[Congressional Record Volume 166, Number 138 (Tuesday, August 4, 2020)]
[Senate]
[Pages S4704-S4706]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          CATTLE SPOT PRICING

  Mr. GRASSLEY. On another matter, Madam President, Iowa is home to 
86,000 family farms and leads the Nation in the production of 
commodities, such as corn, where we are No. 1; soybeans, No. 2; pork, 
and eggs, No. 1. Iowa also ranks in the top 10 in cattle production, as 
many family farms raise livestock alongside their corn and soybeans.
  The 2017 USDA Census of Agriculture showed over 23,000 farms in Iowa 
that raise cattle or calves, with annual sales of $4.7 billion. Caring 
for livestock takes a spirit of commitment, selflessness, and, of 
course, hard work. These farmers get up very, very early in the 
morning, work on their farms all day, and are active members of their 
communities. These families and their values form the foundation of 
what makes up our rural communities across Iowa.
  However, over the years, the consolidation of the beef industry has 
threatened the very livelihood of these families and rural communities 
where they reside. From the 2012 USDA Agriculture Census to the 2017 
Agriculture Census, Iowa lost nearly 1,500 cattle producers. This is 
not a new issue to the beef industry. The concern of fair and 
transparent cattle pricing has seen increased attention due to 
disruptions in our food supply chain. It has been very obvious during 
this period of the virus pandemic.
  For background, the U.S. Department of Agriculture mandates price 
reporting for live cattle and tracks the spread between fed cattle 
prices--what the producer gets paid--and the boxed beef values, which 
is what the packing company gets paid.
  For the years 2016 to 2018, this spread averaged about $21 per 
hundredweight. Soon I will be comparing that to a very, very big 
increase from that $21. However, during April and May, there were major 
beef supply disruptions, as large numbers of plant workers contracted 
COVID-19. Because there are only four companies that slaughter 80-
percent of the cattle, companies have the advantage of purchasing 
cattle from thousands of producers, acting as a chokepoint for the 
entire industry. These packers dominate the marketplace and limit 
opportunities for price negotiation.
  During this time, in these recent months, packer profit margins 
topped out at a spread of $279 per hundredweight compared to the $21 
that I previously mentioned. This was the largest spread between the 
price of fed cattle and the price of boxed beef since the inception of 
the mandatory price reporting law of 2001. So while all the packers 
were making record profits, the independent producer had nowhere even 
to market his livestock.
  It is important to note that the impact of consolidation doesn't just 
hurt producers. It hurts consumers. We have seen the price of ground 
beef and steaks--a staple in many American diets--double or triple 
recently. Grocery stores also limited the amount of meat that families 
could buy. All this has made it very clear that the cattle market is 
broken and real action is needed to fix it.
  Thankfully, the Trump administration stepped up to this cause. It has 
responded with two decisive actions to address the country's cattle 
market. First, the U.S. Department of Agriculture and the Department of 
Justice are both investigating the practices of these packing 
companies, particularly the four that dominate the market. While this 
will take time, President Trump has personally asked for these 
investigations and said he did it because he wants to protect the 
family farmer.
  Second, on July 22, the USDA issued a significant report that lays 
out a roadmap to fix the cattle marketplace. The U.S. Department of 
Agriculture mentions 12 different ways to create additional price 
discovery, increase marketplace competition, and have a more 
transparent relationship between the price of live cattle and the beef 
products that the consumer buys.
  This investigation and report are very much a breath of fresh air, 
particularly for this Senator who has been bringing this issue to the 
attention of Agriculture Department and Justice Departments under both 
Republican and Democratic administrations for a long period of time. We 
have had multiple administrations from Democrats to Republicans 
ignoring independent cattle producers and the broken cattle market. So 
I am very grateful that President Trump and Secretary Perdue

[[Page S4705]]

