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Cattle Contract Library won’t make a difference without fundamental change to packer procurement practices

WASHINGTON, D.C. – The proposed Cattle Contract Library Act of 2021, sponsored by Representative Dusty Johnson, passed out of committee by voice vote this week. There is bipartisan support and can now be considered by the full US House.

Sen. Deb Fischer (R-NE) was the first to forward legislation last spring that would have included a Cattle Contract Library (among other measures) but it didn’t gain traction.

Texas A&M University Extension

The contract library bill requires beef packers to provide details of the types of forward contracts they use for purchasing fed cattle that are not purchased in the negotiated cash market, which is the price discovery market for the cattle industry.

The bill also requires the U.S. Department of Agriculture (USDA) to publicly report the total number of cattle that beef packers have committed to them six months and 12 months into the future.

It’s all part of a myriad of proposed bills, introduced in both houses of Congress, that are meant to address the increasing consolidation in meat packing companies that many contend leave ranchers and feeders at the mercy of price manipulation.

While the Cattle Contract Library Act of 2021 has the most bipartisan support so far among cattle organizations, (no small feat in an industry known for infighting) there is one hold-out that says while such a ‘library’  might illuminate more clearly positions held by packers, it’s a band aid, not a fix.

R-CALF USA CEO Bill Bullard said there is a concern with the new cattle procurement methods now in use that do not specifically fit within the categories established in the contract library bill.

He cited the recently disclosed Cattle Feeding Agreement between Tyson Fresh Meats and Easterday Ranches, Inc. (Easterday), which is one of the nation’s largest cattle feeding companies.

“We’ve always considered Easterday as among the nation’s largest contract cattle feeders, but the Cattle Feeding Agreement between Tyson and Easterday appears to be a hybrid agreement that blurs the line between contracted cattle and packer-owned cattle, and the contract library bill does not expressly include any packer-owned cattle.

“We have to presume there are more of these hybrid-type agreements out there between the largest packers and largest feedlots and if they aren’t expressly captured in reports generated under a contract library bill, then the information available to the industry will remain incomplete and skewed,” he said.

Bullard said a contract library could be helpful after a competitive market is established.

In an interview with Brownfield Ag News, he said, “It could, for example, allow an independent producer to determine when in the future the meatpackers are full of captive supplies and the producer certainly wouldn’t want to buy cattle and schedule them for sale during a period when the packers are expected to be overfull,” he said.

Bullard said R-CALF is instead focusing its resources toward restoring competition in the broken cattle market by urging swift passage of the 50/14 bill, S.949 sponsored by Senators Chuck Grassley of Iowa and Montana’s Jon Tester. The bill would force meatpackers to purchase at least, half [of] their cattle from the cash market and then slaughter them within 14 days so they’re not able to also use those for captive supply cattle.

The organization is also heavily invested in the recently introduced mandatory country-of-origin “American Beef Labeling Act,” S.2716. The M-COOL legislation specifically directs the U.S. Trade Representative and Secretary of Agriculture to determine the means of reinstating beef in the current M-COOL law in a manner that complies with WTO rules. If such means are not implemented within 12 months of the legislation’s enactment, the legislation will take effect on the 1-year anniversary date.

 

 

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