30 CALF News • April | May 2022 • By Larry Stalcup Contributing Editor Editor’s Note: As thousands of beef producers converged on Houston in early February, one communist giant China was staging the Winter Olympics while Russia was readying its military to invade Ukraine. Now, the latter is even asking China for help. And as has happened far too many times, these epic events will likely impact actions by cattlemen and women already facing pressure from Mother Nature, high input costs and other production and marketing obstacles. Whether or not another Black Swan is emerging remains as unknown as predicting cattle prices. A s Congress considers whether to back legislation to require mandatory negotiated cash trade on up to 50 percent of cattle sold to packers, the National Cattlemen’s Beef Association (NCBA) remains fully against the government telling you how to sell your cattle. In one of the most anticipated committee meetings at February’s Cattle Industry Convention & NCBA Trade Show, Live Cattle Marketing Committee members soundly voted down calls for government-mandated negotiated trade. Language in the measure read: “NCBA opposes any mandate on cash trade volumes for cattle or any other legislative or regulatory policies that would limit the methods producers utilize to market cattle.” The upheaval over weak cash trade peaked due to packer actions in the heart of the COVID-19 pandemic. While cattle prices plunged drastically, meat processing leaders claimed too little packer capacity and the lack of packer employees caused cutout prices to swell as consumer demand remained high. Change was needed. NCBA favored a voluntary negotiated trade system over manage cash trade. It used data from university research to develop formulas for sufficient negotiated trade within four feeding sectors. Regions included those for Kansas and Texas, where cash trade was low compared to grid and formula pricing. A voluntary industry working group was established. Voluntary negotiated trade worked in key areas, said Kevin Buse, chairman of Texas Cattle Feeders Association (TCFA) and a member of the NCBA working group that oversaw the voluntary program. “When comparing the 18-month period from January 2019-June 2020 to the period from July 2020-December 2021 in the TCFA region, negotiated trade increased 92 percent,” Buse said. “In 2021, negotiated trade volumes in the TCFA region averaged 13,336 head per week.” However, several triggers were tripped within the voluntary program and NCBA was obliged to take a different course. At the convention, Jerry Bohn, 2021 NCBA president and long-time Kansas cattle feeder, told CALF News that triggers were tripped “because some packing plants were not able to adjust their business models to handle the volume of trade needed” in each region. “I think we were more successful than people gave us credit for,” Bohn said. “We called to the attention of the entire industry that there was not enough negotiated trade or price discovery. We fixed that problem in the Southern Plains. Both the Texas Panhandle and Kansas have increased the amount of negotiated trade. “Quite a bit of trading was done by an increase in negotiated grid trading. There’s nothing wrong with that. By negotiating the start price, then getting a premium or discount for the quality of the cattle, that’s the best of both worlds. “We will see more of that going forward. The quality of cattle in this country has increased dramatically. The amount of cattle grading Choice is in the high 70s [percent] to low 80s. So there are opportunities for producers to capture those genetics and quality.” Bohn said consumer demand for quality beef remained high even during the pandemic. “The problem was that in the pandemic, we backed up cattle for nearly two years, and supply got out of balance with packing capacity. We’re getting that back in line and leverage is going to return to the producer for the first time in three years.” Not all share NCBA’s anti-mandatory stance. There were plenty of producers and feeders who showed their support of mandatory negotiated trade during the Live Cattle Marketing Committee Meeting. One was Brad Koomia, Iowa Cattlemen’s Association and member of the NCBA working group that oversaw the voluntary trigger program. He said NCBA’s language to oppose mandated negotiated trade “feels like we’re not sending a clear message … there is the lack of sensitivity.” Also, R-CALF continues to accuse NCBA and many of its state affiliate members of being in the big packers’ back pocket. Add university cattle economists (who have conducted reams 2021 NCBA President Jerry Bohn NCBA Says 'No' to Mandatory Negotiated Cash Trade Past-President Jerry Bohn Denounces ‘One-Size-Fits-All’ Proposals