Optimizing the Cattle Market Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 3766 To amend the Packers and Stockyards Act, 1921, to establish a cattle contract library, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 8, 2021 Mrs. HARTZLER (for herself and Mr. CLEAVER) introduced the following bill; which was referred to the Committee on Agriculture A BILL To amend the Packers and Stockyards Act, 1921, to establish a cattle contract library, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Optimizing the Cattle 4 Market Act of 2021’’. 5 SEC. 2. SENSE OF CONGRESS. 6 It is the sense of the Congress that there is a need 7 for expedited reauthorization of the Livestock Mandatory 8 Reporting program of the Department of Agriculture, in- 9 cluding formula base prices subject to the same reporting 10 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 3766 IH requirements as negotiated cash and the creation of a con- 1 tract library. 2 SEC. 3. CATTLE CONTRACT LIBRARY. 3 (a) IN GENERAL.—Title II of the Packers and Stock- 4 yards Act, 1921, is amended by inserting after section 223 5 (7 U.S.C. 198b) the following: 6 ‘‘Subtitle C—Cattle Contracts 7 ‘‘SEC. 231. DEFINITIONS. 8 ‘‘In this subtitle: 9 ‘‘(1) BASE PRICE.—The term ‘base price’ 10 means the price paid for cattle delivered to a packer, 11 before application of any premiums or discounts, ex- 12 pressed in dollars per hundred pounds of carcass 13 weight. 14 ‘‘(2) CONTRACT.— 15 ‘‘(A) IN GENERAL.—Subject to subpara- 16 graph (B), the term ‘contract’ means any 17 agreement, written or oral, between a packer 18 and a producer for the purchase of fed cattle 19 for slaughter. 20 ‘‘(B) EXCLUSION.—The term ‘contract’ 21 does not include a contract for a negotiated 22 purchase. 23 ‘‘(3) FED CATTLE.—The term ‘fed cattle’ 24 means a steer or heifer that has been finished on a 25 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 3766 IH ration of roughage and feed concentrates, such as 1 grains, protein meal, grass (forage), and other nutri- 2 ent-rich feeds, prior to slaughter. 3 ‘‘(4) FORMULA MARKETING ARRANGEMENT.— 4 The term ‘formula marketing arrangement’ means 5 the advance commitment of cattle for slaughter— 6 ‘‘(A) by any means other than through a 7 negotiated purchase, negotiated grid purchase, 8 or forward contract; and 9 ‘‘(B) using a method for calculating 10 price— 11 ‘‘(i) under which the price is deter- 12 mined at a future date; 13 ‘‘(ii) the basis of which is a price es- 14 tablished for a specified market, which 15 may be based on any publicly reported 16 price, including plant average price, re- 17 gional price, downstream price, or some 18 other mutually agreeable price source; and 19 ‘‘(iii) that may include a grid or 20 nongrid price. 21 ‘‘(5) FORWARD CONTRACT.—The term ‘forward 22 contract’ means— 23 ‘‘(A) an agreement for the purchase of fed 24 cattle, executed in advance of slaughter, under 25 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 3766 IH which the base price is established by reference 1 to— 2 ‘‘(i) prices quoted on the Chicago 3 Mercantile Exchange; or 4 ‘‘(ii) other comparable publicly avail- 5 able prices; or 6 ‘‘(B) any other contract for the purchase 7 of fed cattle, executed in advance of slaughter, 8 as determined by the Secretary. 9 ‘‘(6) HEIFER.—The term ‘heifer’ means a bo- 10 vine female that has not given birth to a calf. 11 ‘‘(7) NEGOTIATED GRID PURCHASE.—The term 12 ‘negotiated grid purchase’ means a purchase of fed 13 cattle by a packer from a producer under which— 14 ‘‘(A) the buyer-seller interaction results in 15 a negotiated base price, which may be adjusted 16 by premiums and discounts; and 17 ‘‘(B) the cattle are scheduled for delivery 18 to the packer not more than 14 days after the 19 date on which the agreement for purchase is 20 made. 21 ‘‘(8) NEGOTIATED PURCHASE.—The term ‘ne- 22 gotiated purchase’ means a purchase of fed cattle 23 (commonly known as a ‘cash’ or ‘spot market’ pur- 24 chase) by a packer from a producer under which— 25 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 3766 IH ‘‘(A) the buyer-seller interaction that re- 1 sults in the purchase and the agreement on the 2 actual base price for the purchase occur on the 3 same day; and 4 ‘‘(B) the cattle are scheduled for delivery 5 to the packer not more than 30 days after the 6 date on which the agreement for purchase is 7 made. 8 ‘‘(9) PACKER.—The term ‘packer’ has the 9 meaning given the term in section 221 of the Agri- 10 cultural Marketing Act of 1946 (7 U.S.C. 1635d). 