2020-05-19 Ex 04
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MEMBER ALERT:
USCA is leading the effort to designate a minimum percentage of
negotiated cash cattle purchases by each of the major meatpacking plants that
are required to report to USDA AMS under the Livestock Mandatory Reporting
program.
What does this mean?
Our proposal would require a minimum of 30 percent of each packer processing
plant’s weekly volume of beef slaughter to come as a result of purchases made
on the open market or spot market, defined as those purchases which fall under
Negotiated Purchase Beef cattle purchased on the open or spot market, under
the required minimum, would be delivered to the packer not more than 14 days
after the date on which the livestock are sold to the packer.
How does it help?
Fewer and fewer cattle are sold on a negotiated cash basis, which reduces the
ability for true price discovery in the cattle marketplace. Negotiated cash cattle
make up less than 20 percent of the market yet set the price for the other 80
percent of cattle sold through formula contracts and or cattle futures market.
What happens next?
USCA is requesting this change through the reauthorization of the Livestock
Mandatory Reporting program, which is set to expire on September 30, 2020.
We are asking U.S. cattle producers to consider signing on to our letter in
support of this change.
As of the sending of this Member Alert, 2,626 producers have
signed on in support of our ask!
Learn More & Sign the Letter!
CORBITT WALL SHARES MORE ON THE EFFORT:
Minimum Negotiated Purchase Sign-On Letter
In light of the upcoming Livestock Mandatory Price Reporting reauthorization
legislation, the USCA Marketing & Competition Committee proposes these changes
to the program to increase transparency and true price discovery in the cattle
marketplace. Please review the below sign-on letter and indicate your organization's
or company's willingness to support this effort by completing the form below. We
appreciate your consideration.
May XX, 2020
Chairman Pat Roberts Chairman Collin Peterson
Committee on Agriculture, Nutrition & Forestry Committee on Agriculture
U.S. Senate U.S. House of Representatives
Ranking Member Debbie Stabenow Ranking Member Mike Conaway
Committee on Agriculture, Nutrition & Forestry Committee on Agriculture
U.S. Senate U.S. House of Representatives
Dear Chairmen Roberts and Peterson and Ranking Members Stabenow and Conaway;
Over 80 percent of cattle in feedlots in the U.S. are slaughtered by four large
meatpacking companies: Tyson Foods, JBS, Cargill and National Beef. Because these
companies control a large percent of slaughter and processing capacity in the U.S.,
they have the unique ability to unduly influence the price of live cattle through the
employment of tactics like bottlenecking processing speeds, importing chilled foreign
meat to decrease demand for domestic supply, collaborating on pricing mechanisms,
utilizing private forward-formula contracts, and piling up meat in cold storage to
delay the need to purchase live cattle.
Fewer and fewer cattle are sold on a negotiated cash basis, wh ich reduces the ability
for true price discovery in the cattle marketplace. Negotiated cash cattle make up less
than 20 percent of the market yet set the price for the other 80 percent of cattle sold
through formula contracts and or cattle futures market.
With the reauthorization of the Livestock Mandatory Reporting Program (LMR) on
the horizon, the below signatories present the following changes to be made to the
current economic activities within the beef industry:
- Require minimum 30 percent of each packer processing plant’s weekly volume of
beef slaughter to come as a result of purchases made on the open market or spot
market, defined as those purchases which fall under Negotiated Purchase (Forward
Contracts and Formula Marketing Agreement are not con sidered Negotiated Sales).
- The minimum would be mandated for all beef packing plants meeting the definition
of a “packer" in the LMR Act, i.e. slaughter 125,000 head or more per year.
- Beef cattle purchased on the open or spot market, under the requir ed minimum, are
to be delivered to the packer not more than 14 days after the date on which the
livestock are sold to the packer.
- Furthermore, no packer can discriminate against a seller for choosing to sell his
cattle to negotiated cash sale purchases from that of other sales transactions.
With these changes in place, the Mandatory Livestock Reporting system could then be
used to provide accurate and transparent reports of daily prices and number of cattle
purchased via cash market, providing greater market opportunity and price discovery
for independent cattle producers.
The undersigned organizations look forward to continued dialogue on this issue as we
approach the program’s September 30, 2020 expiration date.
Sincerely,
XXX
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