1. Short title
This Act may be cited as the “Cattle Price Discovery and Transparency Act of 2022”.
Cattle Price Discovery and Transparency Act of 2022
A BILL
To amend the Agricultural Marketing Act of 1946 to establish a cattle contract library, and for other purposes.
2. Definitions
in paragraph (5), by striking “cattle,” and inserting “cattle (including fed cattle),”;
by redesignating paragraphs (1) through (14) as paragraphs (2), (3), (4), (6) through (8), (10), and (12) through (18), respectively;
by inserting before paragraph (2) (as so redesignated) the following:
“(1) Approved pricing mechanism—The term approved pricing mechanism means a purchase of fed cattle made—
“(A) through a negotiated purchase;
“(B) through a negotiated grid purchase;
“(C) at a stockyard (as defined in section 302 of the Packers and Stockyards Act, 1921 (7 U.S.C. 202)); or
“(D) through a trading system or platform for the purchase or sale of cattle, or for an arrangement to purchase or sell cattle, through any means in which multiple buyer and seller participants have the ability to, and regularly and consistently, make and accept bids and offers on or at the trading system or platform.”
by inserting after paragraph (4) (as so redesignated) the following:
“(5) Fed cattle—The term fed cattle means a steer or heifer that has been finished on a ration of roughage and feed concentrates, such as grains, protein meal, grass (forage), and other nutrient-rich feeds, prior to slaughter.”
by inserting after paragraph (8) (as so redesignated) the following:
“(9) Mandatory minimum—The term mandatory minimum means, of the quantity of fed cattle purchased for slaughter by a covered packer (as defined in section 221) for each processing plant, the minimum percentage of such cattle that are required to be purchased through approved pricing mechanisms from producers that are not packers.”
by inserting after paragraph (10) (as so redesignated) the following:
“(11) Negotiated grid purchase—The term negotiated grid purchase, with respect to cattle, means a purchase—
“(A) involving the negotiation of a base price from which premiums are added and discounts are subtracted, determined by seller-buyer interaction and agreement on a delivery day; and
“(B) under which the cattle are scheduled for delivery to the packer not later than 14 days after the date on which the cattle are committed to the packer.”
Cattle reporting definitions— Section 221 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635d) is amended—
in paragraph (1), by striking “7-day” and inserting “14-day”;
in paragraph (8)(B), by striking “market” and inserting “marketing”;
by redesignating paragraphs (3), (4), (5), (6), (7), and (8) as paragraphs (5), (6), (8), (9), (11), and (12), respectively;
by inserting after paragraph (2) the following:
“(3) Covered contract
“(A) In general—The term covered contract means any agreement, written or oral, between a packer and a producer for the purchase of fed cattle for slaughter.
“(B) Exclusion—The term covered contract does not include a contract for a negotiated purchase.
“(4) Covered packer—The term covered packer means a packer that has slaughtered during the immediately preceding 5 calendar years an average of not less than 5 percent of the number of fed cattle slaughtered nationally during the immediately preceding 5 calendar years.”
by inserting after paragraph (6) (as so redesignated) the following:
“(7) Heifer—The term heifer means a bovine female that has not given birth to a calf.”
by inserting after paragraph (9) (as so redesignated) the following:
“(10) Steer—The term ‘steer’ means a bovine male castrated before reaching sexual maturity.”
3. 14-Day cattle slaughter report
Section 222(c) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635e(c)) is amended—
in paragraph (1)—
by striking subparagraphs (B) and (C); and
by redesignating subparagraph (D) as subparagraph (B);
in paragraph (2), by striking “the information” and inserting “information reported under this subsection”;
by redesignating paragraph (2) as paragraph (3); and
by inserting after paragraph (1) the following:
“(2) Prior day reporting
“(A) In general—The corporate officers or officially designated representatives of each packer processing plant shall report to the Secretary, for each business day of the packer processing plant, not later than 10:00 a.m. Central Time on each reporting day, the information from the prior business day described in subparagraph (B).
