As you know, it is vital to stay engaged in the policy process, and NCBA makes it easy for you to engage with your elected officials and federal agencies. Please check out the specific policy issues in Washington, D.C., that affect America's cattle and beef producers, and be sure to get involved with the links below!
Issues important to america's cattlemen and women
U.S. cattle producers understand and appreciate the role of taxes in maintaining and improving our nation. However, they also believe that the most effective tax code is an equitable one. Even prior to the unprecedented market volatility caused by COVID-19, fluctuating business costs and adverse weather events have always posed a unique set of challenges for family-owned agricultural businesses. Because of this, farmers and ranchers need certainty in the tax code. Whether it’s managing a tax burden that can change drastically from year-to-year or planning for the next generation, cattle producers rely on long-standing provisions in the tax code, such as stepped-up basis, like-kind exchanges, and the Section 199A Small Business Deduction to maintain viable businesses while ensuring that the next generation can take over the operation.
When it comes to bolstering a new generation of U.S. cattle producers, a major challenge facing farmers and ranchers is the estate tax, commonly referred to as the Death Tax. While the estate owner is technically responsible for the tax, their heirs are often the ones who have to make payments when taxes are due after the death of a primary owner. Many families are forced to choose between paying the legal and accounting costs associated with an estate plan or making investments in their business. The Tax Cuts and Jobs Act of 2017 (TCJA) temporarily increased the estate tax exemption amount to $10 million per individual or $20 million per couple – or, indexed for inflation, a basic exclusion amount of $11.7 million – and maintained a tax rate of 40 percent. The exemption levels will revert to $5 million per individual or $10 million per couple on January 1, 2026.
What is NCBA working on?
NCBA is committed to helping elected officials understand the detrimental consequences of changes to long-standing provisions in the federal tax code through reliable research. We have backed several studies, including an EY study and a Texas A&M study, that ultimately prove what we have been saying for a long time – family-owned businesses and the local economies they support would be hit hardest by changes to the federal tax code. Farmers and ranchers need a fair and equitable tax code for the next generation to build on the economic and environmental contributions of today’s farmers and ranchers.
In March of 2021, NCBA worked closely with Sen. John Thune (R-SD) and Reps. Sanford Bishop (D-GA) and Jason Smith (R-MO) to secure introduction of The Death Tax Repeal Act of 2021. This bicameral legislation held members of Congress accountable to maintain a public record of support for full, permanent repeal of the Death Tax.
NCBA also secured reintroduction of the Preserving Family Farms Act to the 117th Congress. This bipartisan legislation, introduced by Reps. Jimmy Panetta (CA-20) and Jackie Walorski (IN-2), would allow cattle producers to take advantage of the Special Use Valuation and protect family-owned businesses from the devastating impact of the federal Estate Tax, commonly referred to as the Death Tax.
Why does this matter for cattle producers?
With more than 40 percent of farmland expected to transition in the next two decades, Congress must prioritize policies that support land transfers to the next generation of farmers and ranchers. When doing this, lawmakers need to consider the complexity of the implications of taxes on family-owned agricultural businesses. In the case of farms and ranches, the United States Department of Agriculture (USDA) reports that 91 percent of assets are illiquid. This means that to pay off tax liabilities at the time of an owner’s death, surviving family members may be forced to sell off land, farm equipment and sometimes parts of the operation. If farmland is lost, and therefore transitioned out of production, the environmental benefits that come along with the deliberate stewardship done by farmers and ranchers will be lost as well. Federal tax policy that facilitates generational transfer and allows the next generation of producers to build upon the environmental and economic benefits of today’s farmers and ranchers is just as important for fifth-generation producers as it is for first-generation, veteran, and minority community producers who are breaking into and establishing a foothold in the industry.
NCBA is leading efforts in Washington to make sure that fake meat – both current plant-based products and potential lab-produced products in the future – is properly marketed and regulated. First, we are asking the USDA to work with the Food and Drug Administration (FDA) to enforce existing labeling laws for plant-based protein products. The FDA has the power to take action against products that use misleading labels to confuse consumers about the true nature of their product. Unfortunately, the FDA has a track record of lax enforcement on food labeling issues. Second, we are asking the USDA to assert regulatory jurisdiction over lab-grown fake meat products. No framework currently exists for regulating these new products, but USDA is the agency best-placed to ensure both fair and accurate labeling and the safety of lab-grown products for consumers. NCBA recently submitted comments outlining our principles on fake meat to the U.S. Department of Agriculture, and we will continue to lead the way as Washington decides how to regulate new products that are introduced in the marketplace.
