Livestock Economist Sets Record Straight on Market Research

FORT COLLINS, CO – A recent study conducted by Colorado State University Livestock Economist Dr. Stephen R. Koontz, is leading to a call to adopt the so-called 30-14 policy. Recently the U.S. Cattlemen’s Association (USCA) adopted his research and called for a federal requirement mandating a minimum percentage of cash negotiated cattle to be bought by each U.S. meat processing facility that is large enough to report to USDA’s Agricultural Marketing Service (AMS). Specifically, the 30-14 policy proposal refers to beef packing companies being required by the government to purchase at least 30 percent of individual plant fed cattle needs in the negotiated cash market and that those purchases would be delivered to the plant within 14 days.

Last week, however, Dr. Koontz clarified in a letter that his research does examine the impact of declining negotiated cash trade on price discovery in regional and national fed cattle markets, and also attempts to make recommendations as to the needed volumes of cash trade for minimal and robust price discovery. But it does not recommend, and he does not support, a mandate of a given percentage cash trade. He also says the policy proposal would not address the current market situation in any manner, a situation due entirely to the supply disruptions at meatpacking facilities. “The main issue I have with the policy proposal is that it would cost the cattle and beef industry millions and possibly billions of dollars per year,” Koontz wrote in a letter to industry leaders.