Indiana Ag Connection - R-CALF: Voluntary Market Reform Did Not Work

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R-CALF: Voluntary Market Reform Did Not Work
Indiana Ag Connection - 04/13/2021

In the 4th quarter of 2020 the National Cattlemen's Beef Association (NCBA) proposed a voluntary plan, called the 75% Plan to increase the volume of cash cattle purchases by the nation's beef packers in each of the five cattle procurement regions. The plan was to take effect on January 1, 2021. This voluntary plan was initiated to avoid congressional action to mandate that packers make minimum purchases in the negotiation cash market. In particular, the bipartisan legislation filed by Senators Charles Grassley and Jon Tester in 2020 to require packers to purchase at least 50% of their cattle procurement needs in the competitive cash market.

According to R-CALF USA, the 2021 1st quarter cash volumes of negotiated cattle purchases reported by the U.S. Department of Agriculture (USDA) reveals the plan did not work to increase the volume of negotiated trade. Instead, R-CALF USA claims the volume of the combined negotiated cash and negotiated grid purchases in the 1st quarter of 2021 were 2.2% lower than the 2020 average purchases for combined negotiated cash and negotiated grid purchases.

The ranch group also reports that the same comparison between the 1st quarter of 2021 and the average for 2020 within the five cattle procurement regions (only four of which are reported as Colorado remains dark due to USDA's confidentiality guidelines), include: Iowa down 6.6%, Nebraska down 2.1%, Kansas down 5.9%, and Texas/Oklahoma/New Mexico up 1.2%.

"The acutely dysfunctional market experienced throughout the first quarter of 2021, marked by rapidly increasing wholesale beef prices and only minor increases in fed cattle prices is proof that incremental measures and minor tweaks are inadequate to restore robust competition to our U.S. fed cattle market," said R-CALF USA CEO Bill Bullard.

"The cattle industry needs a real and immediate fix and the only meaningful solution offered to do that is Senators Grassley and Tester's Senate Bill 949 (S.949), the spot market protection bill also known as the 50/14 bill. The cattle industry can't wait any longer without risking a complete loss of its competitive marketing channels that are needed to sustain a competitive marketplace," he said.

Bullard said cattle producers need to immediately contact their U.S. Senators and Representative to urge them to quickly pass S.949 to immediately restore the lost competitive forces in the U.S. cattle market.

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