For plant-based products, NCBA worked with U.S. Reps. Roger Marshall (R - 1st Dist. - Kansas) and Anthony Brindisi (D - 22nd Dist. - N.Y.) to introduce bipartisan legislation called the Real MEAT (Marketing Edible Artificials Truthfully) Act in October 2019. Then a month later U.S. Senators Deb Fischer (R – Nebraska) and Catherine Cortez Masto (D – Nevada) introduced a companion bill to the Real MEAT Act in the Senate. Specifically, the Real MEAT Act would establish a federal definition of beef, clarify the imitation nature of these alternative protein products, and enhance the federal government’s ability to enforce the law of misbranded imitation meat. This bill’s introduction was a direct result of our team working across party lines to ensure that cattle producers and consumers are protected from misleading and deceptive marketing by fake meat companies.
The supply chain that takes U.S. cattle from field to fork is complex and dispersed across long distances. Seedstock producers, cow-calf operators, and backgrounders are found throughout the country, but cattle feeders tend to be concentrated down the center from the Dakotas to Texas. The vast majority of cattle produced in the United States make the journey by truck to that major feeding region. They may be coming from as near as Nebraska or as far away as Virginia, Florida, and Oregon. Transporting live cattle from Point A to Point B in a manner that is humane, safe, and efficient is a top priority for our producers and the livestock haulers who drive with live animals each day.
On July 6, 2012, President Obama signed the Commercial Motor Vehicle Safety Enhancement Act into law, which required the Department of Transportation (DOT) to create and enforce an electronic logging device (ELD) rule. DOT published a final rule regarding the electronic log books that become effective February 16, 2016, stating that all motor carriers and drivers who are currently required to keep records of duty status (RODS) on paper must install and use an ELD no later than December 18, 2017.
The ELD enforcement date and existing hours of service (HOS) regulations pose significant consequences for the livestock industry. Current federal law limits on-duty time to 14 hours, with a maximum drive time of 11 consecutive hours. The driver must then rest for 10 consecutive hours before returning to duty. For the great majority of trips made by our livestock haulers, this is simply not enough drive time to accommodate the realities of hauling live animals across the country. Research also demonstrates that repeated loading and unloading of animals creates stress, harming the livestock as well as potentially endangering the hauler.
What is NCBA working on?
NCBA is working hard to ensure federal regulations covering livestock transportation are flexible enough to allow our drivers to do their jobs safely while also maintaining the safety of the livestock they are hauling. Flexibility is critical to maintaining an efficient, reliable supply chain and keeping grocery store shelves stocked with beef.
Since the ELDs were first rolled out, NCBA has acquired multiple exemptions for livestock haulers. The most recent exemption provided by Congress lasts until November 30, 2021. We ask Congress to provide another ELD exemption for livestock haulers through the appropriations process.
- The current 150 air-mile exemption allows anyone hauling agricultural commodities to be exempt from hours of service rules until they are outside of the 150-air mile radius (172 road miles) of their starting point for the day. NCBA hopes to permanently secure the same exemption for the back-end of agricultural commodity hauls to provide further flexibility during the unloading period. NCBA continues to work with Congress to add this backend exemption for livestock haulers.
- The current ELD enforcement deadline needs to be delayed by the Federal Motor Carrier Safety Administration (FMCSA) no less than one year to allow adequate time for industry concerns to be addressed as well as necessary educational training on the actual ELDs and livestock exemptions.
- HOS rules for livestock haulers must be made more flexible so that drivers can safely do their jobs while preserving the welfare of the animals. NCBA supports adding an additional 150 air-mile exemption to the backend of hauls for livestock haulers in order to provide them with needed flexibility.
Why does this matter for cattle producers?
Unfortunately, any expiration of the current delay of the ELD enforcement date and existing HOS rules may force small business owners out of the marketplace while also having the unintended impact of decreasing driver safety – and jeopardizing the wellbeing of hauled animals if they can no longer be hauled by trained, skilled drivers.