“(B) Information required—The information required under subparagraph (A) shall be, with respect to the prior business day, the number of cattle scheduled for delivery to a packer processing plant for slaughter for each of the next 14 calendar days.”
4. Expedited carcass weights reporting
Section 222 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635e) is amended by adding at the end the following:
“(f) Expedited carcass weights
“(1) Determination—Not later than 180 days after the date of enactment of the Cattle Price Discovery and Transparency Act of 2022, the Secretary shall determine the minimum amount of time needed by the Secretary to publicly report the daily average carcass weight of cattle slaughtered by packer processing plants.
“(2) Reporting—Not later than 180 days after the Secretary has made a determination under paragraph (1), the Secretary shall begin publicly reporting the information described in that paragraph within the time determined under that paragraph.”
5. Mandatory reporting of cutout yield
Section 223 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635f) is amended—
in subsection (a)—
in the subsection heading, by striking “Daily reporting” and inserting “In General”;
in paragraph (3)—
in subparagraph (C), by striking the period at the end and inserting “; and”; and
by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively, and indenting appropriately;
by redesignating paragraphs (1) through (3) as subparagraphs (A) through (C), respectively, and indenting appropriately;
in the matter preceding subparagraph (A) (as so redesignated), by striking “Secretary at least” and inserting the following: “Secretary—
“(1) at least”
by adding at the end the following:
“(2) at least once each year, at a time determined by the Secretary, cutout yield data.”
in subsection (b)—
by striking “the information required to be reported under subsection (a)”; and
by striking “day.” and inserting the following: “day—
“(1) the information required to be reported under subsection (a)(1); and
“(2) a composite price using the information required to be reported under paragraphs (1) and (2) of subsection (a).”
6. Cattle contract library
The Agricultural Marketing Act of 1946 is amended—
by redesignating section 223 (7 U.S.C. 1635f) as section 224; and
by inserting after section 222 (7 U.S.C. 1635e) the following:
“223. Cattle contract library
“(a) In general—Not later than 120 days after the date of enactment of the Cattle Price Discovery and Transparency Act of 2022, the Secretary shall establish and maintain, through the Livestock Mandatory Price Reporting program, a library or catalog (referred to in this section as the “library”), of each type of covered contract entered into between packers and producers for the purchase of fed cattle (including cattle that are purchased or committed for delivery), including any schedules of premiums or discounts associated with the covered contract.
“(b) Information collection
“(1) In general—To maintain the library, the Secretary shall obtain information from each packer on each type of existing covered contract of the packer by requiring a filing or other form of information submission from each packer.
“(2) Contract information—Information submitted to the Secretary by a packer under paragraph (1) shall include, with respect to each existing covered contract of a packer—
“(A) the type of contract;
“(B) the duration of the contract;
“(C) a summary of the contract terms;
“(D) provisions in the contract that may affect the price of cattle covered by the contract, including schedules, premiums and discounts, financing and risk-sharing arrangements, and transportation arrangements;
“(E) the total number of cattle covered by the contract solely committed to the packer each week within the 6-month and 12-month periods following the date of the contract and the percentage of cattle each week that may vary for delivery or nondelivery at the discretion of the packer, organized by reporting region or in such other manner as the Secretary may determine;
“(F) in the case of a contract in which a specific number of cattle are not solely committed to the packer—
“(i) an indication that the contract is an open commitment; and
“(ii) any weekly, monthly, annual, or other limitations or requirements on the number of cattle that may be delivered to the packer under the contract, including the percentage of cattle that may vary for delivery or nondelivery in a given time period at the discretion of the packer; and
“(G) a description of the provisions in the contract that provide for expansion in the numbers of fed cattle to be delivered under the contract for the 6-month and 12-month periods following the date of the contract.
“(c) Availability of information
“(1) In general—The Secretary shall make publicly available to producers and other interested persons information (including the information described in subsection (b)(2)), in a user-friendly format, on the types of covered contracts in the library, including notice (on a real-time basis, if practicable) of the types of covered contracts that are entered into between packers and producers for the purchase of fed cattle.
