AMS extends comment period on fed cattle market rule

The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) announced Nov. 25 that it is extending the public comment period on its advance notice of proposed rulemaking (ANPR) by an additional 30 days for the “Price Discovery & Competition in Markets for Fed Cattle” proposed rule. The document was originally published on Oct. 11, 2024 (89 FR 82519). With the 30-day extension, comments now must be submitted on or before Jan. 10, 2025.

The ANPR requests advance comments on proposals to amend the regulations under the Packers & Stockyards Act (PSA) to address concerns regarding price discovery and fairness in fed cattle markets.

The notice seeks public feedback on an identified set of regulatory options that AMS could employ to address concerns regarding price discovery and fairness in fed cattle markets. AMS said information from public comments would inform its approach to this topic, including any future regulatory changes.

During the initial 60-day comment period ending Dec. 10, 2024, AMS received requests from several industry organizations asking for additional time to submit comments and citing the various proposals' complexity and wide-ranging impacts that could cause significant legal and economic changes in relationships between packers and their suppliers. These requests for more time led to AMS announcing this extension of the ANPR comment period by an additional 30 days.

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According to the summary of the proposed rule, AMS is seeking input from stakeholders about ways to improve price discovery and fair and competitive trading environments in fed cattle markets, many of which are concentrated markets. Those concentrated markets may have played a role in packers imposing fed cattle purchasing agreements on producers, commonly known as alternative marketing arrangements (AMAs), that use some method of calculating prices other than cash negotiated or spot pricing.

Fed cattle AMAs have achieved a well-established position in the cattle industry, accounting for the majority of cattle traded, the AMS summary continued. The vast majority of AMAs are formula pricing agreements that use an external benchmark price to establish a base price in the contract when determining the price a seller will receive. In formula contracts, which this ANPR focuses on, the base price is not known when the contract is signed, and it fluctuates in accordance with the benchmark.

Aspects of the design of formula contracts have some adverse consequences – directly or in conjunction with certain trading practices – for producers and the markets in which they operate and potentially for other packers seeking to compete for fed cattle in the market, AMS explained. It is possible that some of these adverse consequences could give rise to a violation of the PSA or other antitrust laws.

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This ANPR seeks comment on a range of options designed to ensure that base prices in formula pricing agreements are broadly representative of fair market conditions and are not vulnerable to unfair, deceptive, manipulative, unduly preferential or anticompetitive practices that could cause prices to shift. The targeted options also seek to address obstacles that market participants face when engaging in price discovery and contributing to transparent markets. These options are further intended to mitigate the market design, trading practices or preferences that underlie the complaints AMS reported that it has received over the years relating to aspects of formula pricing agreements and their impact on producers and the cattle markets.

AMS said it seeks comment on the experience of producers, packers and other market participants in relation to the problems undergirding these complaints, as well as the effectiveness, workability and economic impacts of several potential solutions identified – and welcomes relevant data, information and opinions to explain those views.

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This request for comment is principally focused on what could be done by the AMS Packers & Stockyards Division under the authority of the PSA of 1921, as amended (7 U.S.C. 181 et seq.). However, AMS reported that it is also interested in commenters' views on any other authorities that USDA could deploy. These could include efforts in connection with other authorities or offices of USDA – such as the Office of the Chief Economist – that provide market-relevant information or analysis. Comments received in response to this ANPR will inform the agency’s approach to regulating the nation's fed cattle markets.

Comments can be submitted on or by Jan. 10, 2025, through the federal e-rulemaking portal at https://www.regulations.gov and should reference the document number (Doc. No. AMS-FTPP-24-0013) and the date (11/25/2024) and page number (92853) of this issue of the Federal Register (Vol. 89, No. 227). AMS said it strongly prefers comments be submitted electronically but will also accept written comments submitted and delivered via mail by Jan. 10, 2025, to Docket No. AMS-FTPP-24-0013, S. Brett Offutt, Chief Legal Officer, Packers & Stockyards Division, USDA, AMS, FTPP; Room 2097-S, Mail Stop 3601, 1400 Independence Ave. SW, Washington, DC 20250-3601.

All comments submitted in response to this ANPR will be included in the record and will be made available to the public, as submitted, including any identifying information. Comments can be submitted anonymously by entering “N/A” in the fields that would identify the commenter.

For further information contact: S. Brett Offutt, chief legal officer/policy advisor of the AMS Packers & Stockyards Division, by phone at (202) 690-4355 or by email at s.brett.offutt@usda.gov.