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What do you know? How do you suppose some peoples bankers will look at this? It must be a ploy by the CME to get more contracts sold. lol.

AMI: Bill Prohibiting Livestock Forward Contracting Introduced In House



Rep. Earl Pomeroy (D-ND) this week introduced legislation (H.R. 4257) that would prohibit the use of forward contracts and formula pricing in the livestock sector. Reps. Barbara Cubin (R-WY) and Stephanie Herseth (D-SD) also co-sponsored the bill that could expose producers to greater price risk and market volatility.

The bill would amend the Packer and Stockyards Act to outlaw "formula price" and "forward contract," as defined by the bill. Formula price would mean "any price term that establishes a base from which a purchase price is calculated on the basis of a price that will not be determined or reported until a date after the day the forward price is established." A forward contract would be defined as an "oral or written contract for the purchase of livestock that provides for the delivery of the livestock to a packer at a date that is more than 7 days after the date on which the contract is entered into …."

AMI, which opposes the bill, noted that while the bills' intention is to "prohibit the use of certain anti-competitive forward contracts," it disregards that many producers and processors jointly enter into contracting and marketing agreements to limit exposure to market volatility, access capital, and implement value-added business practices. Marketing agreements and contracting often provide the means to access capital for young producers often to enter farming and ranching.
 
" A forward contract would be defined as an "oral or written contract for the purchase of livestock that provides for the delivery of the livestock to a packer at a date that is more than 7 days after the date on which the contract is entered into …."



If this is the case what about Video sale calves with a future delivery date.
Wouldn't be fair to limit use of contract thru out the industry.
 
Jake,

This bill truly defines the socialized marketing agenda of it's sponsors. The Livestock Marketing police and their clones saving the feeding industry from their own pricing mechanisms. Wonder why Johnny Smith and many of the R-CULTers are such big Democrat supporters? Here's your proof.

This is precisely why I passed the "Freedom of Marketing" resolution within the South Dakota Cattlemen's Association. You can't create a more competitive market by destroying marketing alternatives.

You need to become a SDCA member Jake. You are obviously too conservative to join the blamers.


~SH~
 
TRJake
I have to this point, read hundreds of pages trying to find out where the beef industry is headed. I have read about the competition. How efficient the broiler industry is. The packer controls everything from training to the finished product. You supply the back work, buildings etc. Your reward is pd of gain. If you get on the wrong side of the packer for any reason, you are out of business.

The pork industry is not as fully integrated as broilers, but is fast becoming that way. The research on genetics, feeds, medicines, etc is making a pretty competitive industry. Mega producers are pushing small independents out of the business. Those who are not contracted somehow are paying the price.

These things are creating more efficiency for the packers. Their lines keep moving as they control their costs, supply, delivery times, etc. Its not all known as integration, some use the word coordination. I did not look at 'captive supply' as if it was wrong, innocent or guilty, etc. I tried to be open minded and not judge the packers for doing it, but where it was leading to. The use of some form or another of contract is rising at a hell of a rate. (again, I am not debating advantages or disadvantages)

It is very obvious where the beef industry is headed. Unless something drastic changes, it will be the same as broilers and pork. It may take a little longer than broilers, and may not move as fast as pork is right now, but it is damn sure coming. If beef producers continue to fight each other instead of working together, it will be here faster then you think. I hate government interference in anything and believe that 'education, not legislation' would solve a hell of a lot more problems. Here is a study written in 1993. Its darn well worth the time reading. It helps understand what the beef industry is up against.
http://agecon.uwyo.edu/WFMEC/WebArticles/MarketingArticles/ChangeMeat/ChangingMeatIndI.htm

Your time is a lot better spent reading things like this than: "You are a liar, am not, am to, prove it, I already did, did not, did to!" Geeze, I had to slam my typing fingers in the drawer 3 times today to keep from screaming 'Grow Up!' Looks to me like if producers can't work with each other, they will be working for someone else!
 
SH, I haven't given a lot of thought to joining SDCA yet. These things take time. :wink: I left the Stockgrowers because of the left leaning positions they have taken. I can also see where you are coming from fedup2, but if you take away the rights of some, where does it stop? I don't think this will ever be a perfect world, but I don't see how limiting rights heads us in that direction. That is why this country was started after all right?

