For the first time since establishing a triggering system last year to prompt the cattle processing industry to offer more transparency in its price discovery process, the National Cattlemen’s Beef Association (NCBA) announced last week a major trigger had occurred after packers failed to participate in the voluntary system in adequate numbers.
NCBA President Jerry Bohn said in a letter to the organization’s members that a “major trigger” was tripped “due to a lack of packer participation.”
“Simply put, feeders can offer all their cattle on a negotiated basis — but we only achieve our thresholds if there is a buyer willing to bid fairly on those cattle offered,” Bohn said.
Proram triggersMinimum participation triggers are established for each quarter and require no less than 75% of the weekly negotiated trade volume that current academic literature indicates is necessary for “robust” price discovery.
Under NCBA’s framework, if a major trigger is tripped in any two of four rolling quarters, the organization will “pursue a legislative or regulatory solution determined by the membership.”
The NCBA subgroup charged with monitoring these reporting standards monitor the weekly negotiated trade information for each of four regions — Iowa and Minnesota; Nebraska and Colorado; Kansas; and New Mexico, Oklahoma and Texas.
The minimum volumes are based on research by Stephen Koontz, agricultural economist at Colorado State University.
The threshold must be met in at least 75% of the reporting weeks in a quarter.