Since 1894

6031 SW 37th Street * Topeka, KS 66614-5129 * (785) 273-5115 * Fax (785) 273-3399 * E-mail: kla@kla.org * www.kla.org

April 28, 2022 

Mr. Michael Sheats

Director, Livestock, Poultry, and Grain Market News Division

U.S. Department of Agriculture 

Agricultural Marketing Service

Wash.LPGMN@usda.gov

Dear Director Sheats: 

The Kansas Livestock Association (KLA) respectfully submits the following comments in 

response to the U.S Department of Agriculture (USDA), Agricultural Marketing Service (AMS)

Listening Session on Cattle Contracts Library Pilot Program Development. KLA, formed in 

1894, is a trade association representing over 5,700 members on legislative and regulatory issues. 

KLA members are involved in many aspects of the livestock industry, including seed stock, cowcalf, and stocker cattle production; cattle feeding; dairy production; swine production; grazing 

land management; and diversified farming operations. 

In authorizing the Cattle Contracts Library Pilot Program in Section 779 of the Consolidated 

Appropriations Act, 2022, Congress simply appropriated $1 million “for a Cattle Contracts 

Library pilot program that the Agricultural Marketing Service shall develop and maintain within 

the Livestock, Poultry, and Grain Market News Division.” The only additional condition was 

that the pilot “be similar, as determined by the Secretary, to the swine contract library the U.S. 

Department of Agriculture currently maintains pursuant to section 222 of the Packers and 

Stockyards Act (7 U.S.C. § 198a).” This gives AMS wide latitude to craft the pilot program. 

While Congress directed the program be “similar” to the swine contract library, it did not 

indicate the program must be the same and gave the Secretary discretion to determine the 

meaning of similar. KLA believes this gives AMS the ability to maintain those aspects of the 

swine contract library that are useful and avoid those aspects that limit the usefulness of the 

current swine library and in some instances might hamper market innovation. 

KLA also believes that AMS should make clear to users that a cattle contract library is intended 

as a market transparency tool and should not be used or interpreted as a price discovery 

mechanism. While data reported in a cattle contract library may be used in the future to 

negotiate a formula agreement, the information reported should not represent actual market 

transactions. Contrary to what some commenters implied during the live listening session, the 

data in a contract library should not be real time data and should not be linked to the daily USDA 

Livestock Mandatory Reporting Program (LMR) daily or weekly reports for cattle. 
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Confidentiality Must be Ensured

First and foremost, KLA believes that any pilot program must maintain stringent confidentiality 

safeguards. While the goal of a contract library is to add transparency to the marketplace by 

making available information to the public about how final cattle prices are determined, such a 

tool should never disclose, directly or indirectly, either party to a contract or proprietary business 

information. Confidentiality of such information is required by 7 U.S.C § 1636. KLA members 

are concerned that if a relatively small number of contracts exist in a given region, industry 

participants could determine which packer has agreed to a given pricing formula with a specific

feedyard. Given that current market leverage conditions favor the packing industry, if such 

identities are indirectly disclosed, such information could be used by a packer to renegotiate a 

less favorable formula agreement from the producer perspective. Therefore, KLA has a number 

of suggestions that AMS should implement to safeguard contract participants’ identities and 

other proprietary information. 

Report Only Market Transaction Terms

USDA should only report market transaction terms pursuant to the pilot program. Market 

transaction terms include those terms of a contract that determine the final payment paid to the 

owner of cattle, such as how the base price is determined and any premiums and discounts, 

freight costs, and other miscellaneous adjustments that would modify the base price to arrive at a 

final price. Disclosure of non-market contract information is not necessary to the underlying 

intent of a contract library, which is price transparency. Disclosure of contract terms that do not 

involve price, like animal welfare practices, financing, or environmental obligations runs the risk 

of disclosing personal identities and proprietary business information. 