I am going to be civil in my posts even if some don't like what I have to say, and I respect other posters even if I disagree with them. I am so far to the right, that I won't eat the left wing of a chicken. :!: :wink: Yuck, I hate chicken anyway.
 
Fedup: "It is very obvious where the beef industry is headed. Unless something drastic changes, it will be the same as broilers and pork."
Click to expand...

The beef industry will not be able to integrate like the poulty and pork industries due to the equity required. You will see more "BOTTOM UP" integration like USPB than top down. Try building beef confinement units and see how efficient you can raise cattle. Tyson and Excel do not have the equity to buy up the land, livestock, and machinery required to raise cattle but the producers who are not blamers have found out that they can own the 4th largest packing company in the nation with a good financial game plan.

Doomsday profits that predict the chickenization of the beef industry serve nobody's best interest.


~SH~
 
TRJake I want to make it clear that I never endorsed those laws in any way in my post. I made the remark 'education, not legislation' is usually the best way to go. I know how some on this forum read and i don't want to play that game. I hope you read the site I posted and share your conclusions. I thought they were pretty far-sighted in some things.
 
the real jake said:
What do you know? How do you suppose some peoples bankers will look at this? It must be a ploy by the CME to get more contracts sold. lol.

AMI: Bill Prohibiting Livestock Forward Contracting Introduced In House



Rep. Earl Pomeroy (D-ND) this week introduced legislation (H.R. 4257) that would prohibit the use of forward contracts and formula pricing in the livestock sector. Reps. Barbara Cubin (R-WY) and Stephanie Herseth (D-SD) also co-sponsored the bill that could expose producers to greater price risk and market volatility.

The bill would amend the Packer and Stockyards Act to outlaw "formula price" and "forward contract," as defined by the bill. Formula price would mean "any price term that establishes a base from which a purchase price is calculated on the basis of a price that will not be determined or reported until a date after the day the forward price is established." A forward contract would be defined as an "oral or written contract for the purchase of livestock that provides for the delivery of the livestock to a packer at a date that is more than 7 days after the date on which the contract is entered into …."

AMI, which opposes the bill, noted that while the bills' intention is to "prohibit the use of certain anti-competitive forward contracts," it disregards that many producers and processors jointly enter into contracting and marketing agreements to limit exposure to market volatility, access capital, and implement value-added business practices. Marketing agreements and contracting often provide the means to access capital for young producers often to enter farming and ranching.
Click to expand...


This press release contains outright lies about the Captive Supply Reform Act. It DOES NOT outlaw forward contracting. AMI must be desperate to be spreading such lies.

If you want to defend AMI's position, then quote the part of the act that prohibits forward contracting.
 
OCM,

The prohibition of forward contracts is a "red herring". There is no justification for this stupid communist law of allowing the government to pick and chose who can and who cannot own cattle and how they will be marketed.

You provide for me the justification for this socialism.

This is based on nothing more than empty market manipulation conspiracy theories. A bunch of arrogant Livestock Marketing Police that think they need to save the feeding industry from their pricing mechanisms.

This bill will be shot down in flames OCM. Write it down! This will be yet another loss for the packer blamers.


~SH~
 
I was looking for a discussion on this SH. I was hoping someone would actually read this article and share their thoughts. Why do you feel you need to stick a label on everyone?

SH:"Doomsday profits that predict the chickenization of the beef industry serve nobody's best interest"

"Doomsday profits"?= prophets?
Did you mean to write: posters who discuss what you do not want to hear don't serve your best interest"? Sorry, but thats what it sounds like.

You write:"Tyson and Excel do not have the equity to buy up the land, livestock, and machinery....."

Why do they need to buy these things?

From the posted article: "While contracts can have many variations, one of the principle contractual forms currently being used by the broiler and hog industries is the production contract. These contracts typically require the grower to provide facilities and equipment, repairs and maintenance of facilities and equipment, labor and management, utilities, and record keeping. The processor usually is required to provide the animals that will be raised in the producer's facilities; management procedures and standards and the corresponding training; feed, medicines, disinfectant, and veterinary care; the record keeping system; and live haul to the processing plant (Carroll's Foods).
Contracts in the cattle industry tend to fall more under forward contracting or marketing agreements."

