Mandated cash trade isn’t the answer to cattle market woes

The president of the Illinois Beef Association says government-mandated negotiated cash trade isn’t the way to increase the market price for cattle.

Dr. Paul Walker says the current fed cattle marketing system is broken and the beef industry needs to be proactive to fix it.  He tells Brownfield the industry should link beef cutout values to live cattle prices instead of mandating cash purchases by packers.  “If you tie live price to the retail side, i.e. the cutout value, and you put those in a proper ratio, the packer has to keep that ratio to the feedlot operators, Equity or advantage. 

He says this is a solution that could work for everyone.  “There is some equitable ratio between cutout value in live price that the packer cannot go above that ratio,” he says.  “In other words cutout value, cannot exceed that ratio. You can always go lower if it goes lower, it favors the feedlot operators.”

And, Walker says it wouldn’t take away the packers’ ability to utilize AMAs (Alternative Marketing Agreements) or mandate negotiated cash trade volume.  “It just sets the daily price for what low choice is going to be,” he says.  “And doesn’t let the packer arbitrarily say I only want to give you $1.38. I only want to give you $1.35 and see if I can get away with it.”

Walker says the Illinois Beef Association is in favor of this concept to help improve competition and prices in the cattle markets.

AUDIO: Paul Walker, Illinois Beef Association

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