June 1, 2016

Senate Ag Committee Fields Hearing on Livestock Challenges – Audio

The Senate Ag Committee on Thursday held a hearing on the challenges and opportunities facing livestock and poultry producers. Chairman Pat Roberts noted in his opening comments that it was the first such hearing in five years.

Congress is examining volatility in the livestock markets from a number of angles, with the House Agriculture Subcommittee on Livestock and Foreign Agriculture hosting a similar hearing earlier this week.

Testifying at both hearings was Tracy Brunner, President of the National Cattlemen’s Beef Association.

He told lawmakers that the NCBA and CME are looking at potential changes to help ensure the futures market works for cattle producers. They believe part of the increase in volatility in the futures market has to do with high frequency trading.

Brunner on HFT

High Frequency Trading is utilized throughout all financial markets, and the Commodity Futures Trading Commission has been keeping an eye on it, too.

Brunner on Market Data

Brunner is a rancher and cattle feeder from Kansas.   Also on Thursday’s panel was Joe Goggins, a cattle producer and auctioneer from Montana, and a member of the U.S. Cattlemen’s Association.  He told lawmakers that the futures market in Chicago simply isn’t reflective of the cash market fundamentals in cattle country.

Goggins on Stability

The U.S. Cattlemen’s Association would like to see price reporting modernized, as well as stricter enforcement of the current Packers and Stockyards Act.

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USDA NASS Collecting June Survey Data – AUDIO

usdaNASSUSDA’s National Ag Statistics Service will begin collecting data for the June surveys on crops and livestock. In the first two weeks of June, NASS will survey U.S. producers and visit tracts of farm land to collect information. Responses to these surveys provide the foundation for estimates in the upcoming growing year and will first be released in the Acreage and other reports on June 30th. NASS Pacific Region Director Chris Messer explains the surveys…

Messer – June Surveys

For the area survey, NASS representatives will make personal visits to farmers. The June Agricultural survey will be sent by mail and can be completed online. Messer says the information provided by farmers plays a critical role in determining the current crop outlook…

Messer – Information

Messer says farmers can use the data to finalize their cropping and marketing plans this year, while the industry looks to the reports to gauge exports…

Messer – Importance

The first reports will be released Noon, Eastern Time, June 30th. Other reports using the data will be released later in the year…

Messer – Data

Once released, all NASS reports can be found online at www.nass.usda.gov.

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Debate Surrounding Proposed GIPSA Amendment Grows

pigsTuesday saw the testimony of several key farm and livestock groups before the House Agriculture subcommittee on livestock.  While topics were numerous and varied, one topic discussed by all was the proposed amendment and an assertion by U.S. Agriculture Secretary Tom Vilsack that USDA reinstate a proposed Grain Inspection, Packers and Stockyards Administration, or GIPSA, rule that would ban the ownership of livestock by meat packers.

The debate regarding meat packer ownership of animals and this amendment in particular goes back to the 2008 farm bill.  At that time, Congress approved language that addressed five concerns listed by various livestock groups regarding market forces and liquidity.  In particular, USDA developed regulations in response to the 2008 farm bill that would require meat packers to document and then justify price differences paid for livestock complete with a cost and revenue analysis that groups like the National Pork Producers and National Cattlemen’s Beef Association say will make it nearly impossible for producers to negotiate any sort of premium based on production practices or for packers to apply discounts on animals of lesser quality.

That regulation has been regularly defunded by Congress since USDA approved it back in 2010, but the appropriations bill passed by the Senate committee last week did no such thing.  David Herring, a vice president with Hog Slat, Inc who represented the National Pork Producers and Tracy Brunner, President of the National Cattleman’s Beef Association both said the failure of Congress to defund this rule will cost their industries millions of dollars.  Herring cited a study by Informa Economics saying such a rule would cost the U.S. pork industry more than $350 million per year.  Brunner suggested such language would limit both the ability and the desire of cattle producers to improve quality, some of whom are currently able to secure premiums of $30-$50 over the cash market.

Meanwhile, the National Farmers Union applauded the move.  In fact, the organization during their annual meeting in March approved a measure indicating support for the regulations.  Mark Watne, President of the National Farmers Union was quoted in a news release saying “Competition in the marketplace or the lack of it greatly impacts the price ranchers are paid locally for their livestock,” He continued “The fewer buyers at the sales barn, the lower the price is generally.”

Watne said when meatpackers are allowed to own their own captive supply of animals from birth through slaughter and then market them wholesale, they drive prices down by bypassing the public bidding process for animals. “This hurts family farmers and ranchers and is not a true representation of their livestock’s worth,” he said.

Watne isn’t alone.  Long time Republican Senator and Agriculture Powerhouse Chuck Grassley has long been and advocate for the rule as well.  He is the Senator responsible for the legislation saying, “An effective and efficient marketplace is one where packers that control all harvest capacity of the industry do not also own a majority of the animals to be processed. The fact of the matter is that the market continues to become less competitive [in this situation].”

At present, the House Appropriations bill does include language that would defund the amendment, so should the Senate bill pass, its an issue that will have to be resolved between the two branches.  Vilsack has previously indicated that the controversial rule is one of several regulations currently at the White House Office of Information and Regulatory Affairs, generally the last stop before implementation.

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