[House Report 117-203]
[From the U.S. Government Publishing Office]
117th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 117-203
======================================================================
CATTLE CONTRACT LIBRARY ACT OF 2021
_______
December 7, 2021.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. David Scott of Georgia, from the Committee on Agriculture,
submitted the following
R E P O R T
[To accompany H.R. 5609]
The Committee on Agriculture, to whom was referred the bill
(H.R. 5609) to amend the Agricultural Marketing Act of 1946, to
establish a cattle contract library, and for other purposes,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
Brief Explanation
This legislation directs USDA's Agricultural Marketing
Service (AMS) to establish a publicly available library of
cattle contracts. The legislation also establishes a grant
program, to be administered in coordination with USDA's
National Institute of Food and Agriculture, for producer
education on how to best use cattle market information.
Purpose and Need for Legislation
Given the long-term trend towards the sale of cattle
through specialized alternative marketing agreements, rather
than through traditional negotiated trades, there has been
growing concern from parts of the cattle industry--specifically
cattle producers--that there is not enough transparency in
cattle markets. In creating a contract library, the goal is to
increase transparency and improve price discovery by giving
producers access to more information regarding these marketing
agreements. Additional transparency will be achieved by
requiring USDA to maintain publicly available data regarding
the various types of contracts offered by packers to producers
for the sale of fed cattle. The library will include summarized
information for each type of contract including price terms,
premiums and discounts, and associated transportation costs.
USDA already maintains a contract library for the swine
industry. The cattle contract library is modeled off the swine
contract library but with some alterations to improve utility.
H.R. 5609, Cattle Contract Library Act of 2021
SECTION-BY-SECTION
Section 1. Short title
Section 1 provides the short title of the bill as the
``Cattle Contract Library Act of 2021.''
Section 2. Cattle Contract Library
This section amends chapter 2 of subtitle B of the
Agricultural Marketing Act of 1946 by adding a new section at
the end. Subsection (a) of the new section requires the
Secretary to establish and maintain a library or catalog of
each type of contract offered by packers to producers for the
purchase of fed cattle, including any schedules of premiums or
discounts associated with the contract. Subsection (b) requires
the Secretary to obtain such information by requiring each
packer to submit a form of information that includes: (1) the
type of contract; (2) the duration of the contract; (3) all
contract summary information; (4) the provisions in the
contract that may affect the price of cattle covered by the
contract including base price, schedules of premiums or
discounts, and transportation arrangements; (5) the total
number of cattle covered by the contract solely committed to
the packer each week within the 6-month and 12-month periods
following the date of the contract; (6) for contracts that do
not specify a number of cattle committed to the packer, an
indication that the contract is an open commitment and any
weekly, monthly, annual, or other limitations on the number of
cattle that may be delivered to the packer under the contract;
and (7) a description of the provisions in the contract that
provided for expansion in the committed numbers of fed cattle
to be delivered under the contract for the 6-month and 12-month
periods following the date of the contract.
Subsection (c) requires the Secretary to make a summary of
the information collected for each type of contract publicly
available in a user-friendly format. Within 30 days after the
establishment of the library or catalog, the Secretary is
required to make weekly or monthly reports available for the
public that include: (1) the total number of fed cattle
committed under contracts for delivery to packers within the 6-
month and 12-month periods following the date of the report;
(2) the number of contracts with an open commitment along with
weekly, monthly, annual, or other limitations on the number of
cattle that may be delivered under such contracts; and (3) the
total maximum number of fed cattle that may be delivered within
the 6-month and 12-month periods following the date of the
report. Subsection (d) requires that contracts in the library
or catalog that are no longer offered or in use be labeled as
inactive.