Trade is vital to the success of the U.S. cattle and beef industry. Every effort should be made to expand export opportunities for U.S. beef by removing tariff and non-tariff barriers through trade agreements and other terms of market access. Cattle producers support open markets and science-based standards that allow them to capitalize on strong demand for U.S. beef in overseas markets in Asia and Latin America.
Exports provide American producers with opportunities to maximize carcass values by marketing beef cuts such as tongues, liver, and short plate, that are less popular among American consumers but often fetch top dollar in international markets. Added value from exports benefits every segment of the beef supply chain.
What is NCBA Working On?
Thanks to a decade of trade policy wins, U.S. cattle producers have experienced record-setting beef export sales. Trade agreements have been instrumental in removing trade barriers, ensuring that foreign buyers have greater access to high-quality American beef.
The U.S.-Mexico-Canada Agreement (USMCA) benefits American producers because it protects our duty-free, unrestricted access to Canada and Mexico, and cements science-based trade practices throughout North America. NCBA worked closely with Congress and the Trump Administration to secure USMCA, which went into force on July 1, 2020.
Japan-U.S. Bilateral Trade Deal
Japan is one of the largest export markets for U.S. beef, accounting for nearly $2 billion in sales annually. In 2019, the Trump Administration secured a critically important bilateral trade deal with Japan that leveled the playing field for U.S. beef producers by reducing Japan’s tariff from 38.5% to 9%. This agreement took effect on January 1, 2020.
U.S.-China Economic and Trade Agreement
As Chinese consumers see higher incomes, their demand for American beef is growing at a rapid rate. For 13 years, China banned American beef based on BSE concerns and other non-tariff trade barriers. The U.S.-China Economic and Trade Agreement (commonly referred to as the China Phase One Trade Deal), removed many of the non-tariff trade barriers and opened the massive Chinese market to U.S. beef. Even though the agreement has only been in effect since Spring of 2020, China has already emerged as a top five export market for U.S. beef.
Trade Promotion Authority
Trade Promotion Authority (TPA) authorizes the President to negotiate trade agreements with the assurance that Congress will consider the final agreement with only an up-or-down vote. Under TPA, Congress sets the objectives of trade agreements but gives flexibility to the President to negotiate the specific details with Congressional oversight. Unfortunately, TPA expired in July 2021 and has yet to be reauthorized by Congress. As an essential tool for trade negotiations, NCBA is working with Congress to reauthorize TPA.
Increase Bilateral Trade with the United Kingdom
As a result of Brexit, the United Kingdom is no longer part of the European Union and has the liberty to negotiate bilateral trade agreements with new trade partners. The U.S. and U.K. share many similarities in cattle production and consumer expectations – particularly our commitment to sustainably producing healthy cattle. Expanding trade with the U.K. will reinforce our shared commitment to higher standards in animal health, animal welfare, and sustainability.
Why Does This Matter for Cattle Producers?
American cattle producers raise high-quality, nutritious beef. NCBA is committed to helping producers capture the highest value for their beef by strengthening the business climate both at home and abroad. Foreign markets present an opportunity for American producers to gain additional value for their cattle, and NCBA works with policymakers and trade negotiators to open more markets for high-quality American beef.
OverviewOn Dec. 20, 2018, President Trump signed the Farm Bill into law. It marked the end of a two-year process in which NCBA fought to make sure that the landmark legislation included provisions of vital importance to America's cattle producers – chief among these, the establishment of animal health provisions that included the funding of a Foot-and-Mouth Disease vaccine bank, the National Animal Vaccine and Veterinary Countermeasures Bank (NAVVCB) as well as a strong Conservation Title. Since the Farm bill was signed into law, NCBA has continued to ensure that our Farm Bill priorities are properly and fully implemented at the U.S. Department of Agriculture (USDA).
What is NCBA Doing?
NCBA’s Chief Veterinarian, Dr. Kathy Simmons, was appointed by the United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) to the National Animal Disease Preparedness and Response Program's (NADPRP) consultation board. USDA APHIS established this consultation board to assist the agency with implementation of the National Animal Disease Preparedness and Response Program. This new program was created by the 2018 Farm Bill to fund projects that will help prevent animal pests and diseases from entering the United States and reduce the spread and impact of potential animal disease incursions.
