Rule2022-26389
Cattle Contracts Library Pilot Program
Primary source
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Published
December 7, 2022
Effective
January 6, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This rule establishes the Cattle Contracts Library pilot program. Under this pilot program, the Agricultural Marketing Service will collect, maintain, and report aggregated information on contracts between packers and cattle producers for the purchase of fed cattle. The library will include different types of contracts and contract terms, including contract terms on any schedules of premiums or discounts, delivery and transportation, terms and payments, financing, risk-sharing or profit sharing, and other financial arrangements. In addition to contract term information, the Agricultural Marketing Service will also report on the number of head of cattle purchased under these contracts.
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<title>Federal Register, Volume 87 Issue 234 (Wednesday, December 7, 2022)</title>
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[Federal Register Volume 87, Number 234 (Wednesday, December 7, 2022)]
[Rules and Regulations]
[Pages 74951-74956]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-26389]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 87, No. 234 / Wednesday, December 7, 2022 /
Rules and Regulations
[[Page 74951]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 180
[Doc. No. AMS-LP-22-0065]
RIN 0581-AE22
Cattle Contracts Library Pilot Program
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule establishes the Cattle Contracts Library pilot
program. Under this pilot program, the Agricultural Marketing Service
will collect, maintain, and report aggregated information on contracts
between packers and cattle producers for the purchase of fed cattle.
The library will include different types of contracts and contract
terms, including contract terms on any schedules of premiums or
discounts, delivery and transportation, terms and payments, financing,
risk-sharing or profit sharing, and other financial arrangements. In
addition to contract term information, the Agricultural Marketing
Service will also report on the number of head of cattle purchased
under these contracts.
DATES: Effective January 6, 2023.
FOR FURTHER INFORMATION CONTACT: Michael E. Sheats, Director,
Livestock, Poultry, and Grain Market News Division, AMS, USDA; phone:
202-690-3145 or email: <a href="/cdn-cgi/l/email-protection#317c58525950545d1f62595450454271444255501f565e47"><span class="__cf_email__" data-cfemail="5a173339323b3f367409323f3b2e291a2f293e3b743d352c">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Agricultural Marketing Service (AMS) is
establishing a Cattle Contracts Library pilot program (Pilot) to
increase market transparency for cattle producers pursuant to sec. 779
of the Consolidated Appropriations Act, 2022 (Pub. L. 117-103, March
15, 2022) (the Act). The Act directs AMS to establish a Cattle
Contracts Library pilot that is similar to, as determined by the
Secretary, the U.S. Department of Agriculture's (USDA) Swine Contract
Library maintained pursuant to sec. 222 of the Packers and Stockyards
Act (7 U.S.C. 198a).
Cattle Contract Library Pilot Program
Under the Pilot, packers are required to provide AMS with contract
information for the purchase of cattle and the number of actual and
estimated cattle purchased under active contracts within particular
timeframes. To protect confidential business information, AMS will only
collect contract terms without any personally identifiable information,
not entire contracts. The contract clauses required to be submitted
include contract method, contract start and end dates, base price
source and adjustment, selling basis, premiums and discounts,
specifications relating to cattle attributes, delivery and
transportation terms and payments, financing, risk-sharing, profit-
sharing or other financial arrangements, and volume provisions.
Monthly, packers are required to submit the number of actual cattle
purchased under active contracts in the prior month and the estimated
maximum number of cattle to be purchased under active contracts for
slaughter in the current calendar month.
On January 6, 2023, packers must submit the required contractual
clauses for each active contract, whether the contract is oral or
written. After the initial submission of information, packers will be
required to submit the same information for each new active contract
made available to a producer or producers as well as any changes to the
terms of a previously submitted active contract and associated
schedules or appendices within one business day of the contract being
available. Because the packers prepare these contracts in advance of
their offering those contracts to producers, AMS determined these
submission timeframes to be reasonable.