Subsection (e) requires the publication of information be
subject to confidentiality protections provided under section
251 of the Agricultural Marketing Act of 1946 which protect
proprietary business information and the identity of all
parties to a contract. Subsection (f) makes it unlawful and a
violation of the Act for any packer to willfully fail or refuse
to provide the Secretary accurate information required under
this section or to comply with any other requirement of this
section. Subsection (g) requires the Secretary, through the
Administrator of the Agricultural Marketing Service and in
coordination with the Director of the National Institute of
Food and Agriculture, to make competitive grants to eligible
entities, as defined as an entity listed in subsection (b)(7)
of the Competitive, Special, and Facilities Research Grant, for
producer outreach and education efforts on best uses of cattle
market information. Subsection (h) authorizes to be
appropriated such sums as are necessary to carry out this
section.
Section 3. Definitions
Section 3 amends section 221 of the Agricultural Marketing
Act to define ``formula marketing arrangement'' as the advance
commitment of cattle for slaughter: (1) by any means other than
through a negotiated purchase, negotiated grid purchase, or a
forward contract; and (2) using a method for calculating price
under which the price is determined at a future date. It also
defines ``negotiated grid purchase'' as a purchase of fed
cattle by a packer from a producer under which: (1) the base
price for the cattle is determined by seller-buyer interaction
on a day; (2) the cattle are scheduled for delivery to the
packer not more than 14 days after the date on which the
agreement for purchase is made; and (3) the base price is
subject to adjustment by premiums and discounts after delivery.
It also defines ``type of contract'' as the classification of
contracts for the purchase of fed cattle based on the mechanism
used to determine the base price for the fed cattle committed
to a packer under contract, including formula purchases,
negotiated grid purchases, forward contracts, and other
purchase agreements, as determined by the Secretary.
Committee Consideration
I. HEARING
The Committee on Agriculture has held two hearings in the
117th Congress to examine issues facing the cattle industry and
hear various perspectives on how to address industry and market
challenges.
On July 28, 2021, the Subcommittee on Livestock and Foreign
Agriculture held a hearing titled, State of the Beef Supply
Chain: Shocks, Recovery, and Rebuilding where some of the
following witness testified on matters addressed in H.R. 5609:
Dr. Jayson Lusk, Distinguished Professor and
Head of the Department of Agricultural Economics,
Purdue University, West Lafayette, IN
Dr. Jennifer van de Ligt, Director, Food
Protection and Defense Institute, University of
Minnesota, St. Paul, MN
Dr. Keri Jacobs, Associate Professor of Ag &
Applied Economics, Division of Applied Social Sciences,
College of Agriculture, Food and Natural Resources,
University of Missouri, Columbia, MO
Dr. Dustin Aherin, Vice President and Rabo
Research Animal Protein Analyst, Rabo AgriFinance,
Chesterfield, MO
In response to questions from Members of the Committee,
witnesses discussed the potential for disclosing more
information about alternative marketing arrangements to
increase transparency in the cattle markets.
On October 7, 2021, the full Committee held a hearing
titled, A Hearing To Review the State of the Livestock Industry
where the following witnesses testified on some matters that
were subsequently addressed in H.R. 5609:
Panel 1:
The Honorable Chuck Grassley (R), United
States Senator, Iowa Panel 2:
The Honorable Thomas J. ``Tom'' Vilsack,
Secretary, U.S. Department of Agriculture
Panel 3:
Mr. Todd Wilkinson, Vice President, National
Cattlemen's Beef Association, DeSmet, SD
Mr. Francois Leger, Owner, FPL Food, on
behalf of the North American Meat Institute, Augusta,
GA
Mr. Scott Blubaugh, President, Oklahoma
Farmers Union, on behalf of National Farmers Union,
Tonkawa, OK
Mr. Scott Hays, Vice President, National
Pork Producers Council, Monroe City, MO
Mr. Brad Boner, Vice President, American
Sheep Industry Association, Glenrock, WY
This hearing examined various aspects of the livestock
industry, but related to a cattle contract library, Members of
the Committee heard testimony and answers to questions
regarding the potential for a cattle contract library to
enhance market transparency and improve the negotiating
position of producers when they market their cattle.
