[Congressional Record Volume 142, Number 102 (Thursday, July 11, 1996)]
[Senate]
[Pages S7766-S7769]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE (for himself, Mr. Leahy, Mr. Baucus, Mr. Harkin, 
        Mr. Wellstone, Mr. Feingold, Mr. Dorgan, Mr. Conrad, Mr. 
        Kerrey, Mr. Exon, Mr. Bingaman and Mr. Heflin):
  S. 1949. A bill to ensure the continued viability of livestock 
producers and the livestock industry in the United States; to the 
Committee on Agriculture, Nutrition, and Forestry.


              The Cattle Industry Improvement Act of 1996

  Mr. DASCHLE. Mr. President, today several colleagues and I are 
introducing the Cattle Industry Improvement Act of 1996. This 
legislation addresses the deep concern of cattle, hog, and sheep 
producers across the Nation that the livestock industry does not 
operate in a free and open market. Livestock producers, especially 
cattle producers, are receiving the lowest prices in recent memory. 
Producers can barely make ends meet, let alone make a profit. The 
Cattle Industry Improvement Act is a fair, substantive bill which 
offers commonsense solutions to problems that have plagued the 
livestock industry for a long time.
  For the last 2 years the issue of livestock concentration has been 
the No. 1 agricultural issue in South Dakota, even exceeding interest 
in the farm bill. Livestock concentration and low cattle prices do not 
just affect farmers and ranchers in my State. The impact is felt by the 
entire economy of South Dakota, affecting people who live in cities, 
towns, and rural communities alike. A recession in the cattle industry 
has a ripple effect throughout the entire State the consequences of 
which are potentially devastating. Farm foreclosures, job layoffs by 
agriculture related businesses and bank failures are all likely if 
cattle prices do not rebound in the immediate future.
  I began the effort to address the issue of livestock concentration 
last year with the introduction of legislation creating a livestock 
commission to review the impact of packer concentration. This bill was 
a bipartisan effort that passed the Senate but was blocked in the 
House.
  Fortunately, Secretary Glickman rescued the effort by creating the 
USDA Advisory Committee on Agricultural Concentration. This advisory 
committee, which included livestock producers, has served a vital role 
in addressing concentration in agriculture. The advisory committee 
submitted its findings and recommendations to Secretary Glickman on 
June 6. Some of its recommendations can be implemented administratively 
and are currently under review by Department of Agriculture officials 
to determine their feasibility. Others require legislative action. The 
conclusion the committee reached is unequivocal: the status quo is 
unacceptable. Modern livestock production has changed, the USDA must 
keep pace, and Congress must give the Department of Agriculture the 
tools necessary to respond to these changes in a way that gives 
producers a chance to make an honest living and compete fairly in the 
marketplace.
  The Cattle Industry Improvement Act of 1996 gives the Department 
those tools. The bill requires the Secretary to define and prohibit 
noncompetitive practices. It mandates price reporting for all sales 
transactions conducted by any entity who has greater than 5 percent of 
the national slaughter business, and requires timely reporting of 
quantity and price of all imports and exports of meat and meat by 
products. Livestock producers will be able to count on Federal 
protection against packers and buyers who retaliate against them for 
public comments made regarding industry practices. Federal agriculture 
credit policies will be reviewed to determine if they are adequate to 
address the cyclical nature of modern livestock production.
  The bill also calls for the review of Federal lending practices to 
determine if the Government is contributing to packer concentration, 
and directs the President and the Secretaries of Agriculture and Health 
and Human Services to formulate a plan consolidating and streamlining 
the entire food inspection system.
  Finally the bill requires the USDA to develop a system for labeling 
U.S. meat and meat products. Companies will be encouraged to 
voluntarily participate in labeling their products as originating from 
U.S. livestock producers.
  Swift congressional action is crucial for our Nation's livestock 
producers. Free and open markets are one of the foundations of our 
Nation and our economy. We as consumers all suffer if markets, 
especially food markets, do not operate freely. The Cattle Industry 
Improvement Act is critical to ensuring a fair shake for hard-working 
livestock producers and the Nation's consumers
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1949

