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U.S. Senate tackles the issue of packer concentration and the impact on cattle markets

The U.S. Senate Agriculture Committee on April 26, 2022, tackled longstanding cattle pricing issues in a hearing over a price transparency bill and another that would increase Congress power to stop anti-competitive practices

A North Dakota ranch woman sits at a table, testifying with a microphone in front of her, as a cow man from Kansas looks on, with a different point of view about cattle pricing solutions.
Shelly Ziesch, a cattle rancher from Pettibone, North Dakota, testified in favor of bills regarding cattle market transparency and oversight, during an April 26, 2022, hearing in Washington, D.C. Shawn Tiffany, president-elect, Kansas Livestock Association and Tiffany Cattle Company, Herington, Kansas, took the opposite point. Photo taken April 26, 2022 in Washington, D.C.
Mikkel Pates / Agweek
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WASHINGTON, D.C. — There are at least two sides to a longstanding controversy over lack of transparency and competitiveness in the beef processing and whether Congress can — or should — do something about it.

The North American Agricultural Journalists organization was in Washington, D.C., during a hearing on April 26, 2022, for a hearing on bills that are designed to add price transparency and oversight into the cattle marketings that have moved more cattle trades into AMAs -- advanced marketing agreements -- and have reduced the number sold through auctions and other open arrangements. Photo taken April 26, 2022 in Washington, D.C.
Mikkel Pates / Agweek

Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and ranking Sen. John Boozman, R-Ark., held a hearing on April 26, 2022, in Washington, D.C., to review S. 4030, the Cattle Price Discovery and Transparency Act of 2022 , which importantly includes negotiated cash sales of cattle. It was expanded to give more options, including a “negotiated grid” and “online sales” and cattle sold through sale barns. It provides for reporting slaughter figures within 14 days.

The bill has 19 co-sponsors, including 11 on the Senate Agriculture committee. Regionally, the bill would provide information about minimums of cash contract trades.

The hearing involved a separate but related bill known as the Meat and the Poultry Special Investigator Act of 2022, a proposal that would create a new sheriff in the agriculture department for ensuring laws regarding competition in the livestock industry are followed. The bill’s sponsor Sen. Jon Tester, D-Mont., who is not on the agriculture committee, said this a “moment in time,” for taking action.

The three-hour hearing included a U.S. Department of Agriculture panel and a producer and economist panel, that included Shelly Ziesch, owner/operator of a 600-cow cattle operation and a farming operation of 2,000-acres of corn, soybeans, wheat, alfalfa and oats at Pettibone, North Dakota.


North Dakota voice

Ziesch is a member of the North Dakota Farmers Union board of directors and was testifying on behalf of the NDFU and the National Farmers Union. The Ziesches have three daughters, including two in ranching.

A silver-haired U.S. Senator questions a woman, right, during a hearing about cattle price transparency.
Sen. John Hoeven, R-N.D., a member of the Senate Agriculture Committee, thanked Shelly Ziesch, a cattle rancher from Pettibone, North Dakota, who testified on bills regarding cattle market transparency and oversight, during an April 26, 2022, hearing in Washington, D.C.
Mikkel Pates / Agweek

The Ziesches background-feed most of their calves to sell to other producers to take animals to market weights. They finish a small number that are processed locally. She said her organizations support the bills and seven policy proposals, to increase transparency and increase truthful labeling. She said that in the past 15 years, cash trading of cattle declined from 52% down to 20%.

“As the cash market thins, local farmers are going out of business,” she said.

She said the cash market serves as the basis for other forward-contracts and that the bill would be “worth a try” in giving producers more supply-demand information. It would establish a “cattle contract library,” giving producers insight into contract terms “that they should consider employing” when using advanced marketing agreements, or AMAs.