There is a lot of information in the recent articles that I've posted SH. Take the time to read a couple. I look forward to hearing your thoughts on this article.

Those who feel that they have all the answers, just don't know all the questions! I damn sure have more questions than answers.
 
Your fear of "TOP DOWN" vertical integration occurring in the cattle/beef industry is unwarranted due to the equity required to raise cattle. Tyson and Cargill do not have the equity to own the land livestock and machinery to integrate from the top down. With the equity tied up in land, livestock, and machinery, it's much easire for vertical integration to occur from the "BOTTOM UP" as is the case in USPB.

Yes, I believe integration of some sort or other will continue to occur. I can see more coordination between progressive producers and the packing industry in branded beef programs while the blamers continue to supply these same packers through the commodity beef industry. Either way, coordination will continue to occur.

You seem to suggest that contractual arrangements in the hog and poultry industry are a potential negative. I have a brother-in-law that raised contractual hogs and he said he would never want to go back to the feast and famine volatility of the cash market of days gone by. What's wrong with contractual arrangements if they guarantee you a profit? If some don't like to contract, DON'T CONTRACT!

If you want my comments on a particular aspect of your articles, post them.



~SH~
 
Big Muddy rancher said:
Being Canadian I am not 100% familiar with your government but why aren't these politicions not saving the Broiler and hog industrys.
Click to expand...

The Captive Supply Reform Act includes hogs. Chickens are packer owned.
 
Packers don't need all the land, equipment, etc... to control the cattle industry. All they need to control is the bottleneck.
 
SH you write: "Your fear of "TOP DOWN" vertical integration occurring in the cattle/beef industry is unwarranted due to the equity required to raise cattle."

What fear? Where did I say TOP DOWN" These are your words SH, not mine! Did I not also use the word 'coordination'? If I implied that, it was a mistake on my part as I did not want to narrow the discussion in anyway!
The article explains what beef is up against as far as competing with pork and broilers. As far as coordination will continue to occur, that was the point of some of my statements.

I pointed out this article to TRJake as I wanted to see some discussion on it. I did not ask for your opinion on it SH. I invited you to read the article and discuss it the next post because I still wanted to be polite after you stuck your label on me. You made your point as to the fact, you don't have to read anything as you already have all the answers, just ask. I believe any further discussion would be a waste of time. Have a nice evening.
 
~SH~ said:
OCM,

The prohibition of forward contracts is a "red herring". There is no justification for this stupid communist law of allowing the government to pick and chose who can and who cannot own cattle and how they will be marketed.

You provide for me the justification for this socialism.

This is based on nothing more than empty market manipulation conspiracy theories. A bunch of arrogant Livestock Marketing Police that think they need to save the feeding industry from their pricing mechanisms.

This bill will be shot down in flames OCM. Write it down! This will be yet another loss for the packer blamers.


~SH~
Click to expand...


You're not even correctly representing what the law does. How can you be accurate in calling it communist if you can't even correctly describe it?

There is no prohibition of forward contracting in the bill. Quote it to me if you think it does.
 
Sandman: "Packers don't need all the land, equipment, etc... to control the cattle industry. All they need to control is the bottleneck."
Click to expand...

I repeat, it is far easier for producers to control this industry from pasture to plate than for the large packers to control it from the top down. Case in point - USPB!

Your position is nothing more than baseless fear mongering Sandman, like always.


Fedup: "What fear? Where did I say TOP DOWN" These are your words SH, not mine! Did I not also use the word 'coordination'? If I implied that, it was a mistake on my part as I did not want to narrow the discussion in anyway!"
Click to expand...

I never said you used the words "TOP DOWN" did I? I simply pointed out the fact that vertical integration is occurring more from the "BOTTOM UP" (producer driven) than the "TOP DOWN" that so many fear in this industry.

OK Fedup, let's define your statement then. Here it is..............

Fedup (previous): "It is very obvious where the beef industry is headed. Unless something drastic changes, it will be the same as broilers and pork."
Click to expand...