Scope of Cattle Contract Library Pilot Program
Not all packers are required to submit this information. Generally,
only packers that slaughtered an average of not less than 5 percent of
the number of fed cattle slaughtered nationally during the immediately
preceding five calendar years are subject to this Pilot. To determine
the definition of packer for purposes of the Pilot, and thus the
packers subject to the required reporting under the Pilot, AMS
considered two approaches: (1) the Livestock Mandatory Reporting Act
(LMR), also administered by AMS, covers packing plants that slaughtered
an average of 125,000 head of cattle per year during the immediately
preceding 5 calendar years, and (2) the proposed Congressional
legislation, S. 4030--Cattle Price Discovery and Transparency Act of
2022, covers packing companies that have slaughtered during the
immediately preceding five calendar years an average of not less than 5
percent of the number of fed cattle slaughtered nationally during the
immediately preceding five calendar years.\1\ AMS estimates that, under
the LMR approach, approximately 40 packing plants operated by 16
packing companies would be subject to the Pilot. AMS estimates that
under the S.4030 approach, approximately 18 packing plants operated by
four packing companies would be subject to the Pilot.
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\1\ A ``packing plant'' refers to a physical plant. A ``packing
company'' refers to an entire company. A packing company may have
multiple packing plants.
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AMS estimates that the LMR approach would cover approximately 90
percent of all fed cattle slaughter. AMS estimates the S. 4030 approach
would cover 85 percent of total fed cattle slaughter.\2\ When
estimating the costs to all reporting entities, AMS estimated the total
annual cost under the LMR approach to be $294,947, and the total annual
cost under the S.4030 approach to be $122,752. Therefore, AMS estimates
that requiring only packers slaughtering not less than 5 percent of the
number of fed cattle slaughtered nationally annually to submit
information results in a 42 percent reduction in cost burden to the
industry while providing a library of contractual information covering
85 percent of the annual total fed cattle slaughter. For the purposes
of this Pilot, AMS believes this is a sufficiently similar market
capture to the Swine Contract Library, which covers roughly 95 percent
of the market, and would capture all types of applicable contracts.
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\2\ As estimated in the AMS Packers and Stockyards Division
Annual Report 2020; <a href="https://www.ams.usda.gov/sites/default/files/media/PackersandStockyardsAnnualReport2020.pdf">https://www.ams.usda.gov/sites/default/files/media/PackersandStockyardsAnnualReport2020.pdf</a>.
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Required Reporting
AMS worked with packers to voluntarily obtain contractual
information used for the purchase of cattle and associated volume
[[Page 74952]]
information to develop the Pilot. While this voluntarily submitted
information was sufficient to design the Pilot, it did not provide AMS
with comprehensive information on all the types of contracts used to
purchase cattle or the volume of cattle purchased. Based on feedback
from industry stakeholders, including those who voluntarily submitted
contract information, AMS determined the Pilot needed to be mandatory;
otherwise, the Cattle Contract Library would be incomplete, and the
information would be potentially misleading if packers self-select the
contract terms they provide.
Consistent with the statutory authority for the Pilot, submission
of the specified contractual information and volume information for
those contracts is mandatory, as it is with the Swine Contract Library.
Public Input
While by statute this Pilot is exempt from notice and comment
rulemaking and the Paperwork Reduction Act, AMS has considered public
input. AMS announced an in-person listening session on April 11, 2022,
in a notice to trade on their website, and AMS provided an opportunity
for written comments to be submitted via email. On April 21, 2022, AMS
hosted a cattle industry listening session on the Pilot in Kansas City,
MO. The session was attended in-person and virtually by over 150
industry stakeholders and provided an open forum for the public to
share their feedback. AMS specifically sought feedback on what
information the Pilot should include to be most helpful to cattle
marketers, what concerns stakeholders have over the public release of
the Pilot, and what format should be used to present the information.
AMS also provided an opportunity for interested parties to submit
written feedback in the week following the listening session and posted
all written feedback on its website. All public input related to the
Pilot can be found here: <a href="https://www.ams.usda.gov/market-news/livestock-poultry-grain/cattle-contracts-library">https://www.ams.usda.gov/market-news/livestock-poultry-grain/cattle-contracts-library</a>.