take this issue seriously, when so many others before them have ignored 
this problem.
  In the report issued by Secretary Perdue, one of the considerations 
for Congress is to create a mechanism to mandate negotiated cash 
trades. I am getting to one of the very key reasons why I am on the 
floor today, because I see some of the actions in this report from 
Secretary Perdue as almost an endorsement of the Grassley-Tester 50/14 
concept.
  The Grassley-Tester bill will require half of packers' weekly volume 
of beef slaughter to come as a result of purchases made on the cash 
market. The fact is that without a mandated amount of cash trade, 
independent producers become residual suppliers and then lack the 
leverage to fairly negotiate with packing companies.
  Besides the Grassley-Tester bill, Congress has the responsibility to 
fully vet the 11 other considerations that the Trump administration 
lays out in its report. The Agriculture, Nutrition, and Forestry 
Committee should hold hearings on this road map. We should bring a 
diverse set of stakeholders, government officials, business executives, 
and subject matter experts to explain the challenges that cattle 
producers are facing. The hearings would allow the committee to 
properly vet proposals to improve mandatory price reporting, which 
needs to be reauthorized by September 30 of this year.
  The beef industry employs hundreds of thousands of hard-working men 
and women who work each day to help feed our country and, because we 
export so much, you can say feed the world.
  As the U.S. Department of Agriculture Census shows, we are losing 
producers due to consolidation. We need to show these men and women 
that Washington, DC, is listening. We need to show our rural 
communities that we want them to survive. We must develop solutions to 
the problems that they are facing.
  I will continue to be the voice for independent producers. Today, I 
am asking my colleagues and Congress to be that voice with me. Support 
my bill with Senator Tester and bring competition and price 
transparency back to the cattle markets. While I am at it, I want to 
reemphasize something I previously said. The Ag committee should hold a 
hearing on these issues and do it very soon.
  I am happy to see Senator Tester on the floor, who I think is here to 
speak on the very same issue.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana
  Mr. TESTER. Madam President, I want to thank Senator Grassley for his 
leadership on this issue. He has known for a long time, as I have 
known, that something is amiss in the competition in the cattle 
business.
  I rise today to speak about that. It isn't talked about enough in 
this body or in the United States in general, but the fact is that 
rural America is being cast aside, and it is falling prey to corporate 
interests whose only concern is about making a quick buck. The truth of 
the matter is that the American cattle ranchers are suffering.
  It is an open secret that meat packers have been taking advantage of 
small-scale ranchers, family ranchers, and the small and medium-sized 
feeders for years. While some of us have been raising the issue for 
some time, it is now becoming apparent and it has come into the 
national spotlight.
  Almost 1 year ago exactly, a fire at a beef packing plant in Holcomb, 
KS, halted 5 percent of our country's beef distribution capacity. It 
caused the price of meat in grocery stores to skyrocket and caused a 
sharp decline in cattle prices at the farm gate. It was Montana 
producers and producers across this country who took the hit while the 
meatpacking industry reported record profits.
  Following that fire, Senator Grassley and I demanded that the 
Department of Agriculture conduct an investigation looking into price 
manipulation by the largest packers. Although this investigation is 
ongoing, their findings thus far have been disturbing. Their findings 
clearly show that markets are being manipulated and the packing 
industry is walking all over America's ranchers and consumers.
  Just when we thought that conditions for producers couldn't get much 
worse and as we saw cattle prices drop lower than they have been in 
decades, ranchers were hit with yet another disaster. That disaster was 
the coronavirus pandemic.
  This virus forced many of the largest packing plants to shut their 
doors, depleting the Nation's beef capacity by nearly 40 percent. Yet 
again, it was our small-scale cow calf operators, along with everyday 
consumers, who have seen skyrocketing beef prices throughout the last 
year, and we have seen lower and lower prices for the cow calf 
operators and the small to medium-sized feeders. They are the ones 
taking the hit. In April and May of this year, we saw the largest ever 
price discrepancy between the price of boxed beef and the price 
received by the cattle owner, growing from $66 per hundredweight on the 
boxed beef to $279.
  I need to repeat that, because it is nothing short of ridiculous. 
From early April to the middle of May, the price for what American 
cattle ranchers were selling for the beef shipped to stores across this 
country increased by 323 percent.
  Mission control, we have a problem here.
  Our ranchers and the American public are being taken advantage of in 
the midst of a global health crisis that has also driven us into an 
economic crisis. To top it off, cattle transactions on the cash market 
took a steep decline following the Holcomb Fire, allowing for even more 
price manipulation by the packers while the number of cows slaughtered 
increased by 5,000 head.
  Now, it is obvious to anybody who looks at this situation that the 
packers are using these crises to force markets to work for them only. 
One of the ways the packers get away with this is by limiting 
transactions that take place on the spot for cash markets. Instead, 
they set prices with formulas that allow them to use unfair market 
power to put corporate profits over families, ranchers, feeders, and 
over consumers.
  That is why Senator Grassley and I wrote a bill requiring large-scale 
packers to increase the proportion of spot transactions to 50 percent 
of the total cattle purchases. This would hold corporate packers 
accountable; make pricing fairer for our producers--cow-calf operators, 
small- and medium-size feeders; and bring more money into rural 
economies and into the pockets of these families who are feeding this 
country and the world.
  I fear these words are falling on deaf ears. The fact is, we need 
more support from this body. We need our colleagues on both sides of 
the aisle to sign on to this critical legislation so that we can ensure 
that folks who have been raising our food for generations are able to 
meet the bottom lines and that families in both rural and urban areas 
who rely on affordable beef can keep putting food on the table. We 
needed you to join us yesterday because rural America needs help today. 
Folks across my State need help now.
  I know many of my colleagues--especially those of you who are on the 
campaign trail--are always looking for ways to show support for rural 
America. I am calling on you to join Senator Grassley and me in 
standing up against this profiteering.
  Another way you can help American ranchers today is by supporting a 
bill that my colleague Senator Rounds and I wrote, the New Markets for 
State-Inspected Meat and Poultry Act. It is a critical bill that will 
cut needless redtape preventing ranchers from properly utilizing State-
inspected meat facilities to be able to sell their products across 
State lines.
  We have an opportunity to work on these commonsense bills together--
something that doesn't happen very often in this Senate. We have a 
critical chance to support folks who are the very reason we can enjoy a 
juicy burger or a tender steak.
  Let me close with the words of a person who is in the cattle industry 
on the ground in Montana who told me about 60 days ago that we are at a 
crisis point in production agriculture when it comes to beef. If 
something is not done on this issue of packer control of prices in the 
marketplace, if something isn't done to ensure that capitalism isn't 
working here and that we need to put some sideboards on this to funnel 
some of the money down to the growers and the small- and medium-sized 
feeders, then our food chain for red meat will change. I know for the 
vegetarians in the crowd that might sound like a good deal, but it is 
not because the fact is,

[[Page S4706]]

when the food chain in rural America goes bust--because that is what we 
are on the verge of--this whole country will be diminished by that.
  So it is important that my colleagues here in the Senate work with 
Senator Grassley and me to fix this problem. It will not be fixed by 
not doing the things we need to do in this body. Senator Grassley and I 
have a bill, and Senators Rounds and King have a bill, and we need to 
get those two bills passed and move on to ensure fairness in the 
marketplace.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana

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