Ag News

House Ag Committee holds hearing on beef/livestock markets

by Georgia Farm Bureau

Posted on Oct 14, 2021 at 0:00 AM

During its “Hearing to Review the State of the Livestock Industry” on Oct. 7, the House Agriculture Committee heard concerns about conditions affecting the meat supply chain. The hearing included testimony from Agriculture Secretary Tom Vilsack, National Cattlemen’s Beef Association Vice President Todd Wilkinson and processor Francois Leger representing the North American Meat Institute.

“Two of the themes that were the focus of today’s hearing were the need to improve price discovery and how essential it is for us to look more closely at how we can incentivize competition and capacity in our processing sector,” Ag Committee Chairman David Scott (D-Ga.) said.

Concerns over processing capacity and maintaining the meat supply chain arose after interruptions during the early months of the COVID-19 pandemic. The hearing witnesses agreed that the need for increases in processing capacity are apparent, particularly in the beef sector.

“Our inventories are down in beef and pork and poultry for a variety of reasons, whether it’s drought or disease or disruption of the supply chain. At the same time, we are seeing incredibly high demand domestically and exports at a high level,” Vilsack said.

According to the NCBA, U.S. beef producers could supply processors with 1.5 million head of cattle more than the current processing capacity, but expanding capacity carries steep start-up costs that inhibit the creation of new, small processors. To help alleviate this, the USDA has committed $500 million in federal funding to support expanded processing capacity. Vilsack said the USDA is working to establish how the funds will be used and expects rollout of the program as early as the first quarter of 2022.

According to the NCBA, information on market prices has become increasingly difficult to obtain because of expanded use of alternative marketing arrangements (AMAs) - sales that occur through means other than direct cash markets.

Georgia Farm Bureau supports policies that empower our producers to negotiate the best possible price for their animals.

Sen. Chuck Grassley (R-Iowa) submitted a bill that would require processors to make 50% of their livestock purchases through direct cash markets and that the animals be delivered within 14 days. Both the NCBA and NAMI oppose this sort of federal government mandate, which they say would ultimately harm producers. A study by the Agricultural Food & Policy Center (AFPC) at Texas A&M indicated Grassley’s plan, commonly referred to as the 50/14 bill, could result in lower prices paid to producers.

The NCBA has pushed for the creation of a cattle contract library, which would provide information on the formula contracts in use between producers and processors, which the organization says may help cattle producers capture more value for their livestock and better plan their business strategy.

To access testimony from the hearing, click here.

For the Texas A&M study findings, click here.

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