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Cattle 
     Industry Improvement Act of 1996''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Expedited implementation of Fund for Rural America.
Sec. 3. Prohibition on noncompetitive practices.
Sec. 4. Domestic market reporting.
Sec. 5. Import and export reporting.
Sec. 6. Protection of livestock producers against retaliation by 
              packers.
Sec. 7. Review of Federal agriculture credit policies.
Sec. 8. Streamlining and consolidating the United States food 
              inspection system.
Sec. 9. Labeling system for meat and meat food products produced in the 
              United States.

[[Page S7767]]

Sec. 10. Spot transactions involving bulk cheese.

     SEC. 2. EXPEDITED IMPLEMENTATION OF FUND FOR RURAL AMERICA.

       Section 793(b)(1) of the Federal Agriculture Improvement 
     and Reform Act of 1996 (7 U.S.C. 2204f(b)(1)) is amended by 
     striking ``January 1, 1997,'' and all that follows through 
     ``October 1, 1999,'' and inserting ``November 10, 1996, 
     October 1, 1997, and October 1, 1998,''.

     SEC. 3. PROHIBITION ON NONCOMPETITIVE PRACTICES.

       Section 202 of the Packers and Stockyards Act, 1921 (7 
     U.S.C. 192), is amended--
       (1) in subsection (g), by striking the period at the end 
     and inserting ``; or''; and
       (2) by adding at the end the following:
       ``(h) Engage in any practice or device that the Secretary 
     by regulation, after consultation with producers of cattle, 
     lamb, and hogs, and other persons in the cattle, lamb, and 
     hog industries, determines is a detrimental noncompetitive 
     practice or device relating to the price or a term of sale 
     for the procurement of livestock or the sale of meat or other 
     byproduct of slaughter.''.

     SEC. 4. DOMESTIC MARKET REPORTING.

       (a) Persons in Slaughter Business.--Section 203(g) of the 
     Agricultural Marketing Act of 1946 (7 U.S.C. 1622(g)) is 
     amended--
       (1) by inserting ``(1)'' before ``To collect''; and
       (2) by adding at the end the following:
       ``(2) Each person engaged in the business of slaughtering 
     livestock who carries out more than 5 percent of the national 
     slaughter for a given species shall report to the Secretary 
     in such manner as the Secretary shall require, as soon as 
     practicable but not later than 24 hours after a transaction 
     takes place, such information relating to prices and the 
     terms of sale for the procurement of livestock and the sale 
     of meat food products and livestock products as the Secretary 
     determines is necessary to carry out this subsection.
       ``(3) Whoever knowingly fails or refuses to provide to the 
     Secretary information required to be reported by paragraph 
     (2) shall be fined under title 18, United States Code, or 
     imprisoned for not more than 5 years, or both.
       ``(4) The Secretary shall encourage voluntary reporting by 
     any person engaged in the business of slaughtering livestock 
     who carries out 5 percent or less of the national slaughter 
     for a given species.
       ``(5) The Secretary shall make information received under 
     this subsection available to the public only in the aggregate 
     and shall ensure the confidentiality of persons providing the 
     information.''.
       (b) Elimination of Outmoded Reports.--The Secretary of 
     Agriculture, after consultation with producers and other 
     affected parties, shall periodically--
       (1) eliminate obsolete reports; and
       (2) streamline the collection and reporting of data related 
     to livestock and meat and livestock products, using modern 
     data communications technology, to provide information to the 
     public on as close to a real-time basis as practicable.
       (c) Definition of ``Captive Supply''.--For the purpose of 
     regulations issued by the Secretary of Agriculture relating 
     to reporting under the Agricultural Marketing Act of 1946 (7 
     U.S.C. 1621 et seq.) and the Packers and Stockyards Act, 1921 
     (7 U.S.C. 181 et seq.), the term ``captive supply'' means 
     livestock obligated to a packer in any form of transaction in 
     which more than 7 days elapses from the date of obligation to 
     the date of delivery of the livestock.

