Today SDSGA Executive Director James Halverson was invited to participate in a conversation with several Key USDA officials and White House Staff. Liz Archuleta, USDA Director of External and Intergovernmental Affairs hosted the call along with Mae Wu, Deptuty Undersecretary for Marketing and Regulatory Programs and Will McIntee Associate Director of Public Engangment for the White House.
The Biden Administration is seeking input on their announcement to invest $500 million of American Rescue Plan funds to expand meat and poultry processing capacity so that farmers, ranchers, and consumers have more choices in the marketplace.
“We are emphasizing a few points to the Administration on how we’d like to see these funds distributed.” Said Halverson. “First and foremost, we believe these funds must go directly to small and medium sized processors only. We believe if these folks can increase processing capacity there will be more competition for our cattle. We need to incentivize our smaller processors to expand or build new facilities.”
Utilizing funds to upgrade equipment and technology can help expand capacity as well. “When I recently toured a processing facility the owner explained how his new equipment to cure and smoke bacon reduced the process from over a week down to a day, and the results tasted great! I’ve also seen new grinding equipment that is fully automated, but these guys need help investing in this type of technology.” Halverson said.
“We are also emphasizing that there needs to be investment in training and education, as well as technical assistance to help with overcoming barriers to entry. Many of our local processors cannot expand because they don’t have the workforce or the time to jump through all of the hoops that go along with building or expanding.” Halverson added
“Additionally, we continue talking about the need for inspections. Another barrier is the uncertainty of getting the USDA inspections necessary for interstate shipment of meat. We will continue to advocate for S.107 the New Markets for State-Inspected Meat and Poultry Act introduced by Senator Rounds and cosponsored by Senator Thune. There is no reason meat inspected by a state that “must meet or exceed USDA standards for health and sanitation” shouldn’t have the same rights and privileges that federally inspected meat has.” Halverson said.
SDSGA will provide written comments on this issue by August 30th. Please contact the SDSGA office for more information.
Public comments can be submitted at: https://www.federalregister.gov/documents/2021/07/16/2021-15145/investments-and-opportunities-for-meat-and-poultry-processing-infrastructure
WASHINGTON, August 5, 2021 —The U.S. Department of Agriculture (USDA) today announced that beginning Monday, August 9, 2021, it will issue two new USDA Market News reports based on Livestock Mandatory Reporting data that will provide additional insight into formula cattle trades and help promote fair and competitive markets. This action is one piece of USDA’s efforts to deliver on President Biden’s Executive Order 14036 on Promoting Competition in the American Economy, which directed USDA to, among other things, “enhance price discovery, increase transparency, and improve the functioning of the cattle and other livestock markets.” The Executive Order on Competition launched a whole-of-government effort to promote competition, including 72 specific agency initiatives. USDA has already undertaken several other initiatives under the Executive Order, including announcing investments of at least $500 million in meat processing capacity, new rulemakings under the Packers & Stockyards Act, and a top-to-bottom review of the “Product of USA” label.
The first report, the National Daily Direct Formula Base Cattle, will provide greater information into the foundational prices used in cattle market formulas, grids and contracts. The second report, the National Weekly Cattle Net Price Distribution, will show the volume of cattle purchased at each different level of pricing within those formulas, grids, and contracts.
”During the past five years, stresses and disruptions caused by concentration in livestock markets have hurt producers, workers, and consumers, and highlighted vulnerabilities in America’s food system supply chain resiliency. Current negotiated cash cattle trade is approximately 30% less than it was in 2005, while formula transactions have increased at the same rate. Our new reports on formula transactions will bring needed clarity to the marketplace.” said Secretary Tom Vilsack. “Also, in the coming months, we plan to conduct several producer-focused outreach sessions to help producers and others understand how these data can inform real-world marketing decisions at farm, ranch, feedlot, and other points in the supply chain.”
These new reports will be issued by USDA Market News, overseen by the Department’s Agricultural Marketing Service.
- 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.