The National Cattlemen’s Beef Association is watching out for when USDA will move ahead with its funding plans for new packing-plant capacity.
Highlighting some policy successes for NCBA in 2021, Ethan Lane, the group’s vice president of government affairs, said in an online press call Tuesday that NCBA “continues to have really robust dialogue” with the Biden administration on packing capacity and expects USDA will soon be making some funding announcement for new regional packing plants.
While USDA has not detailed its plans for the $500 million, Lane said USDA has been directing its focus on more regional processors.
“We’re continuing to reiterate that message to the administration that we need to diversify, regionalize that packing capacity,” Lane said. “We need to make sure we’re looking for opportunities to create new packing capacity in areas that are underserved.”
U.S. Agriculture Secretary Tom Vilsack first announced the $500 million funding for packers in late July, but then USDA asked for recommendations from stakeholders later in the summer. Lane said USDA had planned to make some funding announcements “at the end of the year.” So, the wait continues.
“I’m not terribly surprised that they haven’t put anything out yet, but it should be soon,” he said. “I wouldn’t be surprised if it came out in chunks” with different funding levels targeting the various packing sectors — beef, pork and poultry.”
Even without federal funds in hand, at least four medium-sized independent packing plants have been announced in Idaho, Iowa, Missouri and Nebraska with plans for construction throughout the next year.
New processors that receive those federal funds will ideally generate new opportunities and more value for producers instead of further down the supply chain. Lane said NCBA also has stressed to USDA to ensure that new packing capacity doesn’t go to the “Big Four” packers — Cargill, JBS, National Beef or Tyson Foods.
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“I think everybody in this space has made it clear they don’t want to see any of this money go to the Big Four that have harvested so much profit,” Lane said.
Tanner Beymer, director of government affairs and market regulatory policy at NCBA, said he was at a roundtable late last week with a pair of USDA undersecretaries as well as Rep. Abigail Spanberger, D-Va.
USDA earlier this month announced $100 million under the Food Supply Chain Guaranteed Loan Program to make available nearly $1 billion in loan guarantees for food processing and other essential infrastructure for the food supply chain. The program allows guaranteed loans with lenders for up to $40 million for businesses to expand facilities or add new equipment. More details can be found here.
Touching on beef demand, Lane pointed to record beef exports for 2021. The U.S. Meat Export Federation noted beef exports were at $8.53 billion at the end of October, already surpassing the 2018 record of $8.33 billion with two months of exports still left to record.
“We have a tremendous amount of demand right now both nationally and around the world,” Lane said. “We want to capitalize on that so we don’t lose it.”
Looking at price discovery, NCBA installed a voluntary framework with certain triggers that would step up its own calls for regulatory changes. Over the year, Lane said, there has been more negotiated cash trade in certain areas of the country, even if packers did so reluctantly.
“We know that’s not sustainable long term,” Lane said. “We’re going to need to find some options to make sure, first of all, that producers have the ability to choose the best marketing method for their cattle, rather than a government mandate telling them how to market their cattle. They need to be able to pick the best option for them.”
Still, Lane said there needs to be some guarantee of “healthy, robust price discovery” to set base prices used for alternative marketing arrangements (AMAs). Lane said he expects more focus on that issue when NCBA gathers in Houston, Texas, in early February.
The House of Representatives earlier this month also passed the Cattle Contract Library Act and extended the Livestock Mandatory (Price) Reporting Act through Sept. 30, 2022. The contract library passed 411-13, reflecting the broad industry support for a library that shows details of AMAs, similar to a program that is already operating in the pork industry.
The bill still needs Senate approval, but it came out of the cattle industry meeting in Phoenix, Arizona, last spring following concerns about markets.
“I think one of the reasons you saw that particular piece of legislation move so quickly through the process is because it enjoys such broad support from a wide variety of interest groups,” Beymer said.
At the moment, the LMR is operating on an extension to Feb. 18, 2022, so the livestock industry will be watching how the next federal funding bill moves and if the Senate adds the LMR bill to it. LMR keeps getting extended.
CASH TRADE BILLS
Because of the group’s opposition to mandated cash trade, NCBA right now remains opposed to a deal struck between Sens. Chuck Grassley, R-Iowa; Deb Fischer, R-Neb.; Jon Tester, D-Mont.; and Ron Wyden, D-Ore., to expand negotiated cash trade for cattle, the Cattle Price Discovery and Transparency Act.
“We still have firm policy that opposes government mandates of cash market activity,” Beymer said.
The legislation, dubbed the Fischer-Grassley bill, looks to encompass regional mandated cash trade with an extension of the LMR bill and a contract library all lumped into one bill.
“We would strongly advocate that those legislative ideas or cattle market proposals that do not enjoy broad support or are controversial within the industry, that they be considered separately from LMR because we can’t afford to jeopardize LMR’s chances of getting reauthorized in either a short-term or long-term basis,” Beymer said.
Reflecting some of the industry division on the Fischer-Grassley bill, the Ranchers-Cattlemen’s Action Legal Fund (R-CALF USA) released its own analysis that the bill would be more of a boon for packers than cattle producers. R-CALF wants to see a national 50% negotiated cash market within 14 days of cattle slaughter — a proposal Grassley and Tester originally proposed.
Lane added that the House moved ahead on a bill with a lot of broad agreement, while the Senate bill has “some pretty aggressive personality politics at play.”
Lane also noted the year ended with the stalling out of the Build Back Better initiative and its “large aggressive spending plans.” NCBA and other agricultural groups initially opposed the bill over tax provisions in the original plans detailed last spring. NCBA and the American Farm Bureau Federation were among the groups that remained opposed to the bill.
“We spent most of this year really trying to educate members up on Capitol Hill and consumers around the country about the very real threat of including pay-fors in this multi-trillion-dollar spending package,” Lane said.
The bill initially included language to eliminate stepped-up basis for inherited assets, as well as reducing the estate-tax exemption and increasing capital gains. Lane said all those provisions “could have had a disastrous impact on cattle producers.”
For more details on tax provisions in the bill, see “Farm Tax Experts Worry Alarming Tax Provisions Could Return to Build Back Better Act,” here.
Lane noted NCBA was joined by hundreds of agricultural groups to push back on some of those tax provisions. Moving into 2022, Democrats are expected to modify the Build Back Better Act to potentially get Sen. Joe Manchin, D-W.Va., to support some version of the bill. “Nevertheless, we really view that as a real success story for NCBA,” Lane said.
Chris Clayton can be reached at Chris.Clayton@dtn.com
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