Policy Post: November 2020

Report examines cattle market issues, solutions

A new report by the American Farm Bureau Federation’s Cattle Market Working Group provides an in-depth examination of the causes and price implications resulting from extreme market volatility in the cattle industry. The report also sets the stage to explore policy solutions.

In April 2020, AFBF President Zippy Duvall tasked the newly created Cattle Market Working Group, composed of 10 state Farm Bureau presidents, to investigate and research recent volatility in the cattle markets due to COVID-19, as well as the impacts of the Holcomb, Kan., beef plant fire that occurred in August 2019.

The committee met each week, for a total of well over 20 hours, to hear from government and university experts among others representing multiple perspectives and different facets of the value chain. The working group extensively discussed and debated the various factors that led to the market disruptions, policy proposals currently being examined in the public arena, and potential actions to mitigate the impacts on producers if similar events occur in the future. The report is designed to provide Farm Bureau leaders with needed background information on the many issues facing the cattle market.

You can read the Cattle Market Working Group report by visiting tnfarmbureau.org/cattlemarketreport.

“Our cattle producers suffered a one-two punch with the fallout from the Holcomb fire and the COVID-19 pandemic,” said AFBF President Zippy Duvall. “The prices families were paying at the grocery store went up, but the prices paid to farmers dropped through the floor. That’s not fair to consumers or producers. We must work toward a more stable, resilient food supply chain that can better endure unforeseen challenges so we can keep America’s pantry stocked while ensuring farmers are paid a fair price for their products.”

Key topics of the report include:

Mandatory Minimum Negotiated Trade

• The working group discussed “triggered”-style mandatory minimum pricing that is set on a region-by-region basis.
• Various and fluctuating levels would be determined regionally, including input from state Farm Bureau members.

Risk Management and Education

• The working group is interested in AFBF working with the Chicago Mercantile Exchange to better address concerns from smaller producers.
• Existing risk management tools, such as livestock risk protection crop insurance, could be adjusted to be more affordable for smaller producers.

Small Capacity Meat Packing

• The working group discussed policy solutions that would allow smaller packing facilities to play a larger role in the food supply chain.
• Create incentives for smaller packing plants to become federally inspected.

GIPSA

• Farm Bureau supports strengthening the Grain Inspection, Packers and Stockyards Administration’s ability to enforce market rules.

Cattle farmers are encouraged to read the report as it contains insight and policy considerations as Farm Bureau leaders debate policy recommendations for 2021.