     SEC. 5. IMPORT AND EXPORT REPORTING.

       (a) Exports.--Section 602(a)(1) of the Agricultural Trade 
     Act of 1978 (7 U.S.C. 5712(a)(1)) is amended by inserting 
     after ``products thereof,'' the following: ``and meat food 
     products and livestock products (as the terms are defined in 
     section 2 of the Packers and Stockyards Act, 1921 (7 U.S.C. 
     182)),''.
       (b) Imports.--
       (1) In general.--The Secretary of Agriculture and the 
     Secretary of Commerce shall, using modern data communications 
     technology to provide the information to the public on as 
     close to a real-time basis as practicable, jointly make 
     available to the public aggregate price and quantity 
     information on imported meat food products, livestock 
     products, and livestock (as the terms are defined in section 
     2 of the Packers and Stockyards Act, 1921 (7 U.S.C. 182)).
       (2) First report.--The Secretaries shall release to the 
     public the first report under paragraph (1) not later than 60 
     days after the date of enactment of this Act.

     SEC. 6. PROTECTION OF LIVESTOCK PRODUCERS AGAINST RETALIATION 
                   BY PACKERS.

       (a) Retaliation Prohibited.--Section 202(b) of the Packers 
     and Stockyards Act, 1921 (7 U.S.C. 192(b)), is amended--
       (1) by striking ``or subject'' and inserting ``subject''; 
     and
       (2) by inserting before the semicolon at the end the 
     following: ``, or retaliate against any livestock producer on 
     account of any statement made by the producer (whether made 
     to the Secretary or a law enforcement agency or in a public 
     forum) regarding an action of any packer''.
       (b) Special Requirements Regarding Allegations of 
     Retaliation.--Section 203 of the Packers and Stockyards Act, 
     1921 (7 U.S.C. 193), is amended by adding at the end the 
     following:
       ``(e) Special Procedures Regarding Allegations of 
     Retaliation.--
       ``(1) Consideration by special panel.--The President shall 
     appoint a special panel consisting of 3 members to receive 
     and initially consider a complaint submitted by any person 
     that alleges prohibited packer retaliation under section 
     202(b) directed against a livestock producer.
       ``(2) Complaint; hearing.--If the panel has reason to 
     believe from the complaint or resulting investigation that a 
     packer has violated or is violating the retaliation 
     prohibition under section 202(b), the panel shall notify the 
     Secretary who shall cause a complaint to be issued against 
     the packer, and a hearing conducted, under subsection (a).
       ``(3) Evidentiary standard.--In the case of a complaint 
     regarding retaliation prohibited under section 202(b), the 
     Secretary shall find that the packer involved has violated or 
     is violating section 202(b) if the finding is supported by a 
     preponderance of the evidence.''.
       (c) Damages for Producers Suffering Retaliation.--Section 
     203 of the Packers and Stockyards Act, 1921 (7 U.S.C. 193) 
     (as amended by subsection (b)), is amended by adding at the 
     end the following:
       ``(f) Damages for Producers Suffering Retaliation.--
       ``(1) In general.--If a packer violates the retaliation 
     prohibition under section 202(b), the packer shall be liable 
     to the livestock producer injured by the retaliation for not 
     more than 3 times the amount of damages sustained as a result 
     of the violation.
       ``(2) Enforcement.--The liability may be enforced either by 
     complaint to the Secretary, as provided in subsection (e), or 
     by suit in any court of competent jurisdiction.
       ``(3) Other remedies.--This subsection shall not abridge or 
     alter a remedy existing at common law or by statute. The 
     remedy provided by this subsection shall be in addition to 
     any other remedy.''.

     SEC. 7. REVIEW OF FEDERAL AGRICULTURE CREDIT POLICIES.

