In comments submitted to the U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS), Packers and Stockyards Division, R-CALF USA expressed support for the agencyโs advance notice of proposed rulemaking (ANPR), โPrice Discovery and Competition in Markets for Fed Cattle.โ
The ANPR sought comments regarding how to enhance protections for farmers and ranchers under the Packers and Stockyards Act (P&S Act) in light of the chronic problems identified with the increased use of unpriced formula contracts for fed cattle procurement within the industry. This ANPR marks the fifth and final competition-related rulemakings under the Biden administration.
In its comments, R-CALF USA emphasized that addressing the issues identified in the ANPR is essential for the long-term viability of Americaโs cattle producers. The organization also urged USDA to finalize its previous rulemakings that clarify statutory protections for both the market and market participants under the P&S Act.
The comments highlighted that formula contracts have severely reduced the volume of cattle sold in the competitive cash market leading to diminished price transparency and allowing beef packers to disproportionately benefit from a price discovery process they minimally contribute to.
The organization also pointed to a direct correlation between the shrinking fed cattle cash market and the decline in the number of cattle operations, cattle, and feedlots, noting the trend threatens U.S. food security and makes it vulnerable to market disruptions.
R-CALF USA called on USDA and Congress to take immediate action to restore competitive market forces in the cattle industry, advocating for requiring packers to purchase at least half of their weekly cattle supply through the cash market. In addition, R-CALF USA noted support for prohibiting top-of-the-market pricing agreements and unpriced formula contracts that undermine price transparency; for discouraging packers from requiring exclusivity from producers; for mandating full compensation for cattle sellers if packers fail to pick up cattle within the negotiated transaction window; and for loosening or eliminating confidentiality rules under the Livestock Mandatory Reporting Act to improve transparency.
โThe current system is broken and lacks robust competition. The solution is to reinstate competitive forces within the market by requiring more equitable participation in the price discovery process and by ensuring transparency in the market,โ R-CALF USA CEO Bill Bullard said.
๏ปฟโIt is crucial that we ensure the fed cattle market is competitive, accessible, and equitable for all U.S. cattle producers,โ he concluded. โThe time to act is now!โ