II. FULL COMMITTEE
On October 21, 2021, the Committee on Agriculture met
pursuant to notice, with a quorum present, to consider H.R.
5609, the Cattle Contract Library Act of 2021. Chairman Scott
made an opening statement as did Ranking Member Thompson.
Chairman Scott requested other Members submit their opening
statements for the record. Without objection, H.R. 5609 was
placed before the Committee for consideration, a first reading
of the bill was waived, and it was opened for amendment at any
point.
Chairman Scott recognized Mr. Johnson, the bill's sponsor
to speak on the bill. Discussion occurred and without
objection, the Committee considered the bill. There being no
amendments, a voice vote was conducted, and the bill was
reported favorably from Committee.
At the conclusion of the meeting, Chairman Scott advised
Members that pursuant to the Rules of the House of
Representatives, Members had until October 28, 2021 to file any
supplemental, additional, dissenting, or minority views with
the Committee. Without objection, staff was given permission to
make any necessary technical, clarifying, or conforming changes
to reflect the intent of the Committee. Chairman Scott thanked
all the Members and adjourned the meeting.
Committee Votes
In compliance with clause 3(b) of rule XIII of the House of
Representatives, H.R. 5609 was reported by voice vote with a
majority quorum present. There was no request for a recorded
vote.
Committee Oversight Finding
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Cost of Legislation and the Congressional Budget Act
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has requested
but not received a cost estimate for this bill from the
Director of the Congressional Budget Office. The Committee
adopts as its own cost estimate the forthcoming cost estimate
of the Director of the Congressional Budget Office, should such
cost estimate be made available before House passage of the
bill.
The Committee has requested but not received from the
Director of the Congressional Budget Office a statement as to
whether this bill contains any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures. Congressional Budget Office staff
has informed the Committee on a preliminary, informal,
nonbinding basis that there does not appear to be any direct
spending associated with the bill.
Constitutional Authority Statement
The Committee finds the Constitutional authority for this
legislation in Article I, section 8, clause 3, that grants
Congress the authority to regulate foreign and interstate
commerce.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the House of
Representatives, the performance goals and objectives of this
measure are to establish a cattle contract library and provide
a summary of the information in the contracts in a publicly
available user-friendly format.
Advisory Committee Statement
No advisory committee within the meaning of section 5(b) of
the Federal Advisory Committee Act was created by this
legislation.
Applicability to the Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (Public Law
104-1).
Federal Mandates Statement
An estimate of Federal mandates prepared by the Director of
the Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act was not made available to the
Committee in time for the filing of this report. The Chair of
the Committee shall cause such estimate to be printed in the
Congressional Record upon its receipt by the Committee.
Earmark Statement
This measure does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9(e), 9(f), or 9(g) of rule XXI of the House of
Representatives.
Duplication of Federal Programs
This measure does not establish or reauthorize a program of
the Federal Government known to be duplicative of another
Federal program, a program that was included in any report from
Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program in the most recent Catalog of Federal Domestic
Assistance.
Disclosure of Directed Rule Makings
The Committee does not believe that the legislation directs
an Executive Branch official to conduct any specific rule
making proceedings within the meaning of 5 U.S.C. 551.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
AGRICULTURAL MARKETING ACT OF 1946
TITLE II
* * * * * * *
Subtitle B--Livestock Mandatory Reporting
* * * * * * *
CHAPTER 2--CATTLE REPORTING
SEC. 221. DEFINITIONS.
In this chapter:
(1) Cattle committed.--The term ``cattle committed''
means cattle that are scheduled to be delivered to a
packer within the 7-day period beginning on the date of
an agreement to sell the cattle.
(2) Cattle type.--The term ``cattle type'' means the
following types of cattle purchased for slaughter:
(A) Fed steers.
(B) Fed heifers.
(C) Fed Holsteins and other fed dairy steers
and heifers.
(D) Cows.
(E) Bulls.