In 2020, USDA announced that they secured contracts worth $27.1 million to provide foot-and-mouth disease (FMD) vaccines for the National Animal Vaccine and Veterinary Countermeasures Bank (NAVVCB) that was created in the 2018 Farm Bill at the request of NCBA. This year the agency pledged to spend another $14.9 million for FMD vaccines. While this is a significant initial step forward, more work needs to be done. NCBA will continue to work with USDA, Congress and other stakeholders to secure future funding, making certain that the entire U.S. cattle industry is better prepared for a possible outbreak of FMD.
Why does this matter for cattle producers?
FMD is a threat to both the livestock industry and to American agriculture, as a whole. It is a highly contagious, viral disease affecting cloven-hoofed livestock such as cattle, sheep and pigs. Morbidity can reach 100 percent in susceptible populations, and mortality can reach 20 percent or more in young calves, lambs and piglets. While there has not been a U.S. outbreak of FMD since 1929, the disease still poses a significant threat to the U.S. cattle herd. FMD is endemic in many areas of the world, and international trade and travel create opportunities for the virus to enter the United States.
In the past, the U.S. response to an FMD outbreak relied predominantly on the depopulation of infected animals. Currently, industry leaders and regulatory authorities have shifted the strategy for managing outbreaks towards using vaccination. Prior to the creation of the NAVVCB in the 2018 Farm Bill, the United States relied on an FMD antigen bank that we shared with Mexico and Canada
Cattle producers play a vital role in the conservation of wildlife species. Many NCBA members dedicate significant time and resources to the maintenance of critical wildlife habitat, even when that work means a financial or operational loss for the operation.
The Endangered Species Act (ESA) became law in 1973 with the admirable goal of protecting species at risk of extinction and funding efforts to recover them. Unfortunately, this law has since become one of the most ineffective statutes on the books. As of October 2020, only 3.7 percent of the total number of species listed since 1973 have been delisted. The ESA was designed with four distinct phases — identification of species at risk, listing as “threatened” or “endangered,” recovery efforts to boost populations, and delisting when the species is fully recovered. Congress saw these as equally important parts of the process. Over the last 50 years, imbalanced focus on the listing phase with a failure to develop recovery plans has crippled many recovery efforts. When combined with unclear or constantly-changing population targets and inefficient procedures within the U.S. Fish and Wildlife Service (FWS), species have languished on the list long after FWS has publicly declared them as recovered. This wastes time and prevents limited taxpayer funds from going to the animals that truly need help.
In August 2019, NCBA and the Public Lands Council worked with state wildlife agencies, conservation groups, and other stakeholders across the political spectrum to secure reforms that modernized the ESA. In June 2021, FWS and the National Marine Fisheries Service announced their intent to rollback these reforms.
What is NCBA working on?
As federal agencies consider changes to the implementation of the ESA, NCBA is focused on the following priorities:
- Cattle producers need a voice in the process. ESA listings have a direct impact on cattle producers’ ability to be responsible stewards of the land and water. Federal regulators must consider the good work already done when evaluating a species’ status. Cattle producers’ work should be recognized and included. FWS must also consider not only the economic harm imposed on producers and rural communities by unnecessary listings, but also the unforeseen side effects of preventing producers from actively managing landscapes and ecosystems.
- Cattle producers need the flexibility and incentives to pursue voluntary conversation projects. Ranchers and farmers do a tremendous amount of voluntary environmental work each day, even when it comes at a financial or personal cost to their operation. Their work includes reducing fuel loads for wildfire; improving soil health and increasing carbon storage; fighting invasive species and restoring native grasslands; repairing waterways; and more. ESA listings discourage or prohibit much of this voluntary work, resulting in unintended residual harm to wildlife and the entire ecosystem.
- Species must be efficiently delisted when they are fully recovered. The ESA was never intended to be a permanent waiting room. Species that are listed must be targeted with a specific, strategic recovery plan and when recovery has been achieved, they must be delisted. Rampant litigation threatens FWS’s ability to ever delist species, which was never the intent of Congress. NCBA is involved in litigation to defend the delisting of the gray wolf, and we will continue to push back against the overreach and abuse that arises from failure to delist recovered species.
Why does this matter for cattle producers?
