Farm Action Urges USDA to Strengthen Protections for America’s Cattle Ranchers

Today, Farm Action submitted a public comment to the U.S. Department of Agriculture (USDA) in support of its advanced notice of a proposed rulemaking, Price Discovery and Competition in Markets for Fed Cattle, aimed at improving farmer and rancher protections under the Packers and Stockyards Act (P&S Act) in the highly consolidated beef packing market. 

Due to a series of mergers and a lack of antitrust enforcement starting in the 1980s, today, the four largest beef packing firms buy more than 80% of fed cattle. Concurrent with market consolidation, Alternative Marketing Agreements (AMAs) have become the dominant purchasing mechanism. AMAs inherently lack transparency, and as the cash market has thinned with their corresponding rise, they have increasingly enabled the largest packers to exploit farmers and ranchers. 

Given the market structure, Farm Action recommends that AMAs be replaced with a more transparent purchasing system  — one that ensures a firm base price — such as an internet-based market.  

The comment notes, “The USDA is to be commended for its willingness to look at how the Packers and Stockyards Act rulemaking authority can be employed to improve the operation of the market for fed cattle. As these comments suggest, there is a great deal that ought to be done to improve the operation of this market to ensure fairness and efficiency to all participants.”

Farm Action notes that if AMAs remain legal, the following recommendations should be adopted to ensure fair, efficient, and equitable treatment of producers: 

• Establish better rules to govern AMA prices, including setting a base price with adjustments based on quality and market premiums such as black angus at the time of the contract (instead of linking it to a future price);
• Eliminate exclusive dealing arrangements in cattle buying;
• Increase transparency by ensuring better information is collected and disclosed, emphasizing that compensation disclosures include any and all compensation, including bonuses and other payments that may occur outside of contract windows;
• Establish rules to govern the pick up of cattle and top-of-the-market buying in the cash market.

Farm Action is encouraged by USDA’s continued efforts to strengthen the 100-year-old P&S Act and restore it to the statute’s original goal of protecting livestock and poultry producers from unfair monopolistic market practices. This proposed rule marks the fifth and final such rulemaking set forth by the Biden Administration. Farm Action is hopeful that the next administration will finalize the three outstanding rules. 

Media Contact: Emma Nicolas, [email protected], 202-450-0094