The most frequent input AMS received was that the Pilot should
provide factual, reliable information in a user-friendly format that
protects all confidential or sensitive business information. AMS also
received input that the packers' submission costs should be minimized
and should provide educational outreach to stakeholders.
AMS considered these comments in the preparation of this rule. To
maintain confidentiality, the Pilot requires submission of contract
clauses, not entire contracts. Further, while this rule does not
address the way in which AMS will report the information collected
through the Pilot, AMS intends to publish the Cattle Contract Library
in a manner that does not disclose the source's identity to further
protect the buyers' and the sellers' confidential business information.
This Pilot will allow AMS to make a range of valuable market
information on the structure and volume of cattle contracts publicly
available, while maintaining the confidentiality of individual
contracts and sensitive information included therein. The law
establishing the Swine Contract Library adopted sec. 251 of the
Agricultural Marketing Act of 1946 to protect personal identifying
information and proprietary business information from public
disclosure. The Pilot likewise adopts those provisions in this rule to
prohibit disclosure beyond contract and volume information.
With respect to input on cost, AMS determined that the selected
approach would impose the lower cost burden on the industry, yet still
provide a library of contractual information that covers most contracts
for fed-cattle. AMS believes this Pilot covers a similarly sized
percentage of sales in the market as the Swine Contract Library covers
in the market for swine.
In response to input requesting that AMS provide outreach, during
development of the Pilot, AMS conducted nearly 40 outreach and
educational events with industry stakeholders during which the Pilot
was demonstrated and additional feedback for possible refinements was
gathered. AMS designed the Pilot in a user-friendly and intuitive
manner, accessible to users with minimal guidance. During the outreach
sessions, many stakeholders expressed their appreciation for the ease
with which they could access and understand the information in the
Pilot.
In addition to the feedback received through the listening sessions
and outreach, packers voluntarily provided AMS with over 300 inactive
contracts and 100 active contracts for review, which informed AMS's
determination as to the contract clauses required to be reported. AMS
also reviewed other contracts available under its marketing and
regulatory programs. Using these contracts, AMS identified common
elements in each that affect the final pricing. This included the base
price mechanism, base price adjustments, premiums and discounts, and
other miscellaneous provisions (e.g., transportation, shrink, selling
basis, dressing percent conversion, etc.). AMS also examined important
differences in the contracts, including the influence of any short- or
long-term buyer/seller relationships on financial terms of the contract
that may affect the competitive environment of the packers and
producers in the cattle market. AMS used this feedback and contract
information to develop a draft library that was shared with interested
stakeholders including packers, industry groups, Congressional staff,
and academics. AMS further refined the library as described in this
Pilot based upon input received from those interested stakeholders on
the draft library.
Similarities to the Swine Contract Library
In accordance with the statutory mandate, the Pilot is modeled on
the Swine Contract Library. The Swine Contract Library features a
report to the public on the contract terms available to sellers of
swine. To achieve this, the statute and regulations require swine
packers to report contract and production information for publication.
Not all swine packers are required to report; swine packers must either
slaughter 100,000 head per year or have the capacity to slaughter
100,000 head per year to be subject to reporting under the Swine
Contract Library provisions. See 9 CFR 206.1. The regulations require
swine packers to prepare a monthly report to submit to AMS. See 9 CFR
206.3. The public reports released on these contracts are anonymized to
protect confidentiality under the standards of sec. 251 of the
Agricultural Marketing Act of 1946. See 7 CFR 206.2(f); 7 U.S.C. 1636.
The Swine Contract Library publishes information on, among other
things: the existing contract types for each geographic region; the
contract types currently being made available; packers' reported
estimates of the total number of committed swine; the types of
conditions or circumstances as reported that could result in expansion
in the numbers of swine to be delivered; and the packers' reported
estimates of the maximum total number of swine that potentially could
be delivered.