From grizzly bears to gray wolves, prairie chickens to panthers, wildlife is constantly impacting and shaping the way that cattle producers do business. Our members need the freedom and flexibility to conserve wildlife habitat, protect at-risk species, and make responsible management decisions for their land. ESA reforms are a necessary part of that equation.
CATTLE PRODUCERS EXEMPT FROM CERCLA AND EPCRA REPORTING
CERCLA and EPCRA were enacted by Congress to provide for cleanup of the worst industrial chemical toxic waste dumps and spills. Neither of these laws were intended to govern agricultural operations, for whom odor emissions from livestock are a part of everyday life. To make this clear, in 2008, EPA finalized a rule to clarify that farms are exempt from CERCLA reporting and small farms, specifically, were also exempt from EPCRA reporting. Activists sued the EPA, forcing a bad court decision in 2017 that resulted in upward of 200,000 livestock operations being put on the hook for reporting low-level odor emissions to the government. To add insult to injury, it is practically impossible for the vast majority of cattle producers to calculate the odor emissions that need to be reported with any degree of certainty.
Even the people who receive these odor reports do not want them and have said that receiving them would actually hurt their ability to respond to emergencies. The National Association of SARA Title III Program Officials, which represents state and local emergency response commissions, notes the EPCRA odor reports "are of no value to [Local Emergency Planning Committees] and first responders" and that the reports "are generally ignored because they do not relate to any particular event." The U.S. Coast Guard, who receives the CERCLA odor reports, stated that early calls from farmers have "increased [initial notifications] from approximately 100-150 calls per day to over 1,000 phone calls per day." This influx has negatively impacted the Coast Guard's ability to coordinate responses for true emergencies. The bottom line is CERCLA and EPCRA were designed by Congress to deal with toxic waste spills and chemical explosions, not odors from a cattle ranch or feedlot.
What does this mean for cattle producers?
NCBA’s successful advocacy campaign led to a change in the law to protect livestock producers from the onerous CERCLA reporting requirements. Starting March 2018, farms across the country are exempt from a law originally written to target toxic waste sites, not cattle ranches and feedlots. As a follow-up to the success we’ve had in eliminating CERCLA reporting for livestock producers, in late 2018 the Trump Administration proposed an EPCRA exemption for farms. NCBA filed robust comments in support of this exemption and on June 4, 2019 EPA Administrator Andrew Wheeler signed the final rule exempting cattle producers from EPCRA reporting. These exemptions represent critical relief for cattle producers
NCBA is closely monitoring the Dietary Guidelines process to ensure that all decisions are science-based, and that anti-animal agriculture activists do not try and skew the process in their favor. Some activist groups have proposed including “sustainability” considerations in the new guidelines – code for saying that beef consumption should be heavily reduced or eliminated. Eliminating meat from the world’s diets will not end or even significantly impact climate change, and it will make the world’s consumers less healthy and more at risk for malnutrition.
What does this mean for cattle producers?
In July 2020, the Dietary Guidelines Advisory Committee (DGAC) released their scientific report, which represents an objective assessment of the latest available science on specific nutrition topics and is designed to inform the U.S. Department of Agriculture (USDA) and the U.S. Department of Health and Human Services (HHS) as they develop the 2020-2025 Dietary Guidelines for Americans (DGAs). Since 1980, new DGAs are published every five years, and as the cornerstone of all federal nutrition policy, influence policy makers, health professionals, and federal nutrition programs alike.
Even though the 2020 guidelines are generally balanced and evidence-based, there were missed opportunities to further reinforce beef’s role in healthy diets and NCBA was proactive in launching a campaign to drive producer comments on the scientific report. Thanks to widespread grassroots support from cattle producers across the country, this was one of NCBA’s most successful comment campaigns ever. Over 700 producers submitted letters to help DGAC recognize where they can improve their work, when they release the Dietary Guidelines for 2020-2025. Stay tuned for more to come this winter as the Dietary Guidelines are finalized.
Read NCBA's Dietary Guidelines policy here.
For years, NCBA fought against the widely overreaching 2015 Waters of the United States rule. On September 12, 2019, the Trump Administration finalized the repeal of the 2015 Waters of the United States (WOTUS) rule and in April 2020, finalized the Navigable Waters Protection Rule (NWPR). The NWPR, unlike the 2015 WOTUS rule, did not subject ephemeral streams or isolated water features to federal regulation. Additionally, the NWPR provided much needed agricultural exemptions for stock ponds, prior converted cropland, and other agricultural features. NCBA defended the NWPR in federal courts across the country, but unfortunately it was struck down by the U.S. District Court in Arizona on August 30, 2021.
