funding we secured in the American Rescue Plan, the USDA is investing more than $1 billion to promote competition by expanding local and regional meat processing capacity and provide more options for farmers. The Administration is also taking steps to ensure that competition rules under the Packers & Stockyards Act are enforced.
There is no shortage of complex challenges facing livestock producers. And it is in the interest of all Americans to make our food supply chain more resilient. I look forward to hearing from USDA and our panel of industry experts for their perspectives on these proposals. With that, I’ll turn to Ranking Member Boozman for his opening remarks.
Ranking Member Boozman’s Opening Statement at Hearing to Review Cattle Market Legislation
U.S. Senator John Boozman (R-AR), ranking member of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, released the following opening remarks, as prepared, from the legislative hearing to review S. 4030, the Cattle Price Discovery and Transparency Act of 2022, and S.3870, the Meat and Poultry Special Investigator Act of 2022.
Good morning. I thank Chairwoman Stabenow for holding today’s hearing. I thank our witnesses for being with us this morning. I look forward to hearing their testimony and discussing S. 4030, the Cattle Price Discovery and Transparency Act of 2022; and S. 3870, the Meat and Poultry Special Investigator Act of 2022.
There is no doubt that the bills we are discussing this morning are the result of the frustration at the prices America’s farmers and ranchers receive for cattle in relation to the prices consumers ultimately pay for beef products.
There is a significant difference in these two prices, and I understand the frustration of some cattle producers. I also understand the desire of some of my colleagues to propose legislative solutions to address this frustration.
Before Congress passes any changes to the law, I believe we have a responsibility to understand the issue we are seeking to solve and to understand the proposed solution.
Since the sponsors introduced their first version of the legislation in November 2021, we have spent many, many hours reviewing the proposal, talking with USDA officials, and soliciting input from the nation’s preeminent cattle and beef industry economists.
My charge to my staff was to learn all they could about the legislation and talk to the experts including cow-calf producers, backgrounders, feeders, and packers. We supplemented those efforts with academic analysis. This morning’s hearing is one more step we are taking to learn about the issues and the costs and benefits of the proposed legislation.
Over the last few months, as I and my staff have studied S. 4030 (and its predecessor), we have learned a few things about the potential impact of the legislation. I share this with my colleagues to help inform the discussion and hopefully allow us to seek comments and clarifications from our witnesses.
If adopted, the impacts of S. 4030 would include:
The number of cattle marketed under alternative marketing agreements (AMAs) will decrease and the number of cattle sold in the cash market will increase. For example, in Texas, Oklahoma and New Mexico, between 340 thousand and 2.5 million fed cattle will need to move out of formula contracts annually. In Iowa and Minnesota, it’s fewer than two thousand head a year.
Using Texas A&M’s analysis and economic cost estimates from Dr. Koontz, the costs of this shift away from AMA’s will cost cattle producers between $23 million and $249 million annually, depending on how the Secretary of Agriculture decides to implement the law. Over the five years analyzed by Texas A&M, the costs are in the hundreds of millions to billions of dollars.
The costs to cattle producers are not all borne equally. Some regions will be more heavily impacted that others. Nearly 90 percent of the economic costs of this bill are estimated to be borne by farmers in Kansas and the Southern Plains, including Texas, Oklahoma and New Mexico.
The conversations I have had with participants in all sectors of the cattle industry have also raised some questions that I believe we need to consider:
How do the proposed solutions influence packer concentration?
What regions or sectors of the cattle industry will ultimately benefit, and what regions or sectors will bear the costs?
Does S.4030 disincentivize investment and innovation?
With the utilization of AMAs capped, what tools do producers have to manage risk?
What will the cattle industry look like in a decade if this legislation is enacted, and what will it look like if it isn’t?
And, how would these bills have changed the supply and demand dynamics during the COVID-19 pandemic or other black swan events?
With respect to the Meat and Poultry Special Investigator Act, I must say that I am very uncertain about this legislation’s purpose and goals. Legal experts have shared with me that this newly created office at the Department of Agriculture (USDA) will just duplicate functions already performed by either USDA, the Department of Justice, the Federal Trade Commission, or the Department of Homeland Security.
Do we really think that creating yet another government entity is a real solution? Is duplication of responsibilities and confusing the chain of command among federal regulators helpful to our stakeholders? Does the creation of this office discourage the establishment of new small and midsize meat packers?
Though the focus of this legislation and the sponsors interest is focused on the large packers, what are often referred to as the “Big 4” in the beef industry, there are more than a thousand small packers across the country who are also subject to the requirements of the Packers and Stockyards Act.
Those small businesses are dotted across rural America, and they represent the vast majority of the meat and poultry processing facilities in America. They would also be subject to investigation by this new law.
Additionally, this legislation also impacts the pork, poultry, and lamb industries. Yet, none of those stakeholders are testifying today. I believe the committee should ensure that the record reflects any comments or analysis those industries would like to provide.
As I believe there is potential for confusion amongst the various agencies about who is in charge, the committee would benefit from knowing the position of the Department of Justice on S. 3870.
Finally, I would like to share with the committee that I have been in spirited conversations with USDA as I have unsuccessfully attempted to secure the expert opinion of the Office of the Chief Economist on S.4030.
To ensure the committee has the benefit of the chief economist’s expert opinion, I will pose questions to the witnesses today and submit questions for the record. It is my expectation, and I hope the members of the committee will share my expectation, that the Office of the Chief Economist should be empowered to answer any question of any senator fully, completely, independently and without fear of reprisal.
Furthermore, any effort by any government official to thwart this committee’s oversight activities should not be tolerated.
Madam Chairwoman, I ask for unanimous consent to include in the hearing record the letters sent by stakeholders since we noticed the hearing and the multiple economic analyses I’ve mentioned.
Thank you, I’ve also provided a copy of these documents to all our committee members today. I yield back the remainder of my time.