Cattle Group Issues Rebuke on Call for Regional Cash Market MinimumsThu, 12 Aug 2021 10:35:28 CDT
In a white paper distributed this week to the U.S. Senate agriculture committee and other Senate offices, R-CALF USA provides real-time evidence that varying minimum cash cattle purchase requirements region-to-region will allow major beef packers to continue denying timely market access to independent cattle feeders.
Titled Why a 50% National Negotiated Cash Volume Is Needed and Why That Volume Should Not Vary Region by Region, the group’s paper provides the example of at least one Iowa cash cattle seller who was informed that one major packer was out of the market for five weeks and another was reducing Iowa cash cattle purchases.
The paper explains that this example shows that even in Iowa, where negotiated cash cattle purchases have met or exceeded the 50% volume level for the past 16 years, packers can nevertheless deprive independent cattle producers timely access to the negotiated cash market simply by trucking cattle from regions where cash volume requirements are or would be lower, such as from Kansas.
“The ability of packers to ship fed cattle via truck from region to region relegates the five fed cattle procurement regions to mere geographical reporting regions in a procurement market that is, in fact, national in scope,” states the group.
The group says this out-of-region shipping practice demands a cross-regional solution to the lack of competitive cattle purchases and the Grassely/Tester Bill (S.949) provides Congress with such a solution.
By mandating that all large packing plants purchase at least 50% of their cattle needs from negotiated cash cattle markets, the group says Congress can ensure that independent cattle producers located everywhere have access to a competitive market.
The paper also addresses the claim that packers need alternative marketing arrangements (AMAs), such as marketing agreements, to meet the quality requirements of branded beef programs. The paper refutes this claim using a U.S. Department of Agriculture (USDA) study that found negotiated cash market purchases were more likely to be eligible for branded beef programs than were marketing agreement purchases.
Pointing to another USDA study, the paper also provides evidence that the theoretical offsetting benefits of AMA’s do not benefit cattle producers who choose to market in the negotiated cash market. Instead, the paper states those independent cattle producers are carrying the brunt of the financial harm caused by the AMAs without receiving any offsetting benefits.
“Indeed,” states the paper, “they cannot even gain timely access to a competitive market!”
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