An emphatic man in a suit and crew cut speaks to a Senate Agriculture Committee.
U.S. Sen. Jon Tester, D-Mont., is not a member of the Senate Agriculture Committee, but testified in favor of bills that would increase price transparency in packing company transactions and add tools to the U.S. Department of Agriculture to counter it. “We’re in a moment,” he said of a ripe time for fixing anti-competitive trends in the business that have been hurting producers. Photo taken April 26, 2022 in Washington, D.C.
Mikkel Pates / Agweek

Ziesch said she doesn’t want the beef industry to “go the same way as the barley industry in North Dakota,” a reference to contract growing, rather than raising crops for a competitive market.

Hoeven thanked Ziesch for supporting a “cattle contract library” concept, which would provide cattle producers information about how to add values.

A North Dakota farm woman stands for a portrait in front of a marble wall.
Shelly Ziesch, owner/operator of a 600-cow cattle operation and a farming operation of 2,000-acres corn, soybeans, wheat, alfalfa and oats at Pettibone, North Dakota, said cattle producers need Congress to pass bills that add transparency to beef markets and create a new official to oversee market competitiveness. She is a member of the North Dakota Farmers Union board of directors. Photo taken April 26, 2022 in Washington, D.C.
Mikkel Pates / Agweek

Other views

Meanwhile, Boozman and some Republicans focused on the potential negative effects of new layers of bureaucracy and wondered how much would go beyond the “Big Four” livestock processors and land on the 1,000 small processors in the country. He also worried about impacts on marketing alternatives, a topic echoed by Sen. Roger Marshall, R-Kan., who said overregulation leads to consolidation.


Boozman introduced Shawn Tiffany, president-elect of the Kansas Livestock Association, and said he and his brother in 2007 purchased Tiffany Cattle Company, a company his father had managed. Tiffany annually custom-feeds and finishes about 70,000 head of beef at Herington, Kansas. The feedlot deals with about 200 producers who average fewer than 200 cows, all of which are marketed through AMAs.

Tiffany, a member of the National Cattlemen’s Beef Association, said Tiffany Cattle works with multiple packers.

“A mandated minimum level of negotiated trade will limit my ability to maximize the value my customers receive for their cattle,” he said. He believes that requiring the negotiated trade will influence packers to drop some of their AMAs.

Tiffany said AMAs lead to better quality cattle, noting that in 2000 about 60% of cattle graded “choice” or better, and today that number is more than 80%. His own feedlot averages 92% choice or better in all marketings.

A bearded man in a cowboy hat, stands in front of a U.S. Senate hearing room.
Shawn Tiffany, president-elect, Kansas Livestock Association and part owner of Tiffany Cattle Company in Herington, Kansas, told a U.S. Senate Agriculture Committee hearing on April 26, 2022, in Washington, D.C., that forcing mandatory minimum cash price sales in the cattle industry would devastate his custom feedlot operation that depends on advanced marketing agreements that provide increased value to specific genetics and practices, including low-carbon cattle.
Mikkel Pates / Agweek

Tiffany said he markets some of his animals with lower total greenhouse gas emissions, a process which requires extra investments, but connects with consumers in niche markets willing to pay more for that certification.

Tiffany said he was in favor of price discovery and market transparency, but said the bills are not the way to do it. He contends that the “vast majority” of cattle producers oppose mandating a minimum level of negotiated trade. The American Farm Bureau has come out against the bill.

Tiffany said programs like no-hormones-added, natural and low-carbon beef are strategies that develop three years before the animal goes to market.

“I have to know through an AMA that that market is going to be there today, to make that investment,” he said, adding that regulations that would increase cash marketing will limit opportunities for AMAs.


“This bill would fully end my business model as it exists today, and would cause many of my customers to quit retaining ownership of their cattle,” he said. “It’s going to apply 20-year-old pricing mechanisms to an industry that’s far, far advanced beyond cash trading.”

