Statements on Introduced Bills and Joint Resolutions
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - March 06, 2007)
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By Mr. GRASSLEY (for himself and Mr. FEINGOLD):
S. 786. A bill to amend the Agricultural Marketing Act of 1946 to foster efficient markets and increase competition and transparency among packers that purchased livestock from producers; to the Committee on Agriculture, Nutrition, and Forestry.
Mr. GRASSLEY. Mr. President, Senator FEINGOLD and I have in the past sponsored the Transparency for Independent Livestock Producers Act, or what we have generally referred to as the ``Transparency Act.' Today we are once again working together in a bipartisan fashion to reintroduce this important legislation.
My sponsorship of the packer ban this Congress is based on the belief that independent producers should have the opportunity to receive a fair price for their livestock. Over the years we have seen widespread consolidation and concentration in the packing industry. Add on the trend toward vertical integration among packers and there is no question why independent producers are losing the opportunity to market their own livestock during profitable cycles in the live meat markets.
The past CEO of a major packer in 1994 explained that the reason packers own livestock is that when the price is high the packers use their own livestock for the lines and when the price is low the packers buy livestock. This means that independent producers are most likely being limited from participating in the most profitable ranges of the live market. This is not good for the survival of the independent producer.
This bipartisan legislation would guarantee that independent producers have a share in the marketplace while assisting the Mandatory Price Reporting system. The proposal would require that 25 percent of a packer's daily kill comes from the spot market.
By requiring a 25 percent spot market purchase daily, the mandatory price reporting system, which has been criticized due to reporting and accuracy problems, would have consistent, reliable numbers being purchased from the spot market, improving the accuracy and transparency of daily prices. In addition, independent livestock producers would be guaranteed a competitive position due to the packers need to fill the daily 25 percent spot/cash market requirement.
The packers required to comply would be the same packers required to report under the Mandatory Price Reporting system. Those are packs that kill either 125,000 head of cattle, 100,000 head of hogs, or 75,000 lambs annually, over a 5 year average.
Packers are arguing that this will hurt their ability to offer contracts to producers, but the fact of the matter is that the majority of livestock contracts pay out on a calculation incorporating Mandatory Price Reporting data. If the Mandatory Price Reporting data is not accurate, or open to possible manipulation because of low numbers on the spot market, contracts are not beneficial tools for producers to manage their risk. This legislative proposal will hopefully give confidence to independent livestock producers by improving the accuracy and viability of the Mandatory Price reporting system and secure fair prices for contracts based on that data.
It's just common sense, when there aren't a lot of cattle and pigs being purchased on the cash market, it's easier for the Mandatory Price reporting data to be inaccurate or manipulated. The majority of livestock production contracts are based on that data, so if that information is wrong, the contract producers suffer.
This legislation will guarantee independent livestock producers market access and a fair price. It will accomplish these goals by making it more difficult for the Mandatory Price Reporting System to be manipulated because of low numbers being reported by the packs. The Transparency Act is crucial legislation to guarantee livestock producers receive a fair shake at the farm gate and I am looking forward to working on this legislation in a bipartisan fashion.
I ask unanimous consent that the text of the bill be printed in the RECORD.
There being no objection, the text of the bill was ordered to be printed in the Record, as follows:
S. 786
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