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Ranking Member Boozman's Opening Statement at Hearing to Review Cattle Market Legislation

WASHINGTON—U.S. Senator John Boozman (R-AR), ranking member of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, released the following opening remarks, as prepared, from the legislative hearing to review S. 4030, the Cattle Price Discovery and Transparency Act of 2022, and S.3870, the Meat and Poultry Special Investigator Act of 2022.

Good morning. I thank Chairwoman Stabenow for holding today’s hearing. I thank our witnesses for being with us this morning. I look forward to hearing their testimony and discussing S. 4030, the Cattle Price Discovery and Transparency Act of 2022; and S. 3870, the Meat and Poultry Special Investigator Act of 2022.

There is no doubt that the bills we are discussing this morning are the result of the frustration at the prices America’s farmers and ranchers receive for cattle in relation to the prices consumers ultimately pay for beef products.

There is a significant difference in these two prices, and I understand the frustration of some cattle producers. I also understand the desire of some of my colleagues to propose legislative solutions to address this frustration.

Before Congress passes any changes to the law, I believe we have a responsibility to understand the issue we are seeking to solve and to understand the proposed solution.

Since the sponsors introduced their first version of the legislation in November 2021, we have spent many, many hours reviewing the proposal, talking with USDA officials, and soliciting input from the nation’s preeminent cattle and beef industry economists.

My charge to my staff was to learn all they could about the legislation and talk to the experts including cow-calf producers, backgrounders, feeders, and packers. We supplemented those efforts with academic analysis. This morning’s hearing is one more step we are taking to learn about the issues and the costs and benefits of the proposed legislation. 

Over the last few months, as I and my staff have studied S. 4030 (and its predecessor), we have learned a few things about the potential impact of the legislation. I share this with my colleagues to help inform the discussion and hopefully allow us to seek comments and clarifications from our witnesses.

If adopted, the impacts of S. 4030 would include:

The number of cattle marketed under alternative marketing agreements (AMAs) will decrease and the number of cattle sold in the cash market will increase. For example, in Texas, Oklahoma and New Mexico, between 340 thousand and 2.5 million fed cattle will need to move out of formula contracts annually. In Iowa and Minnesota, it’s fewer than two thousand head a year.

Using Texas A&M’s analysis and economic cost estimates from Dr. Koontz, the costs of this shift away from AMA’s will cost cattle producers between $23 million and $249 million annually, depending on how the Secretary of Agriculture decides to implement the law. Over the five years analyzed by Texas A&M, the costs are in the hundreds of millions to billions of dollars.

The costs to cattle producers are not all borne equally. Some regions will be more heavily impacted that others. Nearly 90 percent of the economic costs of this bill are estimated to be borne by farmers in Kansas and the Southern Plains, including Texas, Oklahoma and New Mexico.

The conversations I have had with participants in all sectors of the cattle industry have also raised some questions that I believe we need to consider:

How do the proposed solutions influence packer concentration?

What regions or sectors of the cattle industry will ultimately benefit, and what regions or sectors will bear the costs?

Does S.4030 disincentivize investment and innovation?

With the utilization of AMAs capped, what tools do producers have to manage risk?

What will the cattle industry look like in a decade if this legislation is enacted, and what will it look like if it isn’t?

And, how would these bills have changed the supply and demand dynamics during the COVID-19 pandemic or other black swan events?

With respect to the Meat and Poultry Special Investigator Act, I must say that I am very uncertain about this legislation’s purpose and goals. Legal experts have shared with me that this newly created office at the Department of Agriculture (USDA) will just duplicate functions already performed by either USDA, the Department of Justice, the Federal Trade Commission, or the Department of Homeland Security.

Do we really think that creating yet another government entity is a real solution? Is duplication of responsibilities and confusing the chain of command among federal regulators helpful to our stakeholders? Does the creation of this office discourage the establishment of new small and midsize meat packers?

Though the focus of this legislation and the sponsors interest is focused on the large packers, what are often referred to as the “Big 4” in the beef industry, there are more than a thousand small packers across the country who are also subject to the requirements of the Packers and Stockyards Act.

Those small businesses are dotted across rural America, and they represent the vast majority of the meat and poultry processing facilities in America. They would also be subject to investigation by this new law.

Additionally, this legislation also impacts the pork, poultry, and lamb industries. Yet, none of those stakeholders are testifying today. I believe the committee should ensure that the record reflects any comments or analysis those industries would like to provide.

As I believe there is potential for confusion amongst the various agencies about who is in charge, the committee would benefit from knowing the position of the Department of Justice on S. 3870.

Finally, I would like to share with the committee that I have been in spirited conversations with USDA as I have unsuccessfully attempted to secure the expert opinion of the Office of the Chief Economist on S.4030.

To ensure the committee has the benefit of the chief economist's expert opinion, I will pose questions to the witnesses today and submit questions for the record. It is my expectation, and I hope the members of the committee will share my expectation, that the Office of the Chief Economist should be empowered to answer any question of any senator fully, completely, independently and without fear of reprisal.

Furthermore, any effort by any government official to thwart this committee’s oversight activities should not be tolerated.

Madam Chairwoman, I ask for unanimous consent to include in the hearing record the letters sent by stakeholders since we noticed the hearing and the multiple economic analyses I've mentioned.

Thank you, I’ve also provided a copy of these documents to all our committee members today. I yield back the remainder of my time.