USDA has announced the details of the Cattle Contract Library Pilot Program to help cattle producers get better information about the cattle market. The cattle industry advocated for this program as just one of the many tools needed to help provide transparency and improve price discovery in the cattle markets. This comes after cattle producers charged USDA and Congress to help fix what they consider a broken system as evidenced after the Holcomb, Kansas plant fire and during the height of the COVID-19 pandemic.
Under the pilot program, the Agricultural Marketing Service will collect, and report aggregated information on contracts between packers and cattle producers for the purchase of fed cattle. It will include data on different types of contracts and contract terms, plus premiums or discounts, even financing. AMS will also report on the number of head of cattle purchased under these agreements. Groups like the National Cattlemen’s Beef Association and its state affiliates worked closely with USDA in the testing phase and support the program to help add value to their cattle.
Cory Eich, with the South Dakota Cattlemen’s Association says, “I can’t see where it would do anything but help because you don’t really know what’s out there and now when you can see what’s out there. I think its going to go a long way. It should solve a lot of problems and quell a lot of fears and put out a lot of fires that are burning constantly.”
Eich says understanding the types of contracts available and prices received is valuable and yet the program won’t dictate the types of selling arrangements cattle producers can be part of. “We’re always against mandatory restrictions on producers or anybody that’s in the business and this is all about transparency. From what we understand, myself anyway, the hog industry has had this before so they’re not inventing anything new so we shouldn’t have to be afraid of it,” he says.
AMS will protect proprietary business information by collecting contract terms without any personally identifiable information and not entire contracts. NCBA officials hope that will strike a balance between offering cattle producers insight into the markets to make informed business decisions, while protecting confidentiality.
