USDA has announced the details of their Cattle Market Contract Library Pilot Program. It came after more than two years of work by cattle producers who have been looking for solutions to fix what they have called a broken cattle market that culminated during the height of the COVID-19 pandemic.
Under the pilot program, USDA’s 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.
Cattle producers hope that will improve transparency and price discovery in the market and help those who are selling cattle on a negotiated basis to have more leverage. Dean Black is a cattle producer from Somers, Iowa. “You know that helps with the transparency and I think we’ll see how that plays out and if it does help and hopefully fingers cross that it does make some evening of the playing field.”
Colin Woodall, CEO of the National Cattlemen’s Beef Associations says it’s still early in their evaluation, but they are hopeful the data will be useful for producers. “The whole idea is to try to show produces what kind of contracts or marketing arrangements exist in the cattle business, but we also need to make sure we’re protecting the confidentiality of the data.”
However, with the large volume of data Woodall says there is concern the data will mimic some of the shortfalls of the Mandatory Price Reporting program. “The amount of information that the Mandatory Price Reporting is significant but also overwhelming so most produces don’t use it because they don’t know how to navigate through it. We need to make sure that’s not replicated here in the cattle contract library,” he says.
Woodall says they will have to make recommendations for changes in the program quickly as the pilot program on runs through September 30. Cattle producers continue to work on legislative solutions as well to improve their leverage in the negotiated cash cattle markets, including the Cattle Market Discovery and Transparency Act, which was just re-introduced, but is not supported by NCBA.