Disaggregate Formula Components 

KLA prefers that market transaction terms, as described above, be reported in a disassociated 

manner. For example, AMS would publish, by LMR region, all base prices available among 

active contracts without attaching it to other adjustments in the formula. Likewise, AMS would 

report premiums and discounts, freight costs, and other miscellaneous adjustments separately and 

disassociated from the base formula. While this would not be the same as the swine contract 

library that publishes a final formula price that links all these components, publication in a 

disassociated manner would be similar in nature. Disassociated market transaction terms would 

provide better protection of confidential information, while still allowing market participants to 

see all available components of formula agreements being used in the market. KLA believes this 

is necessary because there may be fewer contracts offered by packers to cattle producers 

compared to the number of contracts in the swine industry. Fewer cattle contracts would allow 

contract participants to more easily be identified if the full final price formula were disclosed.

Separate Final Price Options Reported from a Single Contract

If AMS does not believe it has the latitude to disassociate the final price formula and desires to 

emulate the swine library more closely, KLA recommends that AMS report contracts that 

contain multiple final price formula options as separate final price formulas, such that the 
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separately reported options cannot be connected to each other in a report. For instance, in the 

swine contract library, some final price formulas contain multiple options reported for the same 

contract to settle price.1

 In the cattle industry, such options might be used to settle price based on 

the type of cattle delivered (i.e., black-hided, dairy-cross, hormone-free, etc.). Disclosing these 

contracts as one final price formula with multiple settlement options could provide enough 

details to the public that could allow identification of parties to the contract. To safeguard 

against such an occurrence, each option should be reported as a separate final price formula. 

This still provides the public with all information about of how final cattle prices are settled and 

the various formulas in use at a given time, but avoids indirectly disclosing confidential 

information. 

Maintain Inactive Contracts 

AMS should not delist inactive contract terms, but instead inconspicuously mark them as 

inactive. Although the swine library requires USDA to remove inactive contract price 

information, KLA believes the cattle market could benefit from being able to view historic 

formula price components as market leverage shifts. The cattle industry moves in cycles. At 

times, packers have market leverage, and at times, cattle producers gain more leverage. Being 

able to view how formula components change compared to these market cycles could provide 

useful information. 

Searchable Database 

KLA believes the information reported should be placed into a searchable database, similar to 

the USDA Foreign Agricultural Service's Global Agricultural Trade System. Such a database 

would allow market participants to search the database by region, premium or discount type, 

active versus inactive contracts, or other relevant categories to find information more easily. The 

swine library reports are not user friendly. Instead of an interactive database, the swine contract 

library consists of hundreds of pages of pdf files containing randomized final price formulas. 

Within the final price formulas, premiums and discounts and other base price adjustments are 

simply cross refenced to another USDA document with no further explanation of the price 

adjustment or even a hyperlink to the cross-referenced USDA report. These types of reports may 

provide skilled analyst firms, which employ teams of research personnel, data that can be

reassembled into a user-friendly format, but it does not provide most swine producers with 

meaningful, readily discernible data when renegotiating a contract with a packer. 

If there is insufficient funding to create a searchable database, summary reports should be 

modified from the current pdf document system used by the swine contract library. Premiums, 

discounts, and other adjustment to the base price should be explained or a hyperlink should be 

inserted to allow a producer to easily understand and identify a cross reference used for such 

terms. AMS should update the database on a monthly basis to reflect new market transaction 

terms used in contracts and update existing data as being active or inactive. 

1 See U.S. Department of Agriculture, Agricultural Marketing Service, Swine Packer Marketing Contract Summary - 

Iowa Minnesota, Swine or Pork Market Formula, Determination of Base Price 1490, at 1, available at

https://www.ams.usda.gov/sites/default/files/media/SCLCSRIAMNSPMF.pdf (as of April 28, 2022).
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Reporting of Contracts Unique to the Cattle Industry

Maintaining a database in such a way could help AMS manage the unique nature of some 

alternative marketing arrangements utilized in the cattle industry that are not common in the 

swine industry. Short-term oral formula arrangements between a cattle feeder and a packer are 

common. For instance, a cattle feeder may call a packer at the beginning of a week and inquire 

about access to a formula arrangement for that week. Under such an arrangement the cattle 

feeder might turn in the number of cattle the feeder will deliver that week on Tuesday. The 

packer then agrees to pay the cattle feeder based on that week’s weighted regional cash price as 

reported by LMR with a standard set of premiums and discounts for quality and yield grade. 

