POLICY WATCH

U.S. Brings Dairy Action Against Canada

The U.S. has established a second U.S.-Mexico-Canada Agreement (USMCA) dispute panel with Canada over their application of tariff-rate quotas for dairy products, saying they do not follow the decision in the case won by the U.S. in December 2021. The Office of the U.S. Trade Representative (USTR) had previously requested further consultations with Canada over their dairy import program changes. Canada had submitted proposed changes to their dairy import program to comply with the December 2021 dispute panel ruling. USTR rejected these proposals for not following the decision, against Canada, that the implementation of their Tariff Rate Quota (TRQ) program did not allow the increased access for U.S. dairy products that was included in the USMCA. Canada moved to finalize their program changes and the U.S. reacted by requesting consultations, the beginning of a second dispute process. The May 2022 request from USTR for consultations, under USMCA dispute settlement procedures, challenged Canada’s dairy (TRQ) allocation measures for denying access to eligible U.S. applicants. The December 2021 USMCA dispute settlement panel decided in favor of the U.S. in the case against Canada over dairy imports. The panel ruled that Canada violated the terms of the USMCA by improperly restricting access to its market for U.S. dairy products by the administration of its dairy tariff-rate quota commitments. USTR’s new panel request outlines several aspects of Canada’s policies that violate USMCA provisions. It maintains that Canada’s methodology for calculating market share differs depending on the type of applicant, whether a processor, distributor, or further processor. USTR claims that Canada’s implementation of the dairy (TRQ)s unfairly protects Canadian firms and limits the ability of U.S. products to enter Canadian markets. The request also charges that Canada’s failure to fully allocate its annual dairy (TRQ) undermines the market access that it agreed to provide in the USMCA. Farm Bureau supports using the enforcement measures in USMCA to reach the negotiated access to Canadian markets for U.S. dairy products.

USDA Launches Cattle Contract Library Pilot Program

The Consolidated Appropriations Act of 2022 established the pilot Cattle Contract Library within USDA AMS. Under this pilot, AMS will collect, maintain, and report aggregated information on contracts between cattle producers and packers for purchases of fed cattle. The library will include different types of contracts and contract terms. This includes premium schedules, discount schedules, delivery and transportation, terms and payments, financing, risk sharing, and other financial arrangements. Additionally, AMS will also report on the number of head of cattle purchased under the terms of a contract. AMS will be conducting a series of stakeholder webinars to inform producers how to use this new tool. The live dashboard will begin on February 6, 2023. Nebraska Senator Deb Fischer’s recently reintroduced Cattle Price Discover and Transparency Act of 2023 permanently authorizes the program.  

Nebraska Senator Deb Fischer Reintroduces Cattle Market Reform Legislation

U.S. Senators Deb Fischer (R-Neb.), Ron Wyden (D-Ore.), Chuck Grassley (R-Iowa), and Jon Tester (D-Mont.) introduced the bipartisan Cattle Price Discovery and Transparency Act of 2023. The legislation aims to restore transparency and accountability in the cattle market by establishing regional cash minimums and equipping producers with more market information, including permanently authorizing a cattle contract library. “I continue to hear from Nebraska family farmers and ranchers about the need for robust price discovery and transparency in our cattle markets. Support for our bill is stronger than ever, with a long list of cosponsors representing a diverse set of agricultural communities from across the country. I look forward to working with them all to build on the strong momentum we had last year,” said Senator Fischer, a member of the Senate Agriculture Committee. Following the introduction of the legislation, Nebraska Farm Bureau President Mark McHargue said, “the farm and ranch member families of the Nebraska Farm Bureau Federation once again stand firmly behind Nebraska Senator Deb Fischer’s efforts to provide more price discovery and transparency to the cattle marketplace. Nebraska is ‘The Beef State’ and Sen. Fischer’s tireless leadership trying to address the many challenges surrounding how cattle are marketed in the United States is vital to the economic future of our state. Now is the time to move this legislation through Congress and onto President Biden’s desk.” In addition to Sens. Fischer, Wyden, Grassley, and Tester, the legislation is cosponsored by U.S. Senators Joni Ernst (R-Iowa), Mike Braun (R-Ind.), Tina Smith (D-Minn.), Cindy Hyde-Smith (R-Miss.), Steve Daines (R-Mont.), Bill Cassidy (R-La.), Ben Ray Lujan (D-N.M.), Richard Durbin (D-Ill.), Martin Heinrich (D-N.M.), Raphael Warnock (D-Ga.), Richard Blumenthal (D-Conn.), Kirsten Gillibrand (D-N.Y.), Cynthia Lummis (R-Wyo.), Josh Hawley (R-Mo.), Sherrod Brown (R-Ohio), Mike Rounds (R-S.D.), John Kennedy (R-La.), and Pete Ricketts (R-Neb.). Eleven of the cosponsors are members of the Senate Agriculture Committee.

The Cattle Price Discovery and Transparency Act of 2023 will:

1. Require the Secretary of Agriculture to establish 5-7 regions encompassing the entire continental U.S. and then establish minimum levels of fed cattle purchases made through approved pricing mechanisms. Approved pricing mechanisms are fed cattle purchases made through negotiated cash, negotiated grid, at a stockyard, and through trading systems that multiple buyers and sellers regularly can make and accept bids. These pricing mechanisms will ensure robust price discovery and are transparent.
2. Establish a maximum penalty for covered packers of $90,000 for mandatory minimum violations. Covered packers are defined as those packers that during the immediately preceding five years have slaughtered five percent or more of the number of fed cattle nationally.
3. Create a publicly available library of marketing contracts, mandating box beef reporting to ensure transparency, expediting the reporting of cattle carcass weights, and requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. The contract library would be permanently authorized and specify key details about the contents that must be included in the library like the duration of the contract and provisions in the contract that may impact price such as schedules, premiums and discounts, and transportation arrangements.