Stephen Koontz, a professor of agriculture and resource management at Colorado State University, in Fort Collins, Colorado, asked whether producers would have a single bid from one packer with a $200 per head cost or a three bids with $500 in costs. Concentration brings “tremendous efficiencies,” he said.

He said the entire value chain starts with “consumer dollars,” and what’s left goes to producers. He said increases in efficiency are “orders of magnitude” greater in value than benefits from adding competitiveness, and that lowering costs will increase value to producers and lower costs to the consumer. Formula marketing tend to provide producers and packers each $25 in extra value — or $50, he said.

Koontz said he doesn’t know of any research that indicates markets are better with increases in cash sales. He said the processing industry was at excess capacity until 2016. Since then, supplies outstripped effective processing, especially with a processing plant fire and then with COVID. With reduced cow herds, market prices are heading into record prices for fed cattle and feeder calves. He said many of the AMA agreements go to plants with dedicated markets, which would add costs.

Difference in Rs

One of the prime sponsors, Sen. Deb Fischer, R-Neb., is married to a cattleman. Fischer said the Nebraska Cattlemen Association supports a fix but she said none of their members would agree to testify for fear of retribution from packers they deal with.

Fischer bluntly disagreed with Koontz and Tiffany, saying AMAs have been used a long time and won’t go away because of better reporting.

“It’s a way that producers can choose the options they want to be able to market their cattle,” Fischer said. She said the “idea that everybody who uses an AMA is going to get premiums is not true.”

Fischer said she had votes to get the bill out of the committee, and hoped to get it out of the Senate before August.

Sen. Chuck Grassley, R-Iowa, said large packing companies don’t care how many producers there are.

“It’s always the same — more profit for the packers and more small producers going out of business,” Grassley said. He said trend lines are moving toward further consolidation, and Congress should do its best to stop it.

Marshall said overregulation leads to consolidation.

“Capitalism without competition is unfair and it leads to exploitation.”

Marshall promotes less regulation and improving competition. He focused on changing labels to improve knowledge labeling to meet consumer preference. Sen. Tommy Tuberville, R-Ala., said he didn’t want to see a new layer of government.

USDA is ready

Senators asked two top U.S. Department of Agriculture officials about their needs in helping farmers and ability to manage new responsibilities from the bills.

Andy Green, U.S. Department of Agriculture senior adviser for fair and competitive markets, said promoting diversity in the market and choice is a priority for the Biden administration, through an executive order on competition. He said the Packers and Stockyards Administration has seen a 40% decline in staffing in the past 10 years.

“We would benefit from reinforcements” in investigation, he said.

Green said creating a “special investigator” to do complex investigations on concentration could help, but the country needs to invest in new processing.

“We’re taking an ‘all-of-the-above’ approach” in solving the problem, he said.

Green said the department is doing consumer testing to understand how consumers view labels. Country of Origin Labeling stopped including beef in 2015. Bruce Sommers, USDA Agricultural Marketing Service administrator, said a lot of details have to be worked out if Congress turns the bill into law. He said his agency has the ability to make rules and manage an increase in regulation.

“When you have a smaller staff there are certain aspects of nimbleness,” he said, adding that more staff could allow the agency to cover more ground.

Cory Booker, D-N.J., a member of the committee and a vegan, declared he is the most “enthusiastic vegan” in defending producers from consolidation and unfair market practices. He said, “it is utter deception to American consumers,” to not label meat for its origins.

On April 27, 2022, the House Agriculture Committee held a similar hearing: “An Examination of Price Discrepancies, Transparency, and Alleged Unfair Practices in Cattle Market,”

House Agriculture Committee Chairman David Scott, D-Ga., originally said the chief executive officers of JBS, Cargill, Tyson Foods, and National Beef Packing, the four largest meat packing companies, and a panel of ranchers would testify. House office buildings are closed to the public due to COVID-19, but are livestreamed.

Mikkel Pates is an agricultural journalist, creating print, online and television stories for Agweek magazine and Agweek TV.
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