NCBA: Cattle Contract Library Act Good News For The Cattle Industry

The National Cattlemen’s Beef Association is pleased that the Cattle Contract Library Act introduced last week by South Dakota Republican Dusty Johnson and Texas Democrat Henry Cuellar. Tanner Beymer the Director of Government Affairs and Marketing Regulatory Policy with the National Cattlemen’s Beef Association, said this bipartisan piece of legislation is good news for the industry.

“What this legislation would do is it would direct the Secretary of Agriculture to establish and maintain a library of all of the contracts offered by packers to cattle feeders for the purchase of live cattle. And why that's important is because four transaction types are categorized by USDA when they report information under Livestock Mandatory Reporting.”

Beymer noted the lack of information is especially prevalent in one of the four livestock marketing categories.

“There's negotiated cash, negotiated grid, contracts, and formulas. The formula is a little bit unique because, unlike the other three, it's more so defined by what it isn't than by what it is. It's a catch-all bucket for all of the transactions that don't meet the definition of one of the other three, and because of that, there's a lot of questions about how specifically the formula buckets, work and what types of contracts are being offered by packers to feeders, and by publishing this information and maintaining a record of all the contracts that are being offered, cattle producers can compare the marketing arrangements that they have negotiated with those that maybe another cattle producer has negotiated, and that helps them to improve their leverage position going into negotiations with the packer, potentially, because they have more information available to them at the time.”

The goal, he said, is to help livestock producers stay afloat and help them bounce back from what he calls “black swan” events.

"We're trying to make sure that they have more resources available to them, and we're trying to make sure that the market overall is operating in the most transparent way possible. That is our top priority here, and if we can arm producers with more information that could potentially allow them to capture more value for their cattle, that is a win in our book. It's been a top priority of NCBA for a long time, but specifically since the most recent black swan events at the Holcomb plant in Kansas, and then, obviously, the COVID-19 pandemic. Our focus has been on how we provide more opportunities for producers to increase their opportunities for profitability.”

Beymer said one other item that would help cattle producers is fully reauthorizing Livestock Mandatory Reporting.

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