The National Farmers Union wants Canada to follow the U. S. government’s lead and curtail captive supply in cattle markets.
Captive supply is a technique wherein beef-packing companies use cattle they own, or cattle they control through contracts that do not contain fixed prices, to push down prices to independent sellers. Captive supplies allow packers to stop bidding in cash markets whenever prices rise above packers’ preferred level. Studies have shown the strategy leads to lower prices for ranchers and farmers.
Several senators introduced the “Livestock Marketing Fairness Act” May 20 in the U. S. Senate. The bill would require that contracts specify actual prices. Captive supply contracts omit fixed prices and, instead, base values on cash-market prices at the time of delivery. The bill would not prevent forward contracting, but it would prevent packers from using non-priced contracts as a tool to depress markets.
“We’re constantly told, by politicians and cattle organizations, that we have an integrated North American market. For that reason, U. S. moves to increase farmers’ prices must be matched by similar moves here,” said Manitoba board member Fred Tait.