Legislative Watch: House passing ocean shipping reform, extending LMR, and cattle contract library.

P. Scott Shearer, Vice President

December 10, 2021

5 Min Read
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Cattle Contract Library Passes House - The House of Representatives passed the "Cattle Contract Library Act of 2021" which requires USDA's Agricultural Marketing Service (AMS) to establish and maintain a beef contract library that will increase transparency by providing information to producers on what type of contracts are available.  The vote was 411-13.

Information provided according to a summary of the bill:

  • "Type of contract, defined as the classification of contracts for the purchase of fed cattle based on the mechanism used to determine the base price for the fed cattle committed to a packer under the contract, including formula purchases, negotiated grid purchases, forward contracts, and other purchase agreements, as determined by the Secretary

  • Duration of the contract, provisions in the contract that may affect the base price of cattle covered by the contract, schedules of premiums or discounts associated with the contract, and transportation arrangements

  • The total number of cattle solely committed to the packer each week within the 6-month and 12-month periods following the date of the contract, by reporting region

  • In the case of a contract in which a specific number of cattle are not solely committed to the packer, an indication that the contract is an open commitment and any weekly, monthly, annual, or other limitations on the number of cattle that may be delivered to the packer under the contract

  • A description of the provisions in the contract that provide for expansion in the committed cattle to be delivered under the contract for the 6- and 12-month periods."

The bill introduced by Representatives Dusty Johnson (R-SD) and Henry Cuellar (D-TX) is supported by the American Farm Bureau Federation, National Cattlemen’s Beef Association, U.S. Cattlemen’s Association, National Farmers Union, and Livestock Marketing Association.

The bill now goes to the Senate where Senator Chuck Grassley (R-IA) and others want to address broader reforms in cattle markets

House Extends LMR Until 2022 - The House of Representatives passed an extension of the "Livestock Mandatory Reporting" (LMR) until September 30, 2022 by a vote 419-9.

The bill ensures that USDA will continue to issue market reports that provide transparency and price discovery for producers.  LMR expired in September of 2020 and has continued through the short-term continuing resolutions.

LMR was passed by Congress in 1999 and implemented by USDA's Agricultural Marketing Service in 2001.  The legislation authorizing LMR mandated price reporting for live cattle, boxed beef, and live swine and allowed USDA to establish LMR for lamb purchases and lamb meat sales.  Wholesale pork cuts was added to LMR requirements in 2013.

Ocean Shipping Reform Act - The House of Representatives took steps to address the ongoing challenges exporters continue to face in delays and increased costs for shipping exports overseas by passing the bipartisan "Ocean Shipping Reform Act of 2021."  The legislation aims to stop ocean carriers from refusing to load U.S. exports to markets around the world.  Ocean shippers continue to bring products from China and other countries to U.S. ports and then return empty so they can refill containers as quickly as possible and ship products to the U.S.  This has been a major issue for U.S. agricultural exporters.

The "Ocean Shipping Reform Act of 2021" would:

  • Establish reciprocal trade to promote U.S. exports as part of the Federal Maritime Commission’s (FMC) mission.

  • Require ocean carriers to adhere to minimum service standards that meet the public interest, reflecting best practices in the global shipping industry.

  • Require ocean carriers or marine terminal operators to certify that any late fees —known in maritime parlance as “detention and demurrage” charges—comply with federal regulations or face penalties.

  • Shift burden of proof regarding the reasonableness of “detention or demurrage” charges from the invoiced party to the ocean carrier or marine terminal operator.

  • Prohibit ocean carriers from declining opportunities for U.S. exports unreasonably, as determined by the FMC in new required rulemaking.

  • Require ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (loaded/empty) per vessel that makes port in the United States.

  • Authorizes the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate.

The legislation has strong support from agricultural organizations.  In August, nearly 100 agricultural organizations and companies sent a letter to the sponsors of the bill, Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD), in support of their bill.  They stated, "The transportation crisis for US agriculture and forest products is becoming increasingly dire each month.  There is nothing we produce in agriculture and forest products in this country, that cannot be sourced in some other country. If we cannot deliver, affordably and dependably, our foreign customers will find alternatives to our exports. Our survey suggests that on average 22% of US agriculture foreign sales cannot be completed due to ocean carrier rates, declining to carry export cargo, unreasonable demurrage and detention charges, and other practices."

This is the first major update of U.S. shipping laws in over 20 years.

Economic Relief for Biofuel Producers & RFS Requirements Announced - USDA is making $800 million available to support biofuel producers and biofuels infrastrucutre. 

The Biofuel Producer Program will provide $700 million to biofuel producers who incurred losses due to the Covid-19 pandemic.  There will be up to $100 million for grants for biofuel infrastructure such as blender pumps to increase the availability of biofuels in the market place.  

As USDA was making its announcement, EPA released its Renewable Fuels Standard (RFS) blending requirements for calendar years 2020, 2021 and 2022. It lowered annual blending requirements for ethanol and other biofuels to reflect reduced demand as a result of the Covid pandemic.  At the same time, EPA denied the 65 pending small refinery exemption requests.

EPA proposed 12.5 billion gallons of corn-based ethanol for 2020, 13.3 billion gallons for 2021 and 15 billion gallons for 2022.  The 2020 figure is down from a projected 15 billion gallons previously set and close to the actual amount of corn ethanol produced last year.  It is the first time EPA retroactively changed its requirements.  The 2021 volumes are close to expected production and the 2022 volumes puts the program back on track.  

About the Author(s)

P. Scott Shearer

Vice President, Bockorny Group, Inc.

Scott Shearer is vice president of the Bockorny Group Inc., a leading bipartisan government affairs consulting firm in Washington, D.C. With more than 30 years experience in government and corporate relations in state and national arenas, he is recognized as a leader in agricultural trade issues, having served as co-chairman of the Agricultural Coalition for U.S.-China Trade and co-chairman of the Agricultural Coalition for Trade Promotion Authority. Scott was instrumental in the passage of China Permanent Normal Trade Relations and TPA. He is past chairman of the USDA-USTR Agricultural Technical Advisory Committee for Trade in Animals and Animal Products and was a member of the USAID Food Security Advisory Committee. Prior to joining the Bockorny Group, Scott served as director of national relations for Farmland Industries Inc., as well as USDA’s Deputy Assistant Secretary for Congressional Affairs (1993-96), serving as liaison for the Secretary of Agriculture and the USDA to Congress.

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