[(3) Formula marketing arrangement.--The term
``formula marketing arrangement'' means the advance
commitment of cattle for slaughter by any means other
than through a negotiated purchase or a forward
contract, using a method for calculating price in which
the price is determined at a future date.]
(3) Formula marketing arrangement.--The term
``formula marketing arrangement'' means the advance
commitment of cattle for slaughter--
(A) by any means other than through a
negotiated purchase, negotiated grid purchase,
or a forward contract; and
(B) using a method for calculating price
under which the price is determined at a future
date.
(4) Forward contract.--The term ``forward contract''
means--
(A) an agreement for the purchase of cattle,
executed in advance of slaughter, under which
the base price is established by reference to--
(i) prices quoted on the Chicago
Mercantile Exchange; or
(ii) other comparable publicly
available prices; or
(B) such other forward contract as the
Secretary determines to be applicable.
(5) Negotiated grid purchase.--The term ``negotiated
grid purchase'' means a purchase of fed cattle by a
packer from a producer under which--
(A) the base price for the cattle is
determined by seller-buyer interaction on a
day;
(B) the cattle are scheduled for delivery to
the packer not more than 14 days after the date
on which the agreement for purchase is made;
and
(C) the base price is subject to adjustment
by premiums and discounts after delivery.
[(5)] (6) Packer.--The term ``packer'' means any
person engaged in the business of buying cattle in
commerce for purposes of slaughter, of manufacturing or
preparing meats or meat food products from cattle for
sale or shipment in commerce, or of marketing meats or
meat food products from cattle in an unmanufactured
form acting as a wholesale broker, dealer, or
distributor in commerce, except that--
(A) the term includes only a cattle
processing plant that is federally inspected;
(B) for any calendar year, the term includes
only a cattle processing plant that slaughtered
an average of at least 125,000 head of cattle
per year during the immediately preceding 5
calendar years; and
(C) in the case of a cattle processing plant
that did not slaughter cattle during the
immediately preceding 5 calendar years, the
Secretary shall consider the plant capacity of
the processing plant in determining whether the
processing plant should be considered a packer
under this chapter.
[(6)] (7) Packer-owned cattle.--The term ``packer-
owned cattle'' means cattle that a packer owns for at
least 14 days immediately before slaughter.
[(7)] (8) Terms of trade.--The term ``terms of
trade'' includes, with respect to the purchase of
cattle for slaughter--
(A) whether a packer provided any financing
agreement or arrangement with regard to the
cattle;
(B) whether the delivery terms specified the
location of the producer or the location of the
packer's plant;
(C) whether the producer is able to
unilaterally specify the date and time during
the business day of the packer that the cattle
are to be delivered for slaughter; and
(D) the percentage of cattle purchased by a
packer as a negotiated purchase that are
delivered to the plant for slaughter more than
7 days, but fewer than 14 days, after the
earlier of--
(i) the date on which the cattle were
committed to the packer; or
(ii) the date on which the cattle
were purchased by the packer.
(9) Type of contract.--The term ``type of contract''
means the classification of contracts for the purchase
of fed cattle based on the mechanism used to determine
the base price for the fed cattle committed to a packer
under the contract, including formula purchases,
negotiated grid purchases, forward contracts, and other
purchase agreements, as determined by the Secretary.
[(8)] (10) Type of purchase.--The term ``type of
purchase'', with respect to cattle, means--
(A) a negotiated purchase;
(B) a formula market arrangement; and
(C) a forward contract.
* * * * * * *
SEC. 224. CATTLE CONTRACT LIBRARY.
(a) In General.--Not later than 90 days after the enactment
of this Act, the Secretary shall establish and maintain a
library or catalog of each type of contract offered by packers
to producers for the purchase of all or part of the producers'
production of fed cattle (including cattle that are purchased
or committed for delivery), including any schedules of premiums
or discounts associated with the contract.
(b) Information Collection.--
(1) In general.--To maintain the library or catalog
established under subsection (a), the Secretary shall
obtain information from each packer on each type of
contract of the packer by requiring a filing or other
form of information submission from each packer.
