CALF_News_June_July_2021

28 CALF News • June | July 2021 • www.calfnews.net Bohn commends produc- ers for taking steps to improve price discovery.“Let me be clear, our producers deserve high praise for their diligent efforts to implement the voluntary framework this past quarter,” he says.“They offered cattle on a negotiated basis to comply with our framework, even when market signals were telling them to hold on to cattle in anticipation of higher prices. “Often, these trades were made at a loss. We recognize the steps cattle pro- ducers have taken to address the need for greater price discovery and market transparency, and deeply appreciate their actions,” Bohn continues. “Unfortunately, there was not enough participation in the negotiated market from some of the packers. Simply put, feeders can offer all their cattle on a negotiated basis – but we only achieve our thresholds if there is a buyer willing to bid fairly on those cattle offered.” TCFA Chairman Scott Anderson says supply and demand conditions could be altered by a mandatory national plan. “TCFA continues to work hard to increase negotiated trade, but it takes time to change long-standing marketing arrangements that have improved beef quality for more than 40 years,” he says. “Our members have worked diligently to increase negotiated trade from a low of 4 percent to 13 percent of current trade levels. Based on research, the TCFA region of Texas, Oklahoma and New Mexico needs to sell 10 to 13 percent of the weekly trade on a negotiated basis. “TCFA understands that negotiated trade is necessary for robust price dis- covery, but a one-size-fits-all government mandate overlooks the various supply and demand situations in distinct cattle feeding regions,” Anderson asserts. “We will continue to work with NCBA and other state affiliates to implement the negotiated trade data in the five major cattle feeding reporting regions, the subgroup has determined that a major trigger was tripped during the first quarter of 2021,” NCBA President Jerry Bohn says. “According to our member- approved framework, if another major trigger is tripped during any of the remaining quarters this year, NCBA will pursue a legislative or regulatory solution to increase negotiated trade as determined by our membership.” AgriLife’s Benavidez notes that in the first quarter, the Texas-Oklahoma-New Mexico region failed to reach the 75 per- cent level 4 of 13 weeks; Kansas failed 6 of 13 weeks; Nebraska and Colorado failed 2 of 13 weeks; and Iowa-Minne- sota did not fail any weeks. “Keep in mind that highlighted values do not account for weeks in which force majeure was invoked,” he says. “Winter storm Uri and plant maintenance in Kansas each led to certain weeks [not necessarily failing weeks] qualifying for force majeure exclusion.” Benavidez had several discussions with colleagues and producers about what the results of the first quarter really mean over the past few weeks. “I think a lot of people take the top-line results of the failure to meet the established thresholds and consider these voluntary efforts to be a failure. However, I won’t be quick to call the results of Q1 an outright failure,” he explains. In his analysis, Benavidez’s data (see Tables 1 and 2) shows that the Texas- Oklahoma-New Mexico region had increases in first-quarter negotiated cash trade in every week but one when com- pared to the first quarter of 2020. “In the regions in which negotiated trade was the poorest, conditions are improving,” he says.“Negotiated trade is up over the previous five-year average across the Southern Plains. Comparing given weeks (first quarter), negotiated trade was, on average, 1.4 times the 2016 to 2020 average in Texas-Oklahoma-New Mexico. In Kansas, negotiated trade was, on average, 1.2 times the 2016 to 2020 average in a given week.” CASH TRADE PLAN Continued from page 27 voluntary industry program and achieve a similar outcome through market mecha- nisms that avoid unnecessary costs and unintended consequences to beef produc- ers and consumers.” Bohn says that, although the numbers fell short of the desired 75 percent trade levels in some instances, “it should not overshadow the significant improve- ments made to price discovery since the framework’s implementation. It is apparent that the work of NCBA, and the efforts of the producers who have participated in this framework, have been critical in this increase. “These gains were made despite residual COVID-19 disruptions, pack- ing plant closures, natural disasters, and a volatile market,” he says. “Cattlemen and women should be commended for their efforts to bring more price discov- ery to the marketplace. But we still have a ways to go.” Benavidez concludes that even when not reaching the 75 percent level, many negotiated trade numbers were barely below the 75 percent range. “Two failing weeks in Texas-Oklahoma-New Mexico only fell short by a few hundred head,” he says. “Three failing weeks in Kansas fell short by less than 1,000 head. Of these five ‘close’ weeks across the South- ern Plains in 2021, four still saw higher negotiated trade volumes than in 2020, despite failing the 75 percent rule.”  Jerry Bohn Justin Benavidez To get more updates on negotiated trade and other cattle and crop markets, visit Benavidez’ blog at https://agrilife.org/amarilloagecon/ .