R-CALF USA's solution to the problem is to first address the reasons that so many feeders are exiting the live-weight cash market to prevent that market from shrinking any further and to re-establish it as an attractive market that feeders may voluntarily decide to re-enter.
To accomplish this goal we must first: 1) stop packers from restricting timely access to the marketplace; 2) stop packers from using deceptive practices to coerce individual feeders to exit the live-weight cash market; 3) stop packers from paying preferential prices to their preferred feeders that are not based on either quality or market characteristics (a practice that keeps the cash market price artificially low); 4) stop packers from procuring cattle from other packers who are not cattle feeders (By purchasing cattle from other packers, packers avoid creating demand in the cash cattle market.); and, 5) stop packers from jointly buying cattle in order to reduce the number of bids for cattle (When multiple packers join together to hire one cattle buyer, competition is eliminated.).
These are the reforms the proposed GIPSA rule will help accomplish, and this is why R-CALFUSA strongly supports it. The proposed GIPSA rule will not limit, restrict or prohibit grid pricing, premiums or discounts, value-based marketing, or any legitimate form of alternative marketing agreements.
The packers and their allies are misleading the industry by claiming the proposed GIPSA rule would harm cattle producers because packers would no longer pay premiums for higher quality fed cattle, which would then translate to only average prices for all cattle regardless of quality, including even lighter feeder calves of higher quality. That's a distraction strategy on their part. The packers, along with their allied trade associations, have initiated an aggressive campaign to convince everyone to focus on their outrageous claim that the proposed rule would eliminate market-based pricing programs. Nothing could be further from the truth! There is no language in the proposed GIPSA Rule that would, in any way, limit, restrict or prohibit the use of legitimate alternative marketing arrangements for cattle.
Instead, the proposed GIPSA rule will help restore the integrity of the live-weight cash cattle market, and doing so will prevent further shrinkage of that market, as well as possibly attracting more feeders into that market.
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