South Dakota House Ag committee supports 50/14 rule
The South Dakota House of Representatives Agriculture Committee voted on Feb. 18, 2021, unanimously in favor of a House Concurrent Resolution calling for support of the “50-14” rule, a concept being discussed at the federal level, that would require all larger meatpacking facilities to purchase at least 50 percent of their weekly kill on the cash or “spot” market, and to take delivery of all purchases within 14 days.
Currently, three quarters or more of the weekly slaughter numbers (this percentage is much higher in the southern region) are purchased using formula agreements or “captive supply.” These are non-public agreements between the packer and the feeder, many of which are based on the current “cash market.” According to independent feeders such as Iowa’s Eric Nelson, the cash market is difficult if not impossible to decipher with such a relatively small number of cattle and prices being reported weekly.
The South Dakota Stockgrowers Association; Bryan Hanson, President of SD Auction Markets Association and Fort Pierre Livestock Auction owner; Belvidere rancher Kenny Fox, Brett Kenzy, Gregory, South Dakota, rancher spoke in favor of the bill.
“The cattle industry in South Dakota is the largest single agriculture industry that we have. We can’t afford to lose that industry… we’ve gone from 2014, a $517 return, to a $51 return today,” reported Fox, in his proponent testimony.
“Capitalism is characterized by the freedom of capitalists to operate and manage their property for profit in competitive conditions. Competitive is emphasized,” said Brett Kenzy, encouraging support for the bill.
Scott Vanderwal, South Dakota Farm Bureau President, soybean farmer and cattleman spoke against the resolution. The 50-14 bill fits into the “be careful what you ask for” box, said Vanderwal. The 50-14 rule would prevent some producers from entering alternative marketing agreements, or forward contracts. “We have solid research that marketing agreements create much more revenue than going in the cash market,” he said.
Dr. Koontz from Colorado State University estimates that the mandate would create a $2.5 billion loss in revenue to the cattle industry, in the first year, said Vanderwal.
Vanderwal said that the South Dakota Farm Bureau believes something needs to be done to address cattle price discovery, but that this isn’t the answer.
Brenda Foreman, the South Dakota Cattlemen’s Association lobbyist also spoke against the bill. “SDCA is opposed to mandates that dictate how our members market their cattle, and that is exactly what this resolution does,“ she said. ”This proposed mandate will likely do more harm to cattle feeders than to packers,“ she added.
The House Ag committee supported the resolution, introduced by Representative Liz May of Kyle, with a 9-2 vote, with two members excused.
A resolution is not enforceable in the way that a bill would be. A resolution is more of a nod of support or an “official expression of the opinion or will of a legislative body” for a particular issue. The resolution will now go to the full House of Representatives for a vote.
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