“(2) Monthly report
“(A) In general—Beginning 30 days after the library is established, the Secretary shall make the information obtained each month in the library available in a monthly report to producers and other interested persons.
“(B) Contents—The monthly report described in subparagraph (A) shall include—
“(i) based on the information collected under subsection (b)(2)(E), an estimate by the Secretary of the total number of fed cattle committed under covered contracts for delivery to packers within the 6-month and 12-month periods following the date of the report, organized by reporting region and type of contract;
“(ii) based on the information collected under subsection (b)(2)(F), the number of covered contracts with an open commitment and any weekly, monthly, annual, or other limitations or requirements on the number of cattle that may be delivered under such contracts, including the percentage of cattle that may vary for delivery or nondelivery in a given time period at the discretion of the packer; and
“(iii) based on the information collected under subsection (b)(2)(G), an estimate by the Secretary of the total maximum number of fed cattle that may be delivered within the 6-month and 12-month periods following the date of the report, organized by reporting region and type of contract.
“(d) Maintenance of library—Information in the library about types of contracts that are no longer offered or in use shall be removed from the library.
“(e) Confidentiality—The reporting requirements for packers under this section shall be subject to the confidentiality protections provided under section 251.
“(f) Violations—It shall be unlawful and a violation of this Act for any packer to willfully fail or refuse—
“(1) to provide to the Secretary accurate information required under this section; or
“(2) to comply with any other requirement of this section.
“(g) Authorization of appropriations—There are authorized to be appropriated to the Secretary such sums as are necessary to carry out this section.”
7. Market acquisition of fed cattle
Sense of the Senate— It is the sense of the Senate that—
all participants in the fed cattle market have a responsibility to contribute to sufficient levels of negotiated trade of fed cattle in all cattle feeding regions in order to achieve competitive bidding and maximum transparency in all relevant markets and robust price discovery for the benefit of all market participants;
covered packers that use negotiated market prices or internal formulations thereof as the basis for formula marketing arrangements may have incentives to not participate in price discovery in fed cattle markets, including in order to influence the price, especially if the majority of the cattle purchases are under fed cattle formula marketing arrangements under which it is particularly important to have minimum participation; and
the Department of Agriculture should examine academic literature regarding minimum levels of negotiated transactions necessary to achieve robust price discovery, eliminate the potential for price manipulation, and enhance cattle producer leverage in the marketplace in each of the cattle marketing regions.
in paragraph (1)—
by striking the paragraph designation and heading and all that follows through “Any packer” and inserting the following:
“(1) Penalty amount
“(A) In general—Except as provided in subparagraph (B), any packer”
by adding at the end the following:
“(B) Mandatory minimum violation—Any packer or other person that violates section 259 may be assessed a civil penalty by the Secretary of not more than $90,000 for each violation (as adjusted for inflation).”
in paragraph (2)—
by striking “Each day” and inserting the following:
“(A) In general—Except as provided in subparagraph (B), each day”
by adding at the end the following:
“(B) Mandatory minimum violation—Each week during which a violation of section 259 continues shall be considered to be a separate violation.”
Mandatory minimums— The Agricultural Marketing Act of 1946 is amended—
by redesignating sections 259 and 260 (7 U.S.C. 1636h, 1636i) as sections 260 and 261, respectively; and
by inserting after section 258 (7 U.S.C. 1636g) the following:
“259. Mandatory minimums
“(a) Purpose—The purpose of this section is to establish mandatory minimums—
“(1) to enhance price discovery, transparency, and cattle producer leverage for cattle market participants; and
“(2) to minimize and mitigate conflicts of interest and other incentives for a covered packer to influence the base price of formula marketing arrangements for the benefit of the covered packer through action or inaction in the market in which the base price is determined.
