Livestock Marketing Association in Favor of More Competition in Cattle Markets

Listen to Ron Hays talk with Chelsea Good about LMA’s part in solving marketplace issues for cattle producers.

Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with Vice President, Government and Industry and Affairs at the Livestock Marketing Association, Chelsea Good, about improving the marketplace for cattle producers.

“I think that the livestock sector has been more on center stage in Capitol Hill the last two years than they have been my entire career- probably my entire lifetime,” Good said. “There are a lot of eyes on the livestock sector.”

Livestock auctions, Good said, are the fairest and most transparent way to get true price discovery.

“I think it is a good, healthy thing that we have got our local livestock auctions spread across the United States, and we still have that working for us,” Good said. “I will say that there are some things on Capitol Hill that our association is trying to get some tweaks on. We do believe that you need to have really good oversight of the packers, especially since there are only four major packers that have 85 percent of the fat cattle marketplace.”

It is frustrating for producers, Good said, that people want to see more local and regional packers. Still, an outdated law makes it so that a livestock auction owner cannot invest in a local or regional packer.

“That is not right, and we want to be part of the solution in adding more packers and adding more competition,” Good said. “We should have the ability to do that.”

Regarding legislation on these issues, Good said there have been bills introduced in the house and the senate.

“House members Vicky Hartzler of Missouri and Jimmy Panetta of California are leading the house version- it is the A-PLUS Act,” Good said. “In the senate, it is Senator Ernst of Iowa and Luján of New Mexico. A good bipartisan effort, just to allow a livestock auction owner to invest in a packer that processes less than 2,000 head of cattle a day. We still wouldn’t allow people to invest in the top ten largest, but for those more local, regional-sized packers, we think that markets could be part of the solution in adding more competitors into the marketplace there.”

Good said LMA is in favor of the cattle contract library.

“I have been able to see some versions of the pilot,” Good said. “I think there is still quite a bit of work to do by USDA there. The vision of the cattle contract library is, without knowing names and individuals, you get a good idea of what some of these contracts look like between feed yards and packers.”

The way that USDA has it framed up right now, Good said, is you get a report of the base prices, and then a separate report of different premiums and discounts.

“That is not super helpful because you can’t tie those two things together,” Good said. “We think USDA needs to work harder to be able to do summaries of actual contracts so that producers out there can see what some of these deals look like.”

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