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SD Stockgrowers thank Herseth Sandlin for bill to restore compe
South Dakota The South Dakota Stockgrowers Association is pleased to learn that Representative Herseth Sandlin, D-SD, along with Representative Barbara Cubin, R-WY, introduced H.R. 2214 in mid-may to reform captive supply practices in the livestock industry. According to SDSGA President Rick Fox, Hermosa, S.D., meatpackers currently have the opportunity to manipulate the live cattle market with cattle that they own or have contracted. "The Captive Supply Reform Act doesn't take away a cattle producers' options of contracting cattle, it simply requires that the contracts are based on a firm price rather than basing them on the whims of the cattle market at the time of delivery. The legislation also requires that deals be made in the open, to allow for true price discovery, not secret deals that leave producers uncertain about the actual fair market price," said Fox. Fox explains that contracted cattle can actually be used to leverage the cattle market and lower the cash price. "When meatpackers are able to contract good quality cattle months in advance, they are able to pull out of the market for days or weeks at a time, resulting in a market drop. Often times, after the market drops in this situation, the packers will take delivery on contracted cattle, for which no price has been negotiated. Many contracts specify that 'market price' will be paid upon delivery or slaughter. At that point, the cattle market is down, and the contractor is paid based on that artificially lowered market." Fox said the Stockgrowers strongly support competition and varied market opportunities for producers and feeders. "We want those in the cattle business to have every option available when they sell their livestock. We just want to ensure that it's done in an open manner, to ensure that nobody is being treated unfairly. Fox said the Stockgrowers appreciate Rep. Herseth Sandlin for taking the initiative to introduce the bill and he encourages fellow cattle producers around the country to contact their representatives to urge them to cosponsor the bill. Date: 5/30/07
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