“(b) Establishment
“(1) In general—Not later than 2 years after the date of enactment of the Cattle Price Discovery and Transparency Act of 2022, the Secretary shall establish—
“(A) 5 to 7 contiguous regions (referred to in this section as “covered regions”) that—
“(i) together encompass the entire continental United States; and
“(ii) to the extent practicable, reasonably reflect similar fed cattle purchase practices;
“(B) a mandatory minimum—
“(i) for each covered region established under subparagraph (A); and
“(ii) that shall be applicable with respect to each processing plant of a covered packer located in that covered region; and
“(C) a time period within which a covered packer shall be required to meet the applicable mandatory minimum, which shall be not less than 1 week but not more than 30 days.
“(2) Modifications—The Secretary—
“(A) shall review the mandatory minimums established under paragraph (1) not later than 2 years after the date of establishment and periodically thereafter, but not less frequently than once every 5 years; and
“(B) modify any such mandatory minimum, as necessary, after consulting with representatives of the United States cattle and beef industry and in accordance with paragraph (4).
“(3) Public input—In carrying out this subsection, the Secretary shall make all proposed mandatory minimums subject to notice and comment rulemaking and a cost-benefit analysis.
“(4) Considerations—In establishing or modifying mandatory minimums under this subsection for any covered region, the Secretary shall consider the following factors:
“(A) The number of covered packers in the covered region.
“(B) The availability of fed cattle in the covered region.
“(C) Pre-existing contractual arrangements of packers in the covered region.
“(D) The number of pricing transactions (pens of cattle sold) in the covered region.
“(E) The proportion of fed cattle purchased in the covered region through negotiated purchases or negotiated grid purchases relative to the number of formula marketing arrangements that use the negotiated prices or negotiated grid prices as base prices.
“(5) Initial mandatory minimum requirement—The initial mandatory minimum established under paragraph (1)(B) for each covered region shall be—
“(A) not less than the average percentage of negotiated purchases and negotiated grid purchases made in that covered region between January 1, 2020, and January 1, 2022; and
“(B) not more than 50 percent.
“(c) Purchases—A covered packer shall, with respect to each processing plant of the covered packer, purchase through an approved pricing mechanism not less than the percentage of fed cattle required under the mandatory minimum established under subsection (b) for the covered region in which the processing plant is located.
“(d) Enforcement
“(1) In general—On establishing mandatory minimums under subsection (b), the Secretary—
“(A) shall regularly monitor compliance by covered packers with those mandatory minimums; and
“(B) in the case of noncompliance by a covered packer in a given period, may allow the covered packer to remedy the noncompliance by purchasing the applicable shortfall in the approved pricing mechanism in 1 or more subsequent periods, subject to paragraph (2).
“(2) Nonremedy—The Secretary shall not allow a covered packer to remedy noncompliance under paragraph (1)(B) if the covered packer has a pattern or practice of noncompliance, as determined by the Secretary.
“(e) Effect on premiums—Nothing in this section prohibits a formula marketing arrangement from including a premium in addition to the base price, including a premium for meat quality, consistency, breed, production method, branding, or any other value-added effort.”
8. Alternative marketing arrangements feasibility report
Not later than 180 days after the date of enactment of this Act, the Secretary of Agriculture, acting through the Administrator of the Agricultural Marketing Service, shall publish a report analyzing the feasibility of alternative marketing arrangements with a base price tied to the price of boxed beef, which shall include information on—
the benefits and limitations of such alternative marketing arrangements;
barriers limiting adoption of such alternative marketing arrangements;
potential educational needs relating to the use of such alternative marketing arrangements for industry participants; and
risk management needs to increase the adoption and facilitate the ongoing delivery of benefits of such alternative marketing arrangements to industry participants.
9. Modifications to livestock mandatory reporting regions
Not later than 1 year after the date of enactment of this Act, the Secretary of Agriculture, acting through the Administrator of the Agricultural Marketing Service, shall realign the livestock mandatory reporting regions established pursuant to subtitle B of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635 et seq.) by—
modifying the existing Colorado cattle reporting region to include the State of Wyoming; and
modifying the existing Iowa-Minnesota cattle reporting region to include the States of Illinois and South Dakota.