       The Secretary of Agriculture, in consultation with the 
     Secretary of the Treasury, the Chairman of the Board of 
     Governors of the Federal Reserve System, and the Chairman of 
     the Board of the Farm Credit Administration, shall establish 
     an interagency working group to study--
       (1) the extent to which Federal lending practices and 
     policies have contributed, or are contributing, to market 
     concentration in the livestock and dairy sectors of the 
     national economy; and
       (2) whether Federal policies regarding the financial system 
     of the United States adequately take account of the weather 
     and price volatility risks inherent in livestock and dairy 
     enterprises.

     SEC. 8. STREAMLINING AND CONSOLIDATING THE UNITED STATES FOOD 
                   INSPECTION SYSTEM.

       (a) Preparation.--In consultation with the Secretary of 
     Agriculture, the Secretary of Health and Human Services, and 
     all other interested parties, the President shall prepare a 
     plan to consolidate the United States food inspection system 
     that ensures the best use of available resources to improve 
     the consistency, coordination, and effectiveness of the 
     United States food inspection system, taking into account 
     food safety risks.
       (b) Submission.--Not later than 1 year after the date of 
     enactment of this Act, the President shall submit to Congress 
     the plan prepared under subsection (a).

     SEC. 9. LABELING SYSTEM FOR MEAT AND MEAT FOOD PRODUCTS 
                   PRODUCED IN THE UNITED STATES.

       (a) Labeling.--Section 7 of the Federal Meat Inspection Act 
     (21 U.S.C. 607) is amended by adding at the end the 
     following:
       ``(g) Labeling of Meat of United States Origin.--
       ``(1) In general.--The Secretary shall develop a system for 
     the labeling of carcasses, parts of carcasses, and meat 
     produced in the United States from livestock raised in the 
     United States, and meat food products produced in the United 
     States from the carcasses, parts of carcasses, and meat, to 
     indicate the United States origin of the carcasses, parts of 
     carcasses, meat, and meat food products.
       ``(2) Assistance.--The Secretary shall provide technical 
     and financial assistance to establishments subject to 
     inspection under this title to implement the labeling system.
       ``(3) Authorization of appropriations.--There are 
     authorized to be appropriated such sums as are necessary to 
     carry out this subsection.''.

     SEC. 10. SPOT TRANSACTIONS INVOLVING BULK CHEESE.

       (a) In General.--The Secretary of Agriculture shall collect 
     and publicize, on a weekly basis, statistically reliable 
     information, obtained from all cheese manufacturing areas in 
     the United States, on prices and terms of trade for spot 
     transactions involving bulk cheese, including information on 
     the national average price, and regional average prices, for 
     bulk cheese sold through spot transactions.
       (b) Confidentiality.--All information provided to, or 
     acquired by, the Secretary under this section shall be kept 
     confidential by each officer and employee of the Department 
     of Agriculture, except that general weekly statements may be 
     issued that are based on the reports of a number of spot 
     transactions and that do not identify the information 
     provided by any person.
       (c) Funding.--The Secretary may use funds that are 
     available for dairy market data collection to carry out this 
     section.

  Mr. FEINGOLD. Mr. President, I am pleased to be an original cosponsor 
of the Cattle Industry Improvement Act, which addresses an issue that 
is critical to our livestock and dairy industries--the concentration of 
economic

[[Page S7768]]