What is NCBA Working On?
In early 2021, the Biden Administration announced their intent to repeal and replace the NWPR. Starting in August 2021, the Environmental Protection Agency (EPA) and the Army Corps of Engineers held public listening sessions. At these sessions, NCBA, state affiliates, and numerous cattle producers provided comments in support of NWPR. Unfortunately, the court decision striking down the NWPR left EPA to interpret WOTUS consistent with the pre-2015 regulations until further notice. While the Biden Administration develops new WOTUS rules, NCBA will remain part of the conversation.
What Does this Matter for Cattle Producers?
The 2015 WOTUS rule overregulated the types of isolated or temporary water features commonly found on ranches, such as stock ponds. For years, the WOTUS rule was tied up in litigation leaving cattle producers with regulatory uncertainty while courts decided whether the rule could be enforced. The NWPR limited the scope of federal oversight to larger water systems, including territorial seas, lakes, ponds, and adjacent wetlands as well as tributaries to those bodies of water. As the EPA continues developing a new definition for “waters of the U.S.,” NCBA will make sure that producers’ voices are heard throughout this process. NCBA will also collaborate with state affiliates and members to share individual stories of how an overly broad WOTUS definition impacts cattle farms and ranches.
U.S. beef production is the most sustainable in the world thanks to decades of improvement and innovation by American farmers and ranchers. Today, the U.S. produces 18 percent of the world’s beef with just 6 percent of the world’s cattle due to scientific advancements in animal nutrition, genetics, and production practices. To highlight the commitment of American cattle farmers and ranchers to continued efficiency and sustainability, NCBA released the U.S. cattle industry sustainability goals at the 2021 Cattle Industry Convention in Nashville, Tennessee. These goals are the culmination of grassroots, producer-led policy discussions and showcase the industry’s dedication to environmental, economic, and social sustainability. A truly sustainable food system is only possible by balancing these three types of sustainability. Beef production must remain economically sustainable to be environmentally conscious, while also investing in animal husbandry and workforce safety.
What is NCBA Working On?
Cattle producers have long implemented conservation and sustainability practices on their farms and ranches. Building on generations of sustainable practices, NCBA’s sustainability goals set targets for future improvement and provide a benchmark for measuring success.
The goals include:
- Demonstrate the climate neutrality of U.S. cattle production by 2040.
- Create and enhance opportunities that result in a quantifiable increase in producer profitability and economic sustainability by 2025.
- Enhance trust in cattle producers as responsible stewards of their animals and resources by expanding educational opportunities in animal care and handling programs to further improve animal well-being.
- Continuously improve our industry’s workforce safety and well-being.
To meet these goals, NCBA is sharing educational resources with producers through the Beef Quality Assurance (BQA) program. BQA helps farmers and ranchers implement good animal husbandry practices that demonstrate the industry’s commitment to animal care and workforce safety.
Why Does This Matter to Cattle Producers?
U.S. beef product is the most sustainable in the world. Here are the facts:
- The U.S. has had the lowest beef greenhouse gas emissions in the world since 1996.
- Direct emissions from cattle account for only two percent of the United States’ overall greenhouse gas emissions.
- Between 1961 and 2018, the U.S. beef industry, through continued sustainability efforts and improved resource use, has reduced emissions by more than 40%.
- Today, greenhouse gas emissions from beef production in the United States are 10-50 times lower than other regions around the world.
- Cattle production on private and public land provides $24.5 billion of societal value in the United States, including job creation and land preservation.
The cattle industry is home to some of the most complex markets in the world. The way producers choose to sell their live cattle varies greatly by individual business model, market conditions, geographic region, and a host of other factors.
When calves reach approx. 800 pounds, they are considered “feeder” cattle. Feeder cattle are sold to feeders, who put cattle on a specialized diet for approximately 4-6 months. Once the cattle reach finished weight, typically 1,200-1,400 pounds at 18-22 months old, they are considered “fat,” “fed,” “finished,” or “live” cattle. Live cattle are then sold to packers and processors, who slaughter and process the animals to produce boxed beef. Boxed beef is sold to wholesalers, who in turn sell to retailers and food service providers, until the final product lands on the plate of a consumer.
