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NCBA: Unanimous policy allows for voluntary negotiated trade before seeking regulatory action

Rachel Gabel
for The Fence Post

Six hours of discussion at the National Cattlemen’s Beef Association Summer Business Meeting, with months of Zoom meetings prior to that, ended with the industry group adopting policy changes to support voluntary increased cash trade levels.

NCBA Vice President of Government Affairs Ethan Lane said everyone in the room agreed that price discovery efforts must be focused on individual regions, away from a national level, and down to a more granular level of detail. Proponents and opponents, he said, couldn’t be separated state by state or by cow calf producers versus feeders and that resulted in passionate discussion.

The final policy supports a voluntary approach that increases frequent and transparent negotiated trade to regionally sufficient levels, to achieve robust price discovery determined by NCBA funded and directed research in all major cattle feeding regions and includes triggers to be determined by a working group of NCBA producer leaders by Oct. 1, 2020. If the voluntary approach does not achieve robust price discovery as determined by NCBA funded and directed research, and meet the established triggers that increase frequent and transparent negotiated trade to a regionally sufficient level, and triggers are activated, NCBA will pursue a legislative or regulatory solution. NCBA supports a three-year review/sunset provision on any negotiated trade solutions implemented to allow for a thorough cost benefit analysis to be conducted.

The idea behind the NCBA funded and directed research, Lane said, is to ensure the information received by the industry is what is needed rather than a report by the USDA that tells producers what is needed.

“We’re learning there is a real value to knowing that an elevated amount of negotiated trade in Texas is going to do a ton more for price discovery than is more cash trade in some other regions so that’s where the effort needs to be,” he said. “There was a lot of discussion yesterday that there has been a substantial increase in negotiated trade in those areas since the beginning of the pandemic.”

Texas has hit robust trade numbers more than half of the time as of late, a dramatic improvement but still lower than needed, he said. Much of the discussion centered around the importance of a hook to ensure participation.

“It’s not nothing,” he said. “It’s agreement that we’re all focused on figuring out what those triggers are and how you get the packers to engage in that in an authentic way.”

Assuming the packers won’t participate merely because they’re asked, he said the policy focuses on a voluntary period for engagement with a backstop.

“Here’s the deal, NCBA is unanimously passing policy that says if this doesn’t work, we’re going to the Hill,” he said. “We’re going to seek another solution and that’s where the teeth are. That was a unanimous vote to keep building on the progress being made but if it slows down, this is only going to go one direction.”

REGIONAL DIFFERENCES

NCBA’s research and data shows that a national, blanket mandate would not work. To achieve what is necessary in terms of price discovery and negotiated trade, regional differences must be respected with concentrated efforts where they are most sorely needed, he said.

Lane said NCBA will continue to work with the USDA and Capitol Hill to determine what a regulatory mechanism, should it be needed, might look like.

In addition to the Fed Cattle policy, Livestock Mandatory Reporting policy was also passed to support the withholding of reports in regions that do not meet a minimum level of negotiated cash trade. Extensive discussion of selling on the grid, he said, was criticized for the lack of teeth to encourage engagement.

“The ideal situation would be to make the grid attractive enough that you want to do business there on both sides,” he said. “You need to walk on and get the premiums you’re looking for and the packers feel like they can engage and actually get that kind of — and I’m putting words in their mouth here — that optimized supply chain that they’re looking for.”

The working group includes all state affiliates as Lane said the representatives in the room were incredibly engaged and well informed. He expects that will remain the same moving forward to determine triggers by the October deadline, which will be the work of a subgroup that reports back to the larger group.

In The Fence Post Magazine and Tri State Livestock News readership areas, Lane said every viewpoint was represented in the meeting, a testament to the inconsistencies and regional differences, even between states. Many Western producers, he said, sympathize with the smaller producer angle but, because they are accustomed to living beneath numerous federal regulations, they seem less willing to invite additional federal involvement in the market.

NCBA, he said, has policy that says they oppose restriction of producers to market their cattle as they see fit, but this allows engagement in finding solutions. One solution proposed goes further than many producers seem to be comfortable with, he said, but doing nothing is something no producers are comfortable with.

“There’s some teeth and there’s a path forward,” he said. ​❖

— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at rgabel@thefencepost.com or (970) 768-0024.


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