An Open Letter to the U.S. Senate Ag Committee
To be acceptable, federal price reporting legislation on captive supply cattle slaughter contracts ought to be modeled on the South Dakota law´s provisions which specfically address the need for timely knowlege of slaughter inventory under packer control. The following wording is adapted directly from the SD Law´s language and serves the purpose:
Captive supply contract pools are driving the market for fed cattle. A bill that does not provide timely volume as well as price transparency on captive contract positions is not worth passing.
Volume information is available as soon as contracts are made. Pricing information is often not available until much later: often only in the week of slaughter as many contacts are priced relative to the average price the week of slaughter. Timely reporting of the volume of contract cattle under packer control as soon as those cattle are committed is very important to all producers´ ability to make informed decisions on when and how many animals to place on feed. Knowing contract supply numbers at time of slaughter is not much use because finished cattle cannot be held off the market profitably.
The SD law was drafted with input from professional auction owners from the SD Livestock Marketing Association who have extensive practical experience with properly managed competitive markets and full reporting. The Congress should rely upon their professional experience as honest middlemen on adequate reporting.