KCA President Describes Why the Cattle Market is “Broken”
Lawmakers are searching for livestock industry reforms, including how to bring more transparency into prices. Kansas Cattlemen’s Association President Riley Robbins describes the cattle market as “broken.”
“We’re in a bad place. And I think our two biggest industry problems in my opinion, are a lack of competition from the packers and the feeders. Primarily just from the packers. We just have a total lack of competition in the industry, selling fats, and then we need a way to compete and differentiate our product from imports.”
Around 80 percent of the Kansas cattle market is made up of alternative marketing agreements, which typically use the previous week’s negotiated cash price as the base price of the contract with an added premium.
“The big problem is all these cattle have become captive supply cattle, the packers, you know that they’re getting and they don’t have to compete with other packers to purchase. But the other problem is that there is no negotiating happening on that base price.”
One of the solutions being proposed is the Cattle Price Discovery and Transparency Act, which includes a mandate for a minimum amount of cash cattle trade.
“KCA as an organization has policy that we absolutely support, minimum mandated negotiated cash trade, but our floor is no less than 30% as far as our policy goes, and of course, we would support more than that…so we do not support it based off of that because it’s too weak. I think it comes in right around like 22% for Kansas.”
The association also has another solution they are advocating for.
“KCA has policy to make all of your AMA’s base price negotiated and priced up front when the contract is written. So, in other words, the 80% of the cattle that are not sold as in negotiate negotiated cash right now would have to be negotiated on.”
He says this would allow the packers to still have the efficiency of a large supply of pre-marketed cattle, while also giving the producer more transparency about the price in the contract.
Robbins also supports the 50/14 spot market bill and legislation to bring back mandatory country of origin labelling.