Can the voluntary approach to cattle price discovery work?
NCBA has released its plan to improve price discovery in the cattle markets. But some remain skeptical that a voluntary approach will work.
Iowa cattle feeder Brad Kooima, who served on the regional triggers subgroup that developed the plan, says it will take a willingness on the part of large cattle feeders and the beef packers to make it work.
Kooima thinks a majority of cattle feeders are on board.
“I really truly believe that there is willingness on the part of a lot of feeders—big and small—recognizing that they’ve got to do business differently,” Kooima says. “They’ve got to take a percentage of their cattle and do some real cash negotiating—instead of all these turn-ins and formula deals.”
The other side of the equation involves the beef packers. Kooima says he is anxious to see how they respond.
“I would like to think that they would be somewhat impelled by the fact that they clearly don’t want a mandate—and that would increase their willingness to voluntarily try to reach those standards as well.”
The plan, which will be evaluated on a quarterly basis, contains thresholds that must be met. If they are not met, the subgroup will recommend that NCBA pursue a legislative or regulatory solution to compel robust price discovery.