(2) Contracted cattle information.--Information
submitted to the Secretary by a packer under paragraph
(1) shall include, with respect to each contract of a
packer--
(A) the type of contract;
(B) the duration of the contract;
(C) all contract summary information;
(D) provisions in the contract that may
affect the price of cattle covered by the
contract including--
(i) base price;
(ii) schedules of premiums or
discounts; and
(iii) transportation arrangements;
(E) the total number of cattle covered by the
contract solely committed to the packer each
week within the 6-month and 12-month periods
following the date of the contract, by
reporting region;
(F) in the case of a contract in which a
specific number of cattle are not solely
committed to the packer--
(i) an indication that the contract
is an open commitment; and
(ii) any weekly, monthly, annual, or
other limitations on the number of
cattle that may be delivered to the
packer under the contract; and
(G) a description of the provisions in the
contract that provide for expansion in the
committed numbers of fed cattle to be delivered
under the contract for the 6-month and 12-month
periods following the date of the contract.
(c) Availability of Information.--
(1) Library contents.--The Secretary shall make
publicly available in a user-friendly format a summary
of the information collected for each type of contract
under subsection (b), including notice (on a real-time
basis, if practicable) of the types of contracts that
are being offered by packers to, and are open to
acceptance by, producers for the purchase of fed
cattle.
(2) Reports required.--Beginning not later than 30
days after the date on which the library or catalog is
established under subsection (a), the Secretary shall
make publicly available weekly or monthly reports for
producers and other interested persons, which shall
include--
(A) based on the information collected under
subsection (b)(2)(E), the total number of fed
cattle committed under contracts for delivery
to packers within the 6-month and 12-month
periods following the date of the report,
organized by reporting region and type of
contract;
(B) based on the information collected under
subsection (b)(2)(F), the number of contracts
with an open commitment along with any weekly,
monthly, annual or other limitations on the
number of cattle that may be delivered under
such contracts; and
(C) based on the information collected under
subsection (b)(2)(G), the total maximum number
of fed cattle that may be delivered within the
6-month and 12-month periods following the date
of the report, organized by reporting region
and type of contract.
(d) Maintenance of Library or Catalog.--Information in the
library or catalog established under subsection (a) about types
of contracts that are no longer offered or in use shall be
labeled as inactive in the library or catalog.
(e) Confidentiality.--The publication of information under
this section shall be subject to the confidentiality
protections provided under section 251 of the Agricultural
Marketing Act of 1946 (7 U.S.C. 1636).
(f) Violations.--It shall be unlawful and a violation of this
Act for any packer to willfully fail or refuse--
(1) to provide to the Secretary accurate information
required under this section; or
(2) to comply with any other requirement of this
section.
(g) Producer Education Grants.--
(1) In general.--The Secretary, acting through the
Administrator of the Agricultural Marketing Service and
in coordination with the Director of the National
Institute of Food and Agriculture, shall make
competitive grants to eligible entities for producer
outreach and education efforts on best uses of cattle
market information, including information made
available through the livestock mandatory reporting
program and the catalog or library established under
subsection (a).
(2) Selection criteria.--In selecting grant
recipients under this section, the Secretary shall give
priority to eligible entities that--
(A) demonstrate an ability to work directly
with cattle producers;
(B) can quickly and accurately publish and
disseminate information and analysis of
relevant Department of Agriculture data in a
manner that benefits producer decision making;
and
(C) collaborate with trade associations or
other organizations with a demonstrated ability
to provide educational programs on markets and
risk management.
(3) Eligible entity.--The term ``eligible entity''
means an entity listed in subsection (b)(7) of the
Competitive, Special, and Facilities Research Grant Act
(7 U.S.C. 3157(b)(7)).
(h) Authorization of Appropriations.--There are authorized to
be appropriated to the Secretary such sums as are necessary to
carry out this section.
* * * * * * *
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