This trade, by definition, is a formula trade, and not a negotiated cash or negotiated grid trade. If 

the database operated the same as the swine contract library, this contract would never show up 

in the library as it would be inactive after delivery of that lot of cattle.

Any reports pursuant to the contract library should also include the premiums and discounts 

associated with negotiated grid trade. While these are akin to negotiated cash trades because the 

base price has been determined on the day of the agreement, the manner in which the premiums 

and discounts are determined are not currently disclosed thorough LMR. Having this data in a 

cattle contract library to compare with formula contract premiums and discounts would be useful 

information to the industry and could be adapted to the database reporting mechanism described 

above. 

Avoid Reports of Estimated Deliverables

USDA should not publish a report like the swine contract library report “Estimates of Swine to 

Be Delivered Under Contract over the Next Year.” Unlike swine contracts, cattle contracts tend 

to not obligate a producer to weekly deliverable head counts to a packer. Cattle contracts tend to 

outline how the parties will settle the price of the cattle if a yet-to-be determined number of cattle 

are delivered to a contracting packer, and the day in a given week a cattle feeder would need to 

let the packer know how many head the feeder would like to deliver. The decision whether or 

not, or in what quantity, to deliver cattle under the contract is often determined by the cattle 

feeder on a weekly basis. For example, a pork contract might obligate a swine contractor to 

deliver 1,000 head per week to a packer. Conversely, a cattle contract is more likely to allow a 

cattle feeder the option to decide whether to deliver any number of head of cattle in a given week 

as long as the cattle feeder notifies the packer by a specified day early in the week. If any 

restrictions are placed on quantity to be delivery under existing cattle formula contracts, it will

likely be a maximum limit on the number of head that can be delivered per week without 

specifying a minimum obligation, and the maximum limit may only apply to a certain type of 

cattle (e.g., dairy-cross). 

These contracts are more appropriately identified as open commitments and would be common 

throughout the cattle industry. Given these open commitment contracts, any cattle report under 

the pilot program similar to the “Estimates of Swine to Be Delivered Under Contract over the 

Next Year” would merely be a guess on the part of AMS that could unduly influence already 

volatile futures markets. We strongly recommend AMS forego this report as it would provide 

little useful data to the industry. If AMS feels compelled by the pilot project’s authorizing 
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language to build a “similar” report, KLA recommends AMS only report the total number of 

cattle covered by the contract solely committed to a packer each week within the 6-month and 

12-month periods following the date of the contract in its delivery categories and create a second 

category within the report that simply lists the total number of contracts that are open 

commitments. This is similar to the approach taken in H.R. 5609, the Cattle Contract Library 

Act of 2021, that passed the U.S. House of Representatives on December 9, 2021, by a vote of 

411 to 13. 

Producer Outreach

KLA encourages AMS to set aside some funding for producer education seminars. AMS could 

coordinate such seminars with area university extension livestock specialists. Such outreach 

could also prove useful in identifying strengths and weaknesses in a pilot program, should 

Congress decide to permanently extend the program in the future. 

Utilization of Proper Authority

Finally, Section 779 of the Consolidated Appropriations Act, 2022, did not confer upon AMS 

additional authority to obtain and disseminate market information. Therefore, it is KLA’s belief 

that AMS must rely on existing authority, primarily within LMR (7 U.S.C. § 1635 et seq.) to 

conduct the pilot. While section 779 directs AMS to design a pilot program similar to the swine 

contract library, AMS cannot rely on the authorizing language for the swine library as it is 

specific to the Packers and Stockyards Act and swine.

Thank you for the opportunity to provide these comments about how AMS might design a cattle 

contract library pilot program. KLA stands ready to answer any questions AMS might have as it 

completes this task.

Sincerely,

Matt Teagarden

Chief Executive Officer