11 ‘‘(10) PRODUCER.—The term ‘producer’ means 12 a person engaged in the business of selling cattle to 13 a packer for slaughter. 14 ‘‘(11) STEER.—The term ‘steer’ means a bovine 15 male castrated before reaching sexual maturity. 16 ‘‘(12) TYPE OF CONTRACT.— 17 ‘‘(A) IN GENERAL.—The term ‘type of con- 18 tract’ means the classification of a contract for 19 the purchase of cattle— 20 ‘‘(i) into 1 of the categories described 21 in subparagraph (B); and 22 ‘‘(ii) by determining the base price of 23 the cattle. 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 3766 IH ‘‘(B) CATEGORIES.—The categories for 1 classification of a type of contract are the fol- 2 lowing: 3 ‘‘(i) Formula marketing arrangement. 4 ‘‘(ii) Forward contract. 5 ‘‘(iii) Negotiated grid purchase con- 6 tract. 7 ‘‘SEC. 232. CATTLE CONTRACT LIBRARY. 8 ‘‘(a) IN GENERAL.—Subject to the availability of ap- 9 propriations to carry out this section, the Secretary shall 10 establish and maintain a library or catalog of each type 11 of contract offered by packers to producers for the pur- 12 chase of all or part of the production of the producers 13 of fed cattle (including cattle that are purchased or com- 14 mitted for delivery), including any schedules of premiums 15 or discounts associated with the contract. 16 ‘‘(b) INFORMATION COLLECTION.— 17 ‘‘(1) IN GENERAL.—To maintain the library or 18 catalog established under subsection (a), the Sec- 19 retary shall obtain information from each packer on 20 each type of existing contract of the packer by re- 21 quiring a filing or other form of information submis- 22 sion from each packer. 23 ‘‘(2) CONTRACTED CATTLE NUMBERS.—Infor- 24 mation that shall be submitted to the Secretary by 25 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 3766 IH a packer under paragraph (1) shall include, with re- 1 spect to each existing contract of a packer— 2 ‘‘(A) the type of contract; and 3 ‘‘(B) a description of the provisions in the 4 contract that provide for expansion in the num- 5 bers of fed cattle to be delivered under the con- 6 tract for the 6-month and 12-month periods fol- 7 lowing the date of the contract. 8 ‘‘(c) AVAILABILITY OF INFORMATION.— 9 ‘‘(1) IN GENERAL.—The Secretary shall make 10 available to producers and other interested persons 11 information on the types of contracts in the library 12 or catalog established under subsection (a), includ- 13 ing notice (on a real-time basis, if practicable) of the 14 types of contracts that are being offered by packers 15 to, and are open to acceptance by, producers for the 16 purchase of fed cattle. 17 ‘‘(2) MONTHLY REPORT.— 18 ‘‘(A) IN GENERAL.—Beginning 30 days 19 after the library or catalog is established under 20 subsection (a), the Secretary shall make the in- 21 formation obtained each month in the library or 22 catalog available in a monthly report to pro- 23 ducers and other interested persons. 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 3766 IH ‘‘(B) CONTENTS.—The monthly report de- 1 scribed in subparagraph (A) shall include— 2 ‘‘(i) an estimate by the Secretary of 3 the total number of fed cattle committed 4 under contracts for delivery to packers 5 within the 6-month and 12-month periods 6 following the date of the report, organized 7 by reporting region and type of contract; 8 and 9 ‘‘(ii) an estimate by the Secretary of 10 the total maximum number of fed cattle 11 that may be delivered within the 6-month 12 and 12-month periods following the date of 13 the report, based on the provisions de- 14 scribed in subsection (c)(2)(B) in existing 15 contracts, organized by reporting region 16 and type of contract. 17 ‘‘(d) MAINTENANCE OF LIBRARY OR CATALOG.—In- 18 formation in the library or catalog established under sub- 19 section (a) about types of contracts that are no longer of- 20 fered or in use shall be removed from the library or cata- 21 log. 22 ‘‘(e) EDUCATIONAL OUTREACH ACTIVITIES.—The 23 Secretary shall conduct educational outreach activities for 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 3766 IH producers on how best to use the cattle contract library 1 or catalog established under subsection (a). 2 ‘‘(f) CONFIDENTIALITY.—The reporting require- 3 ments for packers under this section shall be subject to 4 the confidentiality protections provided under section 251 5 of the Agricultural Marketing Act of 1946 (7 U.S.C. 6 1636). 7 ‘‘(g) VIOLATIONS.