These reports follow President Joe Biden’s Executive Order 14036 on Promoting Competition in the American Economy, issued in July, which includes directions to “enhance price discovery, increase transparency and improve the functioning of the cattle and other livestock markets.”
Other steps taken to follow this directive include a $500 million investment in expanding U.S. meat processing capacity, stronger enforcement of the Packers and Stockyards Act and an in-depth review of the “Product of the USA” label.
The first new report, the National Daily Direct Formula Base Cattle, first issued on Aug. 9, will provide greater information into the foundational prices used in cattle market formulas, grids and contracts, and will be gathered at both a national and regional level. This report will enable stakeholders to see the correlation between the negotiated trade and reported formula base prices, as well as the aggregated values being paid as premiums and discounts.
The second report, the National Weekly Cattle Net Price Distribution, first issued on Aug. 10, will show at what levels (price and volume) trade occurred across the weekly weighted average price for each purchase type – negotiated, negotiated grid, formula and forward contract. This report is a window into what producers are paid for cattle (net) and retains confidentiality by segregating volumes purchased in $2 increments plus or minus the daily weighted average price depending upon premiums and discounts.
“During the past five years, stresses and disruptions caused by concentration in livestock markets have hurt producers, workers and consumers, and highlighted vulnerabilities in America’s food system supply chain resiliency. Current negotiated cash cattle trade is approximately 30 percent less than it was in 2005, while formula transactions have increased at the same rate. Our new reports on formula transactions will bring needed clarity to the marketplace,” U.S. Ag Secretary Tom Vilsack said in the announcement.
Industry groups have applauded USDA’s efforts – National Cattlemen’s Beef Association (NCBA) VP of Government Affairs Nathan Lane calling it a “significant step toward increasing transparency in the cattle markets” – but maintain that more must be done for the markets to be truly competitive and transparent.
Some legislation on the horizon includes a bill requiring packers to buy half of their cattle on the spot market, sponsored by Sens. Chuck Grassley (R-Iowa) and Jon Tester (D-Montana), and the Cattle Market Transparency Act of 2021, introduced by Sens. Deb Fischer (R-Nebraska) and Ron Wyden (D-Oregon).