There are four basic transaction types used to trade live cattle:
- In a negotiated cash trade, the price of the live cattle is the result of a direct negotiation between the feeder (seller) and the packer (buyer). This is the most straightforward type of marketing.
- In a contract, the buyer and seller agree to a pricing mechanism for cattle to be delivered at a later date.
- In a negotiated grid sale, the buyer and seller directly negotiate a base price. Premiums and discounts are then applied to the base price according to traits exhibited by the live cattle. This kind of transaction is intended to reward traits that reflect consumer demands or preferences and penalize undesirable traits. This is an example of value-based marketing.
- Formulas are any form of trade that doesn’t meet the definition of the other three transaction type. In most cases, a base price is determined by some external factor – this could be fed cattle futures, market data available through USDA AMS, etc.
Over the past decade, alternative marketing arrangements or AMAs (contracts, formula sales, and grid sales) have become an increasingly popular over negotiated cash trade. This poses a problem because although AMAs help many cattle producers manage risk and get a better price for live cattle, the prices dictated by AMAs rely upon the value that is assigned to live cattle, at a specific point in time, via negotiated trade. This concept is called price discovery. When many people are using AMAs and too few people are using negotiated trade, buyers and sellers are unable to achieve robust price discovery – and the market becomes dysfunctional. Robust price discovery does not guarantee that someone selling live cattle will make money, but rather it provides critical information to ensure that prices reported are the true value of cattle.
What is NCBA working on?
Fair, competitive, and transparent markets are essential for cattle producers in every sector of the industry. Working to encourage competition and transparency is a major part of NCBA’s larger goal of supporting producer profitability. No matter how our members choose to market their live cattle, we want to return market leverage to the side of cattle farmers and ranchers so producers in every sector of the cattle industry can get the prices that they deserve from the packers.
NCBA is tackling this urgent need from multiple angles:
- NCBA is leading the industry to explore ways to increase the use of negotiated cash trade. Beginning on January 1, 2021, a subgroup of NCBA volunteer leaders from across the country began implementing and monitoring a framework colloquially called the 75% Plan. This plan was created by cattle producers, via NCBA’s grassroots policy process. The plan tests the levels of negotiated cash trade, and the level of participation that needs to be seen from packers, in different regions in order to achieve robust price discovery. At its core, the 75% Plan tests whether the industry can resolve this issue of low volumes of negotiated cash trade in a voluntary, industry-led manner – not a government mandate. Read more about the 75% Plan.
- NCBA is working with USDA and lawmakers on Capitol Hill to support the expansion of processing capacity, specifically among small- to mid-sized, independent, regional, and local packing facilities. Right now, there is a greater supply of live cattle than the packing sector can handle. This imbalance of cattle and “hook space” or processing capacity leads to an imbalance of power in market transactions – cattle producers do not have as many opportunities to sell their animals, and packers have an abundant supply to choose from, taking away leverage from the producer. Disruptive, “black swan” market events like the COVID-19 pandemic and 2019 Tyson fire in Holcomb, Kansas exposed the severe need for more processing capacity, but the issue precedes either of these events. NCBA is working with Congress and USDA to increase financing available through loans and grants, lower regulatory barriers, and conduct relevant research to support the expansion of processing capacity.
- NCBA is working hard with partners in Congress to secure reauthorization of Livestock Mandatory Reporting (LMR). This legislation requires packers to report market information to USDA AMS, who then report it to the public. The law also requires AMS to keep packers’ “proprietary business information” confidential. This confidentiality requirement sometimes prevents any price information at all being publicly available in major cattle feeding regions like Colorado. By reauthorizing LMR and clarifying the intent behind the law, Congress can have a direct impact on available market data and help improve price discovery.
- NCBA was the first and foremost industry voice to call for a U.S. Department of Justice (DOJ) investigation into anticompetitive or antitrust practices taking place in the packing sector, and we have continued to work with industry stakeholders and lawmakers to apply pressure to DOJ. Our members deserve to know whether or not the challenges they are facing in cattle markets can be attributed to anticompetitive practices by packers and processors. DOJ must swiftly conclude their investigation and make their findings available to the public.
