Sustainability: Not just a fad

Despite mainstream perceptions, well-managed ranching is a sustainable process. However, there are some potential issues ranching may face in the ongoing sustainability discussion. Pictured: Cattle from the Brookview Farm in Manakin-Sabot, VA graze.

USDA’s Agricultural Marketing Service (AMS) announced it would issue two new USDA Market News reports based on Livestock Mandatory Reporting data, providing additional insight into formula cattle trades and to help promote fair and competitive markets.

The addition of these new publications will allow producers to compare their marketing arrangement to other producers and make more informed business decisions on their operations.

The first report, the National Daily Direct Formula Base Cattle report, will provide greater information into the foundational prices used in cattle market formulas, grids and contracts. The report will enable ranchers and other stakeholders to see the correlation between the negotiated trade and reported formula base prices and the aggregated values being paid as premiums and discounts. The national report will be published three times a day and the weekly and monthly base reports will be both national and regional in scope.

The second report, the National Weekly Cattle Net Price Distribution report, will show the volume of cattle purchased at each different level of pricing within those formulas, grids, and contracts. According to the AMS, “Publishing a price distribution for all cattle net prices will offer more transparency to each of the purchase type categories.

“This report is a window into what producers are paid for cattle (net) and retains confidentiality by segregating volumes purchased in $2 increments +/- the daily weighted average price depending upon premiums and discounts.”

The National Cattlemen’s Beef Association (NCBA) stated that adding these new publications will allow producers to better compare their marketing arrangement to others and make more informed business decisions on their operations.

“USDA’s announcement is a significant step toward increasing transparency in the cattle markets,” said NCBA Vice President of Government Affairs Ethan Lane. “As Livestock Mandatory Reporting awaits congressional reauthorization, it is encouraging to see the administration taking proactive steps to broaden the scope of this critical information tool. NCBA remains committed to maximizing market transparency and looks forward to building on this momentum to shed more light on the fed cattle trade.”

The new reports resulted from President Joe Biden’s executive order directing the USDA to “enhance price discovery, increase transparency, and improve the functioning of the cattle and other livestock markets.” The reports will provide greater insight into the cattle traded outside of the cash negotiated spot market.

Executive order aims to drive competition

Agriculture Secretary Tom Vilsack said in a statement, “Current negotiated cash cattle trade is approximately 30 percent less than it was in 2005, while formula transactions have increased at the same rate. Our new reports on formula transactions will bring needed clarity to the marketplace.

“Also, in the coming months, we plan to conduct several producer-focused outreach sessions to help producers and others understand how these data can inform real-world marketing decisions at farm, ranch, feedlot, and other points in the supply chain.” — Charles Wallace, WLJ editor

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