The following is testimony from NDFU member Shelly Ziesch of Pettibone on the Cattle Price Discovery and Transparency Act to the Senate Agriculture Committee on April 26 in Washington, D.C.:
Chairwoman Stabenow, Ranking Member Boozman, and members of the Committee, thank you for the opportunity to testify today. My name is Shelly Ziesch, and I am a fourth-generation rancher from Pettibone, N.D. On our family operation, we run about 600 cow-calf pairs. We background most of our calves and finish a small percentage that is processed locally. We also raise corn, soybeans, wheat, oats and alfalfa. I serve on the board of directors for North Dakota Farmers Union and am testifying today on behalf of NDFU and National Farmers Union.
Achieving greater transparency, price discovery and fairness in the cattle market is critical to the survival of family farms and ranches. In 2020, I chaired a livestock committee that NDFU established to develop rancher-led solutions to the challenges we face. In the six weeks leading up to our first meeting, the spread between boxed beef and fed cattle prices increased by over 300 percent. While those price swings were directly attributed to pandemic-related disruptions, they also underscored the dangers of a highly concentrated food system. That committee identified these policy proposals:
• Increase competition and fairness in the cattle and beef industries;
• Establish transparent, truthful labeling on beef products; and
• Increase local and regional slaughter capacity.
One of Farmers Union’s chief concerns is the decline in negotiated trades in the cattle industry. Ranchers need to have options when marketing their cattle, including cash trades and alternative marketing arrangements. However, in the last 15 years, cash trades have declined from 52 percent of all trades to 20 percent. As the cash market thins, local livestock auctions are going out of business. If that trend is allowed to continue, producers will lose those important marketing options.
This is concerning because the cash market provides the transparency and price discovery ranchers need to negotiate a fair price for our cattle. The cash market also serves as the basis for all cattle prices. On our operation, we sell our cattle through a combination of cash sales and forward contracts. We use the cash price we receive to help us determine the fair market value for the cattle we sell through forward contracts. Without the transparency of a robust cash market, I am at a disadvantage when marketing my cattle, regardless of the marketing arrangement I use.
NDFU was a strong early supporter of Senate Bill 949, commonly referred to as the “50/14” bill. We believe establishing a floor for the cash market is critical to promoting a fair and transparent marketplace. While we are disappointed the 50/14 bill has not attracted a broader base of support, our top priority is finding a way to move this issue forward. The Cattle Price Discovery and Transparency Act is an important step toward protecting transparency in the cattle market.
The Cattle Price Discovery and Transparency Act includes several provisions that will promote fairness and transparency in cattle markets. The bill establishes regional minimums for negotiated trades, which will preserve the cash market as an option for cattle producers and improve and preserve price discovery. The bill also requires 14-day slaughter reporting, expedites carcass reporting and mandates reporting of cutout yield, all of which will give producers a better understanding of supply and demand factors affecting the market. Finally, the legislation establishes a cattle contract library, which will give cattle producers insight into contract terms they should consider or avoid when using AMAs.
Farmers Union is also a strong supporter of the Meat and Poultry Special Investigator Act, which will strengthen enforcement of existing competition laws. The Packers and Stockyards Act has existed for over 100 years, but a lack of enforcement has allowed consolidation and anticompetitive practices to continue. USDA and the Department of Justice need stronger tools to enforce existing laws. Senate Bill 3870 would give USDA the authority and resources it needs to make sure our laws are enforced the way Congress originally intended.
In closing, I want to say that, like many family farmers and ranchers, my main goal is to ensure our operation can continue with the next generation. That is why I spent the last two weeks trying to save newborn calves during a historic April blizzard. It is why I serve on the North Dakota Farmers Union board of directors, and it is why I am here today. I urge the committee to pass these two bills, because they will provide my three daughters the transparent and fair markets they need to carry on our family’s ranching tradition.
Thank you for the opportunity to testify. I look forward to your questions.