Beef Buzz News
Cattle Industry Waits for Third Quarter Numbers From 75% PlanTue, 05 Oct 2021 10:25:21 CDT
In August of 2020, the National Cattlemen’s Beef Association Live Cattle Marketing committee came together to create the 75% Plan. The goal of the plan is to increase negotiated cash trade and tests whether the beef industry can resolve the issue of low volumes of negotiated cash trade in a voluntary, industry-led manner instead of through government mandates.
Two quarters of the 75% Plan’s first year are already in the books and the third quarter wrapped up with the end of September. Now, industry professionals are waiting to see what the third-quarter numbers will show. NCBA officials indicate that it will take some time to pull the third quarter data together with the addition of the packer data that is being compiled and analyzed by Dr. Stephen Koontz.
Tanner Beymer, director of Government Affairs and Market Regulatory Policy at the NCBA, gives Radio Oklahoma’s own Ron Hays a little more detail about the plan, including the producer side and the packer side of the agreement.
“It’s called the 75% Plan because we look at the existing research that shows the number of cattle that must be traded on a negotiated basis per region to have robust price discovery,” Beymer said. “Given that we need to make substantial progress to get to that robust number, we wanted to start with some realistic benchmarks, so we (decided to aim for) 75%.”
Those numbers are then evaluated through two different lenses: the producer side and the packer participation from the procurement side, Beymer said.
According to Beymer, for the producer side, the volume of cattle that are traded on a negotiated basis in each region is monitored. Every week, a certain number must be reached in no less than 75% of the reporting weeks in a quarter, he added. Packer participation is monitored by procurement of the negotiated trade, he said.
“There are triggers assigned to each of those,” Beymer said. “If we do not meet those thresholds, then we trip triggers.”
If several minor triggers, called trigger silos, are tripped, a major trigger silo will then trip, Beymer said. When enough major trigger silos are tripped, then a legislative or regulatory solution will be pursued, he added.
It wasn’t until recently, that a packer participation silo was finished, meaning the third quarter will be the first to have measurable producer and packer data available. According to Beymer, the goal is to make sure the responsibility is not only on cattle producers to sell negotiated, but also depends on packers to buy negotiated.
Because the NCBA legally cannot access the true numbers of individual packer transaction data, a third party will analyze the data to maintain the confidentiality of packers, but also give cattle producers factual figures, according to Beymer. That third party participant is Dr. Stephen R. Koontz of Colorado State University.
“The packers will voluntarily transmit their procurement information to him, he will analyze it against our framework and then report back to (the NCBA) whether or not triggers were tripped,” Beymer said. “At no time will we ever see the packer data ourselves.”
Click on the LISTEN BAR below to hear more from Ron Hays and Tanner Beymer as they talk about the 75% Plan as the cattle industry waits for the third-quarter data to be released.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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