On October 8, 2024, the U.S. Department of Agriculture (USDA) issued a preliminary copy of an advanced notice of proposed rulemaking (ANPR) titled “Price Discovery and Competition in Markets for Fed Cattle.” The agency intends to seek public comments regarding methods to resolve concerns that current fed cattle procurement practices are distorting the market.
For more than two decades, R-CALF USA has sought reforms to correct what it viewed as a disconnect between the competitive value of fed cattle sold by cattle producers to meatpackers and the actual price that cattle producers receive from the meatpackers for their cattle.
The ranch group has long argued that producers receive a less than competitive price for their cattle due in large part to the meatpackers’ ongoing practice of shifting large volumes of cattle out of the competitive cash market and into unpriced formula contracts (known today as alternative marketing arrangements (AMAs)). The price producers ultimately receive for their AMA cattle is determined sometime in the future and is most often based on an average price discovered in the very cash market from which the cattle had been removed, thus leaving the cash market too thin to establish a competitive value for fed cattle.
The soon-to-be-published ANPR addresses this very concern and seeks public comments on how best to resolve this industry-wide problem with the goal of eliminating market distortions and restoring market competition for independent cattle producers.
R-CALF USA CEO Bill Bullard issued the following statement in response to the preliminary ANPR.
“Reforming the cattle procurement practices of the highly concentrated meatpackers as this ANPR sets out to do is the cattle industry’s holy grail. It is inarguable that the highly concentrated meatpackers possess overwhelming market power when compared to independent cattle producers, and the meatpackers’ current cattle procurement practices that this ANPR intends to reform are among the tools they use to exact that market power upon independent cattle producers.
“We strongly support USDA’s effort and view it as the most critical step undertaken by any administration over the past two decades to restore for independent cattle producers a robustly competitive marketplace, which is absolutely essential to our goal of reversing the alarming decline in the number independent cattle feeders and independent cattle farmers and ranchers, and for ensuring an abundant and affordable supply of beef for American consumers.
“The comment period for the ANPR has not yet been announced, but when it is, we urge every cattle producer to comment on this important effort by offering their solutions to help the USDA make their forthcoming proposed rule as effective as possible.”