Policies Dictating How Cattle Can Be Marketed Threaten the Beef Industry’s Progress

Key Points

• Several federal policies have been proposed to regionally limit how fed cattle can be marketed to force minimum volumes of negotiated cash trades for fed cattle.
• Marketing agreements incentivizing producers to generate higher-quality beef have resulted in beef and cattle genetic improvements and more intense cattle feeding practices, which provide higher-quality beef products to consumers.
• Consumers and cattle producers have benefited as beef products have become more aligned with consumer preferences, yet Congress and the Biden administration are contemplating policies that would undermine such advancements.

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Introduction

Commodity supply chains evolve in response to technological innovation and changes in consumer demand, benefiting both producers and consumers. Beef is no exception to this general rule. Nevertheless, arguing for the need to improve price transparency for farmers, Congress and the Biden administration are considering legislation that would force more cattle sales to be channeled through negotiated cash transactions. These involve “day-of transaction” and similar spot market cash sales of cattle from feedlots to meatpacking plants. Proposed “regional minimum” mandates would require such cash sales to exceed a predefined minimum percentage of all transactions. The proposed legislation would increase supply-chain costs and reduce incentives for ranchers and feedlots to produce higher-quality beef products. It would also lower revenues from beef sales to consumers and therefore lower prices paid to feedlots and farmers for their cattle.

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