U.S. Representative Cynthia Lummis (R-Wyo.) has introduced H.R. 2631, the Livestock Marketing Fairness Act, a bipartisan bill authored by U.S. Senator Mike Enzi, (R-Wyo.). According to a press release from Lummis, the legislation would target unfair meat packer practices and help restore a level playing field to independent livestock producers.

The National Pork Producers Council opposes the Lummis and Enzi bills because they would restrict private marketing arrangements and contracts between producers and packers. The organization points out that there already is transparency in the livestock markets through the federal mandatory price reporting law, which requires packers to convey – twice daily – the prices they pay for livestock.

According to Lummis, there is a lack of transparency in the livestock marketplace that can lead to price manipulation and abuse by some operations. “America’s independent farmers and ranchers should be able to choose the best methods for selling livestock in an open and competitive market,” said Lummis. “Unfortunately, a lack of transparency in the marketplace can lead to price manipulation and abuse by some operations – and our local producers bear the brunt of these unfair practices.”

According to the Lummis press release, the Livestock Marketing Fairness Act would:

 ·         Require marketing agreements to have a firm base price derived from an external source.  This guarantees that local contract prices are not subject to manipulation by packer-owned herds.

·         Encourage transparency and openness in public markets where buyers and sellers can witness bids and make their own offers. Forward contracts and marketing agreements allow packers and producers to coordinate supply and reduce risk, but when they are negotiated in secret, all of the bargaining power is on one side. This practice unjustly depresses prices and reduces market access for small and independent producers.

·         Not hinder the freedom for an individual livestock producer to negotiate a contract price for livestock with a buyer. Instead it gives a seller confidence that the contract price he or she negotiates will not be subject to price manipulation caused by captive supplies.

·         Exempt producer-owned cooperatives, packers with low volumes and packers who own only one processing plant. This exemption targets the source of price manipulation and ensures that the business practices of small family-owned processors are not impacted by the law. 

Another set of controversial proposed rules that target marketing contracts between packers and producers is currently in limbo in Congress. The Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed rule is deadlocked in the House of Representatives. The House Agriculture budget committee in June passed a budget bill denying funding for implementation of the GIPSA rule. NPPC also opposes the GIPSA proposed rules.

The Ranchers-Cattlemen Action Legal Fund, or R-CALF USA, praised Lummis and Rep. Marcy Kaptur (D-Ohio) for their sponsorship of H.R. 2631 in Congress. “The primary benefit to cattle farmers and ranchers who enter these contracts is that they can avoid the meatpackers’ practice of restricting timely access to the market when their cattle are ready for slaughter, which is becoming a huge problem in the industry now that only four meatpackers control the slaughter of more than 80 percent of the nation’s slaughter-ready cattle,” said R-CALF USA chief executive officer Bill Bullard. 

Source: Lummis website, NPPC