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Advice given on cattle contract library

USDA photo by Preston Keres Cattle salebarn USDA.jpg
Vilsack urged to use House bill template on implementing cattle contract library.

In December, the House overwhelmingly passed legislation to address challenges in cattle market transparency by directing USDA’s Agriculture Marketing Service to establish a contract library for cattle contracts that would be reported and published along with other ongoing livestock reporting. Legislators successfully worked to secure funding for this purpose in the FY2022 omnibus appropriations package and now are urging USDA to mirror its cattle contract pilot program to provisions included in the Cattle Contract Library Act.

“As you implement the recently passed appropriations bill, we write to urge you to prioritize the implementation of the cattle contract library pilot program based off the provisions included in our legislation, the Cattle Contract Library Act of 2021,” according to the members including Rep. Dusty Johnson, R-S.D., lead sponsor of the Cattle Contract Library Act.

H.R. 5609 creates a library for cattle contracts within USDA’s Agriculture Marketing Service Department. Currently, beef packers are not required to report the details of contract terms to USDA, which legislators say leaves cattlemen in the dark, inhibiting a transparent, fair and competitive market. The previously-passed House bill would establish a publicly available, user-friendly cattle contract library that would publish information pertaining to the type of contract; the duration of the contract; provisions in the contract that may affect the base price of the cattle; schedules of premiums or discounts; and transportation arrangements.

Related: Cattle contract library pilot in spending bill

Further, it would publish information regarding the total number of cattle solely committed to the packer each week within the 6-month and 12-month periods following the date of the contract, or an indication that the contract is an open commitment. “These provisions would equip cattle producers with the market data they need to make more informed business decisions and exert greater leverage in negotiations with major meatpackers,” the legislators state.

“By quickly implementing the provisions in our legislation, you can help provide certainty to producers across the country who put food on American’s tables,” the legislators add.

Concerns exist

The North American Meat Institute has concerns with the pilot program’s inclusion in the appropriations bill. The Meat Institute states the law is vague and provides no guardrails for the type or amount of data and leaves program development up to AMS. In addition, the law contains a provision that allows AMS to promulgate the rules without a comment period as normally required by law.

“The Congress directs the Administration to create another onerous USDA program with the sole purpose of collecting private business information and making it public without any input from the regulated industry,” says Meat Institute CEO Julia Potts. “This is not transparent or responsible.”

Under the Livestock Mandatory Reporting, packers must report to AMS daily the prices they pay to procure cattle, and other information, including slaughter data for cattle harvested during a specified time period and net prices, actual weights, dressing percentages, percent of beef grading Choice, and price ranges, and then AMS publishes the anonymized data.

AMS publishes 24 daily and 20 weekly cattle reports each week. Weekly reports start Monday afternoon and end the next Monday morning. These reports cover time periods, regions, and activities and the data include actual cattle prices.

Further, packers report all original sale beef transactions in both volume and price through the Daily Boxed Beef Report. This data is reported twice daily, at 11:00 a.m. and at 3:00 p.m. Central Time. The morning report covers market activity since 1:30 p.m. of the prior business day until 9:30 a.m. of the business day. The afternoon report is cumulative, including all market activity in the morning plus all additional transactions between 9:30 a.m. and 1:30 p.m., and is on the USDA DataMart website. The boxed beef report covers both individual beef item sales and beef cutout values and current volumes, both of which are derived from the individual beef item sales data.


TAGS: Marketing
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