Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with the President and CEO of the Texas Cattle Feeders Association, Ben Weinheimer, talking about the cattle contract library program, which has gone live by USDA here in the early days of 2023.
The TCFA represents feedlots in Texas, New Mexico, and Oklahoma.
Nearly a year ago, Weinheimer said the cattle contract library pilot program started as a voluntary initiative funded by congress, and the USDA worked to implement the program on a voluntary basis. Last summer and fall, Weinheimer said they had some frustrations with the level of progress that was being made, so USDA issued a final rule in December of 2022 requiring the four major packers to submit the terms and conditions of their contracts.
“The effective date of that rule was early January, so here at the meetings this week, USDA rolled out the published version of this- their first iteration of summarizing all of these terms and conditions of these cattle contracts,” Weinheimer said.
Originally, Weinheimer said it was thought that sharing the terms of those packer contracts would provide the cattle feeder with more information, but the way the USDA ultimately published their final rule by limiting it to the four major packers has raised concerns that the rule will make it easier for the packers to decipher the information to individually back out their own data and learn more about what their packer competitors are doing.
Hopefully, Weinheimer said, there are no unintended consequences of this rule. USDA has indicated that they will be updating the cattle contract library summary document each Monday afternoon.
“It will be an evolving piece of information that we will need to look closely at and provide USDA with some feedback, and really ensure that it is meeting its intent of helping the cattle feeder with market transparency and not just giving the packer additional leverage and market information,” Weinheimer said.
Weinheimer said it will be critical to study the pilot program to ensure it is working to truly aid cattle feeders before any permanent legislation is passed.
Regarding the price discovery task force that was put together in Denver a few years ago, Weinheimer said much was accomplished from gathering that data.
“We learned a lot in our region, and our members really took that issue to heart,” Weinheimer said. “They recognized that we needed to really evaluate where we had gotten ourselves to in terms of negotiated trade levels three years ago, now. Since that time, we have significantly increased our total negotiated trade in the TCFA region to help ensure that we have adequate price discovery. Those levels have been maintained at around the numbers that have been recommended by the university economists, so it has been a huge success in our region to give us some confidence that we are obtaining negotiated levels that are meaningful and helping to ensure that we are truly discovering the market week to week.”
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