—It shall be unlawful and a viola- 8 tion of this Act for any packer to willfully fail or refuse— 9 ‘‘(1) to provide to the Secretary accurate infor- 10 mation required under this section; or 11 ‘‘(2) to comply with any other requirement of 12 this section. 13 ‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There 14 are authorized to be appropriated to the Secretary such 15 sums as are necessary to carry out this section.’’. 16 (b) CONFORMING AMENDMENT.—Section 201 of the 17 Packers and Stockyards Act, 1921 (7 U.S.C. 191), is 18 amended by striking ‘‘When used in this Act’’ and insert- 19 ing ‘‘Unless specified otherwise, in this Act,’’. 20 SEC. 4. CASH MARKET ACQUISITION OF CATTLE. 21 Title II of the Packers and Stockyards Act, 1921 (7 22 U.S.C. 191 et seq.) (as amended by section 2), is amended 23 by adding at the end the following: 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 3766 IH ‘‘Subtitle D—Cash Market 1 Acquisition of Cattle 2 ‘‘SEC. 241. DEFINITIONS. 3 ‘‘In this subtitle: 4 ‘‘(1) NEGOTIATED GRID PURCHASE.—The term 5 ‘negotiated grid purchase’ means a purchase of cat- 6 tle by a packer from a producer under which— 7 ‘‘(A) the buyer-seller interaction results in 8 a negotiated base price, which may be adjusted 9 by premiums and discounts; and 10 ‘‘(B) the cattle are scheduled for delivery 11 to the packer not more than 14 days after the 12 date on which the agreement for purchase is 13 made. 14 ‘‘(2) NEGOTIATED PURCHASE.—The term ‘ne- 15 gotiated purchase’ means a purchase of cattle (com- 16 monly known as a ‘cash’ or ‘spot market’ purchase) 17 by a packer from a producer under which— 18 ‘‘(A) the buyer-seller interaction that re- 19 sults in the purchase and the agreement on the 20 actual base price for the purchase occur on the 21 same day; and 22 ‘‘(B) the cattle are scheduled for delivery 23 to the packer not more than 30 days after the 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 3766 IH date on which the agreement for purchase is 1 made. 2 ‘‘(3) PACKER.—The term ‘packer’— 3 ‘‘(A) has the meaning given the term in 4 section 221 of the Agricultural Marketing Act 5 of 1946 (7 U.S.C. 1635d); and 6 ‘‘(B) for calendar years beginning on or 7 after January 1, 2022, includes only a feder- 8 ally-inspected cattle processing plant that 9 slaughtered an average of 125,000 head of cat- 10 tle per year during the immediately preceding 5 11 calendar years. 12 ‘‘(4) PRODUCER.—The term ‘producer’ means a 13 person engaged in the business of selling cattle to a 14 packer for slaughter. 15 ‘‘(5) REGIONAL MANDATORY MINIMUM.—The 16 term ‘regional mandatory minimum’ means, for each 17 reporting region (as designated by the Agricultural 18 Marketing Service), of the number of transactions 19 and quantity of cattle purchased for slaughter by a 20 packer in that region each slaughter week, the min- 21 imum number of such transactions and the min- 22 imum percentage of such cattle, respectively, that 23 are required to be purchased through negotiated 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 3766 IH purchases or negotiated grid purchases from pro- 1 ducers. 2 ‘‘(6) SLAUGHTER WEEK.—The term ‘slaughter 3 week’ has the meaning given the term ‘current 4 slaughter week’ in section 212 of the Agricultural 5 Marketing Act of 1946 (7 U.S.C. 1635a). 6 ‘‘SEC. 242. REGIONAL MANDATORY MINIMUMS. 7 ‘‘(a) IN GENERAL.—Not later than 2 years after the 8 date of enactment of this subtitle, the Secretary, in con- 9 sultation with the Chief Economist, shall establish— 10 ‘‘(1) regional mandatory minimums for the pur- 11 pose of enhancing price discovery and transparency 12 for cattle market participants; and 13 ‘‘(2) methods for establishing those regional 14 mandatory minimums, which shall be publicly avail- 15 able. 16 ‘‘(b) DURATION.—Regional mandatory minimums es- 17 tablished for each reporting region under subsection 18 (a)(1)— 19 ‘‘(1) may be weekly or on another periodic 20 basis, as determined by the Secretary; 21 ‘‘(2) shall account for improbable events with 22 profound consequences (commonly referred to as 23 ‘black swan events’); and 24 VerDate Sep 11 2014 06:46 Jul 03, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3766.IH H3766 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 3766 IH ‘‘(3) shall be applicable for not more than a 24- 1 month period. 2 ‘‘(c) PUBLIC INPUT.—In carrying out subsection (a), 3 the Secretary shall make all proposed regional mandatory 4 minimums and proposed methods for establishing those 5 minimums subject to a notice [Text truncated for display. 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