The Swine Contract Library has two public reports: A contract
summary report, and a monthly report. Contract summary reports provide
information on the various terms and provisions from the marketing
contracts. This information includes: the determination of base price
and how base price is set; the premium and discount adjustments to the
base price as determined by both carcass and non-carcass traits;
[[Page 74953]]
application of ledger where terms define the use of ledger or accrual
accounts; and all other remaining terms and provisions from the
contracts. Monthly reports provide packers' estimated swine purchases
under marketing contracts for the next 6 and 12 months. To achieve a
similar level of reporting in this Pilot, AMS must collect contract
terms and volume information from cattle-slaughtering packers.
Accordingly, consistent with the Swine Contract Library (7 U.S.C.
198-198b; 7 U.S.C. 222; 9 CFR 206.1-206.3), AMS will require covered
packers to report specific contractual information for the purchase of
cattle. After the information is collected and reviewed, AMS will
determine the most appropriate format for publication. Throughout, AMS
will treat the reported information consistent with the confidentiality
requirements of the Swine Contract Library's regulatory scheme and 7
U.S.C. 1636.
AMS Reporting
Through this Pilot, AMS ultimately intends to publish a variety of
reports on a national level rather than a regional basis. The published
library of information will likely focus on the base price for
livestock, before application of any adjustments (i.e., premiums or
discounts) in contracts; the contract terms that provide positive or
negative adjustment to the base price before any premiums or discounts
are applied; the contracts' schedule of discounts from the base price;
the contracts' schedule of premiums to the base price; and the actual
and expected volumes of trade under these contracts. AMS also intends
to publish information on delivery and transportation terms and the
contract terms related to financing, risk-sharing, and profit-sharing.
Consistent with the statutory mandate, this Pilot supports AMS's
commitment to market transparency. AMS believes the Pilot will support
competition by providing producers with the market information they
need to make informed production, marketing, and business decisions.
The Congressional reference to section 221 of the Packers and
Stockyards Act (7 U.S.C. 198), together with the waiver of the notice-
and-comment requirements of the Administrative Procedure Act and the
requirements of the Paperwork Reduction Act, provide AMS the direction
and authority to promulgate this rule.
Regulatory Analyses
Exemption From Notice and Comment Rulemaking
Sec. 779 of the Act provides that the promulgation of the
regulations and administration of the Cattle Contracts Library pilot
program shall be made without regard to the notice and comment
requirements of the Administrative Procedure Act (5 U.S.C. 553 et
seq.). Accordingly, AMS is publishing this final rule without having
previously published a proposed rule on this action. While AMS did not
provide for a formal comment period, it did conduct extensive outreach
to cattle industry stakeholders, including hosting a listening session
where AMS received comments and input. AMS also provided an opportunity
for interested parties to submit written comments following the
listening session, posted all input received on its website, and
conducted additional outreach to stakeholders throughout the
development of the Pilots. All public comments are available here:
<a href="https://www.ams.usda.gov/market-news/livestock-poultry-grain/cattle-contracts-library">https://www.ams.usda.gov/market-news/livestock-poultry-grain/cattle-contracts-library</a>. Written feedback AMS received is available here:
<a href="https://www.ams.usda.gov/market-news/livestock-poultry-grain/cattle-contracts-library/feedback">https://www.ams.usda.gov/market-news/livestock-poultry-grain/cattle-contracts-library/feedback</a>. AMS considered these comments and all
feedback provided in the preparation of this rule, also taking into
account the urgency of the expedited time frame provided by Congress to
establish and operate the Pilot. Should such mandate sunset, AMS will
suspend reporting under this rule or otherwise take actions consistent
with relevant statutory mandates.
Executive Orders 12866 and 13563
USDA is issuing this rule in conformance with Executive Orders
(E.O.) 12866 and 13563, which direct agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health, and safety
effects; distributive impacts; and equity). E.O. 13563 emphasizes the
importance of quantifying both costs and benefits, reducing costs,
harmonizing rules, and promoting flexibility.
AMS designed the Pilot to maximize the net benefits of the rule and
determined that this action, effectuating the authority and direction
from Congress, will create benefits exceeding its costs, based on an
assessment of the regulation's market impact as outlined in the
Regulatory Flexibility Analysis.