power. I want to applaud the Minority Leader [Senator Daschle] for his 
extraordinary leadership on this issue. Last year he led the effort to 
establish a commission to investigate concentration in meat packing and 
processing, introducing legislation that passed in the Senate. That 
legislation ultimately led to the report Concentration in Agriculture--
A Report of the USDA Advisory Committee on Agricultural Concentration--
issued this June, which confirmed the extensive concentration occurring 
through the entire livestock marketing chain. The report warned that 
concentration in processing and manufacturing is likely to harm farmers 
more than anyone else in the marketing chain given their already low 
market power in the face of a few large corporate buyers. That report 
made a number of recommendations to Congress, the administration and 
the livestock industry for steps that could be taken to address these 
problems. The legislation Senator Daschle is introducing today takes 
action on a number of those recommendations.
  The trend towards concentration in the livestock industry is 
particularly disturbing in light of the current record low prices in 
cattle markets and record high prices for feed--the most important and 
costly input to livestock production. In Wisconsin, low cattle prices 
have hit our dairy farmers hard as they obtain a substantial portion of 
their income from the sale of cull cows and veal calves. When beef 
prices are low, Wisconsin's 27,000 dairy farmers are equally hard hit.
  According to the USDA report, while prices are distressingly low for 
producers, returns for meat packers are still quite high. As some of my 
colleagues have pointed out, with four firms slaughtering 80 percent of 
the cattle in this country, it is no wonder that producers in Wisconsin 
and elsewhere are concerned about the disparate economic health of 
livestock producers and livestock packing and processing industry. 
While it isn't clear that concentration has caused the low prices, the 
USDA report confirmed that given the circumstances in the livestock 
industry, market manipulation for large packers and processors is 
certainly possible.
  The Cattle Industry Improvement Act includes provisions designed to 
improve market information in the cattle industry which suffers from 
inadequate market information. Less than 2 percent of fed cattle are 
sold through an open ``price discovery'' process, providing producers 
with very little information about what other cattle producers are 
receiving for their cattle and what buyers are paying for cattle. The 
market information provisions of this bill will allow producers to deal 
with their buyers on a more level playing field.
  In addition, this bill provides additional flexibility and authority 
for the Secretary of Agriculture to aggressively target noncompetitive 
activities in livestock markets under the Packers and Stockyards Act. 
Another extremely important provision in this bill is the mandated 
review of Federal agriculture credit policies to determine whether or 
not our lending practices are facilitating the growth of larger 
livestock and dairy operations. Many dairy farmers have complained to 
me that they have a difficult time getting credit for both operating 
purposes and for capital investments because lenders insist that 
farmers greatly expanding their herd size in order to be credit worthy. 
Many small farmers simply cannot get credit for minor herd expansion. 
That is neither fair to our family sized farmers nor is it sound 
policy. Such practices create self-fulfilling prophecies--forcing small 
farms to grow significantly larger or to exit the industry. I am 
looking forward to reviewing the results of the study required by this 
legislation.

  Finally, Mr. President, I want to thank Senator Daschle for his 
cooperation in including a provision in this bill which I proposed to 
address concentration concerns and market information inadequacies in 
dairy markets. The cheese industry operates in a market that suffers 
from a lack of pricing information that is even more extreme than in 
the cattle industry. While less than 2 percent of the cattle in the 
United States are sold on markets with open and competitive bidding, 
less than one-half of one percent of the cheese in the United States is 
sold on an open cash market--the National Cheese Exchange in Green Bay, 
WI.
  Even so, the price opinion of the National Cheese Exchange directly 
and decisively affects the price that farmers throughout the nation 
receive for their milk. Milk prices are tied directly to that price 
through the Basic Formula Price, calculated by USDA. The BFP determines 
the class III price for milk under the Federal milk marketing order 
system. Even if that linkage did not exist, however, milk prices would 
still be dramatically affected by the exchange opinion because it is 
used as the benchmark in virtually all forward contracts for bulk 
cheese. Ninety to ninety-five percent of bulk cheese in the United 
States is sold through forward contracts. In other words, virtually all 
cheese sold in the country is priced based on the opinion price at the 
cheese exchange. Additionally, concentration in cheese processing is 
high and increasing. The top four manufacturers and marketers of 
processed cheese market 69 percent of the tonnage of processed cheese 
nationally. Most if not all of those manufacturers are traders on the 
exchange.
  The National Cheese exchange has been the subject of great 
controversy among dairy farmers because the small amount of trading on 
the exchange has such a substantial impact on farmers. A recently 
released report by the University of Wisconsin-Madison and the 
Wisconsin Department of Agriculture, Trade and Consumer Protection 
concluded that characteristics of the Green Bay cheese exchange make it 
vulnerable to price manipulation by the most powerful member-firms of 
the exchange. While such behavior may or may not violate antitrust 
laws, it is certainly not good policy to rely solely on this type of 
thin cash market to determine milk prices or cheese prices for the 
Nation.
  Like cattle producers, dairy farmers suspect that the price they 
receive for their product may be controlled by a few large processors 
that trade on the National Cheese Exchange. A one cent change in the 
opinion price at the exchange translates into a 10 cent change in the 
price of milk to farmers. When prices on the exchange drop suddenly and 
precipitously, dairy farmers nationally lose millions of dollars in 
producer receipts and begin to wonder whether the price decline was 
truly reflective of market conditions. Others suspect that in times of 
rising milk prices, such as today, traders on the exchange are able to 
prevent prices from rising as high as they might given the market 
conditions.

