Spot market quotas proposed for beef packers

Jun 26, 2020  | 2 min  | Ep4545

The U.S. Senate has proposed a rule requiring beef packers to purchase half of the cattle they slaughter on the spot market.
The proposed change to the Agricultural Marketing Act of 1946 would insert language mandating a spot market quota for beef processors. The bill’s sponsor, Iowa Senator Charles Grassley, a Republican, claims that only 20 percent of cattle purchased for slaughter are currently obtained on the spot market.
Senator Charles Grassley, R - Iowa: “People who have that negotiated bid, that 20 percent, tend to be “Sellers of Last Resort”, and come in maybe when their cattle aren’t really needed, and they get $20 to $40 less.”

The percentage of spot market sales has been trending downward over the last twenty years. The Senator feels when packers own animals, they have little incentive to buy from independent producers.
Senator Charles Grassley, R, Iowa: “One time, a CEO of a meatpacker gave me this answer. He says, ‘Senator, You want to know why we own livestock? When prices are high we kill our own livestock, and when prices are low, we buy from the farmer.’ Now, isn’t that interfering with the marketplace? Unfair competition with the farmers?”

The new rule would not affect meatpackers of pork or poultry, which have higher percentages of contract growers. 
For Market to Market, I’m Peter Tubbs.

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