December 17, 2001

The Honorable Max Baucus
Chairman
Senate Finance Committee
United States Senate
Washington, DC  20510

Dear Senator Baucus:

Thank you for taking the time to visit with us last week.  We also appreciate Angela’s efforts to follow through with our request that is restated below. 

On behalf of the members and affiliated associations of the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA), I am writing to encourage an amendment to HR 3005, the Trade Promotion Authority Bill marked up by the Senate Finance Committee.  This amendment would define perishable, cyclical, and/or seasonal products to include live cattle and beef.  The U.S. cattle industry is extremely sensitive to changes in supplies.  This supply sensitivity is reflected by USDA NASS's issuance of a monthly industry-wide report on cattle on feed.  This report is necessary because neither cattle awaiting slaughter nor fresh beef awaiting consumption can be inventoried without considerable depreciation in product quality or value.  Economists and market analysts report that a 1 percent change in supply causes a 1.6 percent change in price.  This is significant for an industry with a historic return on investment of only 3 to 4 percent.

Live cattle and beef are perishable products.  Cattle that have reached optimal slaughter weight must be slaughtered immediately.  If slaughter is delayed, fed cattle will, within a matter of days, exceed fat-content perimeters and will thus be subject to severe price discounts.  Delayed slaughter not only increases fat content, effectively lowering the value of the animal, but it also increases carcass weights which adds to overall supplies, effectively driving live cattle prices downward.

The quality and value of beef is also predicated on timely consumption.  The shelf life of beef is, in many cases, shorter than the shelf lives of fresh fruits and vegetables. 

The U.S. cattle market has long been characterized as cyclical.  Cattle supplies increase as operators expand their herds in response to increasing prices.  As supplies increase, prices eventually peak and then begin to fall.  As prices decline, cow-calf producers liquidate their herds in order to reduce the supply of cattle.  This “cattle cycle” historically repeats itself every 7-10 years.  Therefore, live cattle and beef are cyclical products. 

The following amendment is intended to ensure fairness and equity in the trade of live cattle and beef:

Amendment to define "perishable cyclical," and "seasonal and perishable" agricultural products

 

Add to Section 11 a new paragraph (9) as follows:

 

     "(9) Perishable, cyclical and/or seasonal products -- The terms "perishable and cyclical" and "seasonal and perishable agricultural products" include fruits, vegetables, live cattle and beef.