  Unfortunately, no alternative to the National Cheese Exchange exist 
for cheese price discovery. It is the only cash market in the country 
for bulk cheese. While there is a futures market for cheese and other 
dairy products, trading of futures contracts have been weak making the 
futures prices unreliable benchmarks. Furthermore, there is little or 
no market information on prices for spot transactions of cheese 
collected by the Department of Agriculture. What little information 
that is collected is not considered extensive enough to be reliable.
  Section 4 of the Cattle Industry Improvement Act includes a provision 
requiring the Secretary of Agriculture to collect and report weekly 
statistically reliable prices and terms of trade for spot transactions 
of bulk cheese from all cheese manufacturing areas of the country. The 
intent of this provision is straight forward--to increase the amount of 
market information on cheese prices that is available to producers and 
processors.
  This provision is not the end solution to the policy challenges 
imposed by the National Cheese Exchange. Those solutions will be 
considered by the Department of Agriculture through their Federal milk 
marketing order reform process and by the regulators of the exchange. 
This provision is a first step towards solving a complicated and multi-
faceted problem. This market data collection effort may only collect 5-
10 percent of bulk cheese transactions nationally. However, even if the 
data captures only 5 percent of the transactions, it will still 
represent a 10-fold increase in the amount of market information 
available to producers and processors today.
  As the USDA advisory report concluded ``It is of the utmost 
importance that information about market conditions and trends be 
widely available to sellers and buyers at all levels of the

[[Page S7769]]

industry. . . It is widely agreed that equal and accurate market 
information improves the price discovery and determination process.'' 
While that report was referring to cattle, not cheese, the principle 
that more market information is always better holds true for cheese as 
well.
  USDA collection of prices for spot transaction of bulk cheese was 
recommended by the joint UW-Madison/Wisconsin Department of Agriculture 
report as a possible solution to the thin market problem at the Cheese 
Exchange. During a recent House Livestock, Dairy and Poultry 
Subcommittee hearing on the National Cheese Exchange, the Department of 
Agriculture also suggested an approach similar to that described in 
Section 4 of this legislation as a way to improve cheese market 
information. Other witnesses, such as the National Farmers Union and 
Kraft General Foods, also suggested increased reporting of spot 
transactions of cheese as a method of improving price discovery in 
cheese markets.
  Mr. President, this is a very modest data collection effort. This is 
a first step towards improving market information in the dairy industry 
and lessening the influence of the exchange. It will not and is not 
intended to replace the National Cheese Exchange. The data collection 
required in the bill will merely supplement existing market information 
and hopefully, improve price discovery.
  There is much more work to be done at both the State and Federal 
level to address the challenges posed by the National Cheese Exchange. 
But I think this is a logical first step forward.
  Once again, I thank the minority leader for his recognition of the 
importance of the cheese price reporting provision in addressing 
concentration and market information concerns in the dairy industry and 
for his cooperation in including this provision in his important 
legislation.

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