CALF_News_June_July_2020

12 CALF News • June | July 2020 • www.calfnews.net based on an average price, which pro- vides fewer signals to improve quality.” Wilson says TCFA recognizes the importance of increasing price discovery. He cited a study by Koontz that features recommendations for minimum levels of negotiated trade for each of the major cattle feeding regions. “For Texas and Oklahoma, the recom- mended level of negotiated trade is 6 to 13 percent [on average],”Wilson says. “We are actively working to achieve those levels through free market mecha- nisms and not government mandates.” One so-called 30-14 proposal requires packers to purchase at least 30 percent of their individual fed cattle needs in the negotiated cash market for delivery within 14 days. Another proposal by Sen. Charles Grassley (R-Iowa) and Sen. Joe Tester (D-Mont.) in May, calls for a 50-percent negotiated cash trade. Both would be government mandated. A few groups support it. NCBA, TCFA and a host of others are against the mandated rules. OnMay 13, South Dakota rancher ToddWilkinson, NCBA Policy Division Chair, responded to the 50-14 proposal. “Increased price discovery will benefit all segments of the cattle industry — that is why NCBA has been closely working with key stakeholders, industry experts and our partners in academia to develop tangible means to meet that end. “[However,] any solution must not restrict an individual producer’s freedom to pursue marketing avenues that they determine best suit their business’ unique needs. Government mandates, like that being proposed by Sen. Grassley, would arbitrarily force many cattle producers to change the way they do business.” Koontz counters reports that he allegedly supported the 30-14 plan. In a letter sent to NCBA on May 4, Koontz wrote,“My research does examine the impact of declining negotiated cash trade on price discovery in regional and national fed cattle markets. And it also attempts to make recommendations as to the needed volumes of cash trade for minimal and robust price discovery. “But my work does not recommend, and I do not support, a mandate of a given percentage cash trade. “The main issue I have with the policy proposal is that it would cost the cattle and beef industry mil- lions and possibly billions of dollars per year. This is known from research in which I participated. The U.S. Congress funded the USDA-RTI Livestock and Meat Marketing Study in 2003 and the work was completed in 2007: https:// www.gipsa.usda.gov/psp/ publication/live_meat_market.aspx. “The use of alternatives to the cash market are cost saving and revenue enhancing. The main beneficiaries of these relationships are the cow-calf pro- ducing sector and the U.S. consumer.” Don Close, vice president for Rabo- bank in St. Louis, points out that there have been talks of making changes in the USDA five-state reporting districts (Texas/Oklahoma and New Mexico; Nebraska; Kansas; Colorado; and Iowa/ Minnesota) to add Wyoming and Illi- nois to the reporting states. “There was also discussion of transi- tioning to a three-region system in order to capture more cash transactions and work around confidentiality,” he says, noting that he favors adopting the three- region approach.“I think it’s only a tem- porary solution, but it would buy time to explore ways to develop and transition to an alternative price discovery system.” He says, however, that since the market has transitioned from selling cattle on the average in the cash market to marketing on individual carcass merits,“I believe the industry is spending too much energy in trying to revive an antiquated price discovery system when time could be spent trying to develop a new system that more accurately reflects how cattle are sold today.” Set-aside payments With a 20- to 40-percent decline in slaughter capacity caused by COVID- 19, the Beef Alliance in Manhattan, Kan., is promoting a government set- aside program. It would support cattle feeders who can’t get cattle marketed in time. It is similar to a program used previously in Canada. In the program, payments of $2.90/ head for 75 days would enable feed- ers to provide a maintenance ration for cattle. It would provide about $217 per head. Overall cost would be about $326 million. Mary Soukup, Beef Alliance manag- ing director, says CattleFax forecasts based on USDA data indicate that fed steer and heifer slaughter will be down between 600,000 and 1.5 million head through the end of 2020. There is poten- tial for many of those cattle to benefit from the set-aside program. Soukup says the program is not intended to allow producers to recoup all economic damages.“It will prevent massive economic loss throughout the beef cattle industry caused by a total breakdown in a system that has oversup- ply due to removal of production capac- ity,” she says.“The proposed set-aside program will also provide certainty and confidence in the food supply.” The Beef Alliance is working with NCBA and state trade associations to build a coalition.“We’re working to get them acquainted with the program,” Soukup says.“We’re also having some conversations on Capitol Hill. As Con- gress moves forward with the next relief SICK COUNTRY, SICK CATTLE MARKETS Continued from page 11 Clara Peller would be yelling extra loud at todays empty shelves. photo from www.yahoo.com