What did you mean by be the same as broilers and pork? The standard argument in this industry is that producers will end up being "serfs on their land" working for Tyson. So what did you mean? Did you mean something else? Here's your chance or would you be more comfortable throwing out the topic and not taking a position on it yourself?

Top down vertical integration where producers contract their cattle with Tyson like they do with poultry and pork? Bottom up vertical integration as in producers owning the packing industry like USPB? Which did you mean?

What did you mean by "if something drastic doesn't change"? That sounds like a concern to me so explain yourself. Do you see vertical integration or coordination as a negative or a positive? Why?

Now are you going to throw out the discussion item ("beef industry ending up like poultry and pork") and leave out your own views on the issue or an explanation or are you just going to slip out of the room because you don't want to committ to a position?

WHAT DID YOU MEAN if I took your position wrong?


Fedup: "I did not ask for your opinion on it SH."
Click to expand...

Too bad you got it anyway didn' t you?


Fedup: "I invited you to read the article and discuss it the next post because I still wanted to be polite after you stuck your label on me."
Click to expand...

Hey, if you think vertical integration or vertical coordination (ending up like poulty and pork) is a good thing, than I apologize for calling you a doomsday proPHET. The standard "fear mongering" position of most in this industry, like Sandman's response above, is that vertical integration or coordination will have producers being serfs on their land to Tyson while reality shows that producers are investing in the packing industry more than Tyson or Excel are investing in the producer side. That is a fact and that fact needs to be pointed out in light of Sandman's fear mongering "controlling the bottleneck" position.

That's exactly what this forum is about. When fear mongering positions like Sandman's are thrown out, the fact that vertical integration is occuring from the "BOTTOM UP" (producer driven) needs to be pointed out because this forum isn't your typical blamer's convention where you make it up as you go.


Fedup: "You made your point as to the fact, you don't have to read anything as you already have all the answers, just ask."
Click to expand...

Now who is putting words in whose mouth? I never said I had all the answers. My point was that I get tired of wading through endless articles. If you have a point of discussion from an article, bring it. I don't see anyone else commenting on the article so why make an issue with me?

I simply responded to a comment you made regarding vertical integration or coordination. If you don't like that, too bad. You didn't graduate from referee to sherriff yet did you?



~SH~
 
OCM: "You're not even correctly representing what the law does. How can you be accurate in calling it communist if you can't even correctly describe it?"
Click to expand...


Will CSRA ban packers from buying feeder calves? Yes or no?

Will CSRA ban formula pricing based on a weekly weighted average base price as we know formula pricing now? Yes or no?

Will CSRA ban forward contracts AS WE KNOW THEM? Yes or no?

Simple yes or no questions OCM, would you like to define the law or create the illusion that it doesn't do what it intends to do?

Don't try to pretend this law is something that it isn't.

You support it, you define it.



~SH~
 
SH, Aside from your usual packer garbage, what are you trying to say here:

Hey, if you think vertical integration or vertical coordination (ending up like poulty and pork) is a good thing, than I apologize for calling you a doomsday proPHET. The standard "fear mongering" position of most in this industry, like Sandman's response above, is that vertical integration or coordination will have producers being serfs on their land to Tyson while reality shows that producers are investing in the packing industry more than Tyson or Excel are investing in the producer side. That is a fact and that fact needs to be pointed out in light of Sandman's fear mongering "controlling the bottleneck" positionHey, if you think vertical integration or vertical coordination (ending up like poulty and pork) is a good thing, than I apologize for calling you a doomsday proPHET. The standard "fear mongering" position of most in this industry, like Sandman's response above, is that vertical integration or coordination will have producers being serfs on their land to Tyson while reality shows that producers are investing in the packing industry more than Tyson or Excel are investing in the producer side. That is a fact and that fact needs to be pointed out in light of Sandman's fear mongering "controlling the bottleneck" position
Click to expand...

Specifically:

that producers are investing in the packing industry more than Tyson or Excel are investing in the producer side.
Click to expand...
?
 
Elemenatry, I'm not going to explain it again just because you are too dense to understand it. You don't understand enough about this industry to have an intelligent discussion on it anyway so don't ask me to explain it.



~SH~
 

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