Johnson Applauds USDA Enhancement of Cattle Price Transparency
Washington, D.C. – Today, U.S. Representative Dusty Johnson (R-S.D.), Republican Leader of the Livestock and Foreign Agriculture Subcommittee, applauded the U.S. Department of Agriculture’s (USDA’s) announcement of two new reports to enhance price discovery under mandatory price reporting for cattle. Johnson has called for increased transparency in price reporting during his time on the Agriculture Committee and introduced the PRICE Act which creates a Beef Cattle Contract Library.
Last week, the subcommittee held a hearing on the shortcomings of the supply chain. In addition to the need for greater processing capacity, the need for greater producer access to real-time data was a primary theme.
“When I talk to cattlemen across the state, they know they can compete if they have an open and transparent market. This is another step in the right direction,” said Johnson. “This USDA announcement does not let Congress off the hook. We have work to do and must reauthorize mandatory price reporting by the end of September to ensure these new reports can be released in a timely and consistent manner. While this announcement is welcome news, cattlemen continue to ask for a Cattle Contract Library to give user-friendly access to contract terms being offered to other producers on a regional and national level. I’ll keep pushing for full implementation of the PRICE Act to ensure this gets done.”
In July, USDA implemented two of Johnson’s bills aimed at increasing capacity space for small producers and curbing steep overtime fees small processing facilities incurred during the peak of the COVID-19 pandemic.
According to USDA Market News, overseen by the Department’s Agricultural Marketing Service, these new reports include:
- The National Daily Direct Formula Base Cattle reports will enable stakeholders to see the correlation between the negotiated trade and reported formula base prices, as well as the aggregated values being paid as premiums and discounts. Daily formula base price reports will be national in scope and released in morning, summary and afternoon versions. The weekly and monthly formula base reports will be both national and regional in scope and include forward contract base purchase information.
- The National Weekly Cattle Net Price Distribution report will show at what levels (price and volume) trade occurred across the weekly weighted average price for each purchase type – negotiated, negotiated grid, formula and forward contract. Currently, the market speculates whether large or small volumes of cattle trade on both sides of the price spread. And in fact, with premiums and discounts applied to the prices, the spreads shown on reports can be wide. Publishing a price distribution for all cattle net prices will offer more transparency to each of the purchase type categories. This report is a window into what producers are paid for cattle (net) and retains confidentiality by segregating volumes purchased in $2.00 increments +/- the daily weighted average price depending upon premiums and discounts. AMS has published a similar net price distribution report for direct hogs since January 2010.