Source: MEATINGPLACE, 9/30/16

The U.S. Senate passed a bill that revises the Packers and Stockyards Act of 1921 to include video and online sales of livestock.

The legislation -- H.R. 5883, the Clarification of Treatment of Electronic Sales of Livestock Act of 2016 -- passed the House of Representatives and is now headed to the White House.

The bill also ensures that modern methods of payment such as the use of credit cards are allowed under the Packers and Stockyards Act.

“Today was a huge step forward for the livestock marketing industry bringing our main regulatory law, which dates back to 1921, into the 21st century with some common sense updates,” Dan Harris, owner of Holton Livestock Exchange and chairman of the Livestock Marketing Association, said in a press release.

USDA to report online cattle purchases
Separately, USDA’s Agricultural Marketing Service (AMS) on Oct. 5 will begin including cattle purchased through the Fed Cattle Exchange by packers required to report according to the Livestock Mandatory Reporting (LMR) Act, in its national and regional direct negotiated slaughter cattle reports.

About 1,800 head of cattle per week have been offered through the Fed Cattle Exchange, at price levels in line with current weekly reported markets, since the marketplace launched in May.

AMS estimates the addition of these transactions in LMR will increase the reported weekly volume of negotiated purchases from 1.5 to 2 percent.

History
Participation in the national cash slaughter cattle market has declined significantly, to 25 percent today from 37 percent in 2010. The decline, which occurred as the supply chain moved to using more formulas and forward contracts, has reduced opportunities for price discovery in the negotiated market.

To stem the decline, the cattle industry developed an online trading platform, the Fed Cattle Exchange, to trade slaughter cattle on a weekly basis, with sales scheduled for every Wednesday. The Fed Cattle Exchange provides a web-based interface by which feedlots can offer pens of market ready cattle for sale, and packers can bid on those offerings in a timed format, similar to an online auction.

The cattle industry requested that AMS consider including these transactions in its LMR cattle reports as negotiated purchases.
AMS determined that livestock traded in this manner would meet the definition of a “negotiated purchase” because buyers can bid on the livestock offered and sellers can accept or refuse the final bid. In addition, delivery must be scheduled within 14 days of the sale.

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