Cattle Contract Library Act of 2021 (H.R.5609)

Aug 12, 2022

Supporting Complete Reporting

South Dakota Representative Dusty Johnson (R-S.D.) recently introduced the Cattle Contract Library Act of 2021 (H.R.5609) requiring beef packers to provide details and types of forward contracts offered when purchasing fed cattle for slaughter. South Dakota Stockgrowers Association (SDSGA), South Dakota’s oldest livestock producer association, did not endorse H.R. 5609. SDSGA Marketing Committee reviewed the proposed bill and was disappointed with the absence of any inclusion for mandatory cash market trade levels.

SDSGA policy provides support for,” Complete reporting of non-reported cattle and beef prices including non-native cattle be required to facilitate true price discovery.” However, SDSGA policy also urges that livestock forward contracts have a negotiated fixed base price in writing when they are entered into and that those contracts are traded on an open public market.

In 2021 SDSGA members and the South Dakota Legislatures overwhelmingly supported House Concurrent Resolution 6006 supporting the 50/14 mandate whereby packers would procure 50% of their weekly harvest on the cash market and take delivery within 14 days. This resolution concurs with SDSGA policy and was transmitted to the members of South Dakota’s U.S. Congressional delegation. HCR 6006 conveys South Dakota’s overall agreement to increasing market discovery and transparency through greater cash market participation.

H.R. 5609 fails to include any mandatory negotiated cash market levels which are needed to establish a base price for both live cattle purchases, as well as alternative marketing agreements (AMAs). SDSGA policy calls for a fixed base price in writing which will not transpire under the current escalating trends of AMAs.

SDSGA member driven policy, Marketing policy (2), directs,” contracts entered into should be traded on an open public market” and is synonymous with the 1921 Packers and Stockyards Act section 202 (7 U.S.C. 192) (b) which refers to packers shall not give advantage to any particular person or locality.

Unanswered questions surrounding H. R. 5609 are, (1) Will the creation of a contract library, devoid of mandatory cash market transparency, become federal justification for non-traded private contract agreements thereby negating the 1921 P&SA? (2) Will a contract library facilitate further industry regionalization bolstering packer justification for differing contracts and thereby creating further division among producers?

During the recent “Hearing to Review the State of the U.S. Livestock Industry” held by the United States House Committee on Agriculture, several participants including Representative Dusty Johnson related to the creation of a proposed beef contract library as building transparency similar with the 2010 hog industry contract library. Since 1980 USDA Economic Research Service depicts the swine industry producer loss of 70% with an accompanying breeding herd loss of nearly 3 million head. This was an industry where cash market discovery resources became annihilated leading to a current vertical integration situation.

South Dakota beef producers have long been disadvantaged by the current escalating use of non-negotiated contracts which have become another packer captive supply tool. These non-negotiated open-ended packer AMAs allow packers to avoid true market price discovery leaving producers with a “take it or leave it” marketing scenario. SDSGA Director Chance Anderson, a rancher from Isabel S.D. said,” I don’t believe the library is a tool farmers and ranchers can really grab on to as markets are fluctuating widely and decisions have to be spontaneous”. Mr. Anderson further stated,” these are desperate times for rancher operations and normally we just take any peace-meal offering but time is running out and we need transparency with true results.”

South Dakota Stock growers worked tirelessly in conjunction with South Dakota legislators to pass HCR 6006 and convey the wishes of producers and rural communities while setting direction for our U.S. Legislators to follow when addressing market transparency. Because of the absence of mandatory cash market discovery levels within H.R. 5609 SDSGA members believe Senate Bill S.949, a bill to amend the Agricultural Marketing Act of 1946 to foster efficient markets and increase competition and transparency among packers that purchase livestock from producers, is more relevant to true cash market discovery. S.949, introduced by Senator Chuck Grassley (R-IA) and includes (9) cosponsors including S.D. Senator Mike Rounds (R-SD). S.949 addresses the transparency solutions expressed in South Dakota’s HCR 6006 and SDSGA encourages all cattle producers to seek congressional support for S.949 to maintain true cash market transparency for rebuilding rural America.

Vaughn Meyer

SDSGA President

< Older Post Newer Post >

Upcoming SDSGA Convention & Tradeshow

02 Nov, 2022

Greetings Friends, Neighbors and SDSGA Members, One again, with our preparedness or not, the seasons have passed quickly bringing us to the Fall season and the annual South Dakota Stockgrowers Convention. The convention planning committee has been diligently planning to make this year’s convention the focal point of our livestock industry. Presentations are planned by industry, State and National leaders to keep SDSGA members informed of the issues and aid in development and implementing policy. Your convention is made possible by many local sponsors and vendors who share our concerns for a robust and profitable livestock industry. Throughout the year many of us have been busily selecting inputs of supplies, equipment or new breeding genetics to amplify the efficiency and production of our herds and flocks with that ever mindful goal of increasing sale day revenues. Our participation in expressing unity for fair markets to recover input costs is often over looked or left to a “take it or leave it” offer by big corporate giants. As producers, our collaborative involvement through our South Dakota Stockgrowers Association sends a unified and resilient voice for fair and profitable markets and I encourage all members and interested producers to join in the camaraderie of this 131 st convention. This past year SDSGA directors and members have united to campaign on behalf of South Dakota’s livestock producers on issues of taxation, regulation and proposed infrastructure rebuilding. Nationally, SDSGA has been privileged to work with our affiliate, RCALF USA, and continues to advocate for the return of Country of Origin Labeling to restore producers’ rights to label their products like other American industries. In addition SDSGA has been advocating for mandatory levels of Packer negotiated cash market purchases with hopes of increasing producer and feeder market transparencies. We remain hopeful that restoring these two actions will once again lead to profitability for our farm and ranch families. One of our major successes this past year has been the total renovation of the SDSGA website bringing improved member access and industry recognition for our organization. Hopefully you will find this site convenient for checking news, weather, events and SDSGA information. Unfortunately there have been some mishaps which have brought issues of mistrust within our organization this past year. These along with differing opinions as to levels of mandated packer cash market procurement have brought dissention among members which if left unaddressed reflects the current state of our industry and our nation. Let me assure you we have taken steps to address these immediate issues and those with future connections to our industry can only be resolved through continued member participation. Our industry is at a very crucial cross roads of sustaining our independent family production model or becoming vertically integrated similar to our pork and poultry cousins. South Dakota Stockgrowers is one of the oldest and largest voices for conveying policy for the upper Great Plains area and your membership participation is vital in formulating our message. This year’s SDSGA convention and annual meeting provides the opportunity for building a unified voice with your neighbors to bring about fair and robust market closure for your toils. Please join your fellow livestock producers and share in leadership of our industry during the South Dakota Stockgrower’s Convention and membership meeting at the Spearfish Holiday Inn Convention Center on Nov. 3-4 th See you in Spearfish, Vaughn Meyer Pres.