Why does this matter for cattle producers?
When markets malfunction, cattle producers at every stage of the supply chain – from cow-calf operators to feeders – cannot get the prices they deserve for their cattle. This a complex and often controversial issue. There is no one silver bullet, and reaching a solution that is research-driven, industry-led, and beneficial for every segment of the supply chain will require transparency and nuance.
The “Product of the USA” label is generically approved by USDA’s Food Safety and Inspection Service, meaning it can be applied without specific source-verification. Under current regulation, foreign products can potentially bear the POTUSA label, provided they were minimally processed or simply repackaged in an FSIS-inspected facility. POTUSA’s broadly permissive application standard:
- can mislead consumers to believe the product is 100% of U.S. origin;
- is not rooted in any source-verification or food safety standard; and
- is applied by packers and retailers in a manner that does not deliver value back to the cattle producer.
What is NCBA working on?
NCBA believes that current “Product of the USA” labels are a disservice to American consumers and cattle producers alike. In 2019, NCBA established the Transparency in Labeling Working Group to investigate producer concerns about the “Product of the USA” label. After several months of investigation, research, and discussion, the producer-led working group recommended new policy for NCBA to address these concerns. NCBA producer members approved the policy in 2020, strengthening NCBA’s support for the use of voluntary source of origin claims, and USDA verification of any source of origin claim or label.
In June 2021, we submitted a petition to USDA-FSIS to eliminate the generic “Product of the USA” label. In lieu of the POTUSA label, we are advocating for a more appropriate generic label, such as “Processed in the USA.” In addition, NCBA requests FSIS to render all other claims relating to U.S. origin ineligible for generic approval. Further, NCBA hopes to work with USDA’s Agricultural Marketing Service (AMS) to proactively educate cattle producers, processors and retailers about the various opportunities that exist to develop voluntary, verifiable origin marketing claims that deliver tangible benefits to cattle producers without violating rules of trade. In July, USDA announced a top-to-bottom review of the POTUSA label. NCBA stands ready to work with USDA throughout that process.
Why does this matter to cattle producers?
Voluntary source-verified labels represent investments made by producers to continually improve their product and meet consumer demand. Marketing through source-verification will provide a more accurate and truthful description of the product. This will reduce the potential for consumer confusion while increasing the ability for cattle producers to capture additional premiums for their product.
While fewer than 20 percent of our country’s population live in rural areas, the small communities there are the backbone of our agricultural and manufacturing industries. Infrastructure investments are an important step toward ensuring that American cattle producers and their communities have access to necessary resources to successful in the 21st century. For rural America to thrive and for farms and ranches to be competitive in a global marketplace, investments in roads, bridges, water infrastructure and reliable high-speed internet are critical.
What is NCBA doing for you?
In regard to the Infrastructure Investment and Jobs Act of 2021, NCBA's goal has been straight forward — get key policy priorities that benefit farmers and ranchers included in the bill, while ensuring that the budget isn't balanced on the backs of those same farmers and ranchers through changes to long-standing provisions in the federal tax code. Included in the bipartisan infrastructure package were several key policy priorities for NCBA:
- $110 billion in U.S. roads and bridges
- $65 billion for high-speed broadband
- Hours-of-service reforms that provide flexibility for livestock haulers
- Congressional commitments to improving federal permitting efficiency
Livestock haulers rely on modernized roads and bridges as well as flexibility in hours-of-service (HOS) requirements to safely complete hauls. Cattle are often raised in remote areas of the country and then hauled long distances to the areas of the country where feedlots and processing plants are located. Without flexibility in HOS requirements, some cattle producers may not have the ability to be compete in the global marketplace and there would be significant challenges in ensuring grocery store shelves remain fully stocked with beef products.
Connectivity is the foundation for progress. Precision agriculture technology will play a central role in increasing our global food system’s resiliency – ensuring that our supply chains remain environmentally sustainable while feeding an ever-growing global population. However, the use of this technology relies on the broad accessibility of reliable, high-speed internet. In the agricultural industry, internet access opens doors to increased efficiency, economic growth, and environmental sustainability.
In addition, historic drought conditions throughout the West serve as a reminder that water infrastructure investments are essential to prepare for changing hydrological conditions, expanding populations, pressing environmental needs and other challenges.