On November 18, 2024, the following comments were submitted by the Iowa Cattlemen's Association
Re: Price Discovery and Competition in Markets for Fed Cattle; Advance Notice of Proposed Rulemaking
The Iowa Cattlemen’s Association (ICA) is a grassroots organization representing nearly 8,000 independent cattle producers and stakeholders affiliated with the beef cattle industry. We appreciate the opportunity to submit the following comments on the Advance Notice of Proposed Rulemaking by the U.S. Department of Agriculture (USDA), Agricultural Marketing Service (AMS) on the options for consideration in the Price Discovery and Competition in Markets.
Iowa’s beef cattle industry is vital to the economy of our state and our producers' livelihoods. With more than 3.45 million head of cattle and calves, our industry generates more than $9.45 billion of economic activity. As the voice of Iowa’s beef business, it is important that ICA bring forward the concerns and ideals of Iowa’s cattle producers to this topic.
ICA’s Current Policy
Price discovery and transparency is incredibly important to Iowa’s cattle farmers, who are predominantly independent producers. ICA members have increased focused on increasing price discovery for the producers who sell their cattle on the open market, wish to avoid vertical integration, and understand the variation of cash negotiations by region across the United States.
To increase price discovery and transparency, ICA believes:
1. Packers that slaughter an average of no less than five percent of fed cattle nationally to purchase no less than the average percentage of negotiated trade for the past two years within a covered reporting region at the plant level.
2. Cattle sold via negotiated means shall be delivered within 14 days. Iowa producers should not agree to cash negotiated cattle sales further than two trading weeks out. If cattle are held past the agreed two weeks, the buyer will pay a fee of $3 or more per head per day.
3. ICA encourages members to utilize voluntary price reporting of fed cattle prices.
4. ICA strongly encourages a complete and competitive value-based marketing program consisting of, but not limited to, total seedstock evaluation, individual carcass data collection with industry pass through, age and source verification, development and promotion of new and existing beef programs.
Additionally, ICA has policy on the transparency of formula transactions given the increased use of these types of transactions. As the details - base price and any premiums - are not reflected in the Livestock Mandatory Reporting (LMR), ICA believes in
1. Increased transparency in formula transactions and by publicly reporting the details of the transactions including the net price, base price, and any premiums.
2. Supporting the Cattle Contracts Library. However, the library should be improved by:
● Requiring participation from all federally-inspected cattle processing plants that slaughtered an average of at least 125,000 head of cattle per year during the immediately preceding five calendar years;
● Utilizing weighted averages instead of simple averages to better describe the volume of cattle traded on specific contracts;
● Separating contracts with specs based on quality, yield grade, dressing percentage, brand (CAB), breed, management program (All Natural, NHTC, GAP), source verified, and export certification from contracts with specs based on packer financing, profit sharing, risk management, supply relationship, and volume threshold.
Conclusion
The Iowa Cattlemen’s Association is a strong proponent of price discovery and market transparency. Independent cattle producers are the majority of cattle production in the state. The opportunity to provide a level-playing field with a fair market value positively impacts long-term producer profitability and reduces the disparity between independent and contract cattle producers. Additionally, packers who are buying cattle should be paying for the quality of their cattle regardless of the region they are purchasing the stock from.
Again, ICA appreciates the opportunity to share comments on this matter. Questions related to this comment may be directed to Kelli Wicks, Director of Government Relations at (515) 296-2266.
Respectfully,
Dustin Puhrmann, Feedlot Council Chair Iowa Cattlemen’s Association