Baseline
Based on figures from the USDA World Agricultural Supply and Demand
Estimates,\3\ U.S. beef packers slaughtered 33.97 million cattle in
2021. Of that figure, 78.4 percent were steers and heifers, 19.9
percent were cows, and 1.7 percent were bulls and stags. Based on the
National Monthly Slaughter Cattle--Committed and Delivered Cattle \4\
data between September 2021 and August 2022, 70.8 percent of cattle in
the categories ``steers and heifers'' and ``other fed cattle'' were
marketed under contract, either under the ``formula'' or ``forward''
categories. Of the cattle reported under contract on that report, 0.6
percent were in the other category. Based on these figures,
approximately 22.58 million steers and heifers and an additional 135
thousand other fed cattle are marketed under contract annually.
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\3\ <a href="https://www.ers.usda.gov/topics/farm-economy/commodity-outlook/wasde-projections-at-a-glance/">https://www.ers.usda.gov/topics/farm-economy/commodity-outlook/wasde-projections-at-a-glance/</a>.
\4\ <a href="https://www.ams.usda.gov/mnreports/ams_2473.pdf">https://www.ams.usda.gov/mnreports/ams_2473.pdf</a>.
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The AMS National Weekly Cattle and Beef Summary \5\ reports an
annual liveweight price for steers of $139 per hundredweight for the
year running between October 2021 and September 2022. Based on an
actual average liveweight for cattle under slaughter of 1,370 pounds,
the average price for steers and heifers sold under contract is
approximately $1,904 per head. The value of all steers and heifers sold
under contract is then $43.0 billion. Assuming that other fed cattle
under contract are valued at 75 percent of the steer and heifer price
per head, their value is $193 million, and the value of all cattle
under contract is $43.2 billion.
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\5\ <a href="https://www.ams.usda.gov/mnreports/lswwcbs.pdf">https://www.ams.usda.gov/mnreports/lswwcbs.pdf</a>.
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The 2020 Annual Report of the AMS Packers and Stockyards Division
\6\ states that 156 plants slaughtered cattle or calves in 2019. The
same report notes that the four largest packers accounted for over 85
percent of the total steer and heifer slaughter in 2019, a figure that
reflects the presence of very large firms, which can own several plants
with much higher daily capacities than those of smaller operations.
Because packers slaughtering less than 5 percent of the number of fed
cattle slaughtered nationally annually are excluded from reporting
under the rule, AMS estimates that four packers will be required to
report under the rule.
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\6\ <a href="https://www.ams.usda.gov/sites/default/files/media/PackersandStockyardsAnnualReport2020.pdf">https://www.ams.usda.gov/sites/default/files/media/PackersandStockyardsAnnualReport2020.pdf</a>.
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[[Page 74954]]
Need for the Rule
Rulemaking is necessary to establish the Pilot as directed by
Congress in the Act. The Pilot will allow AMS to report valuable market
information on the structure and volume of cattle contracts. The Pilot
will maintain information and publish a public library or catalog of
information with contract types and terms offered by packers to cattle
producers for the purchase of fed cattle. The information in the
library will include information on any schedules of premiums or
discounts, delivery and transportation terms and payments, financing,
risk-sharing or profit sharing, and other financial arrangements
associated with such contracts. Pursuant to the Pilot, AMS will also
collect information on the number of head of cattle procured through
the use of contracts.
Currently, AMS reports market information on how cattle prices vary
based on quality grade of cattle at the lot level. Reports issued
pursuant to the Pilot will provide a different cross-section of
information, including premiums and discounts for quality grade, yield
grade, weight, and other special programs, such as breed certification
programs or special feeding programs. Reports based on the Pilot will
also provide information on the basis prices used in contracts and
adjustments made to the basis based on factors such as dressing
percentage, cattle origins, and cattle breed or type.
Regulatory Flexibility Analysis
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (5 U.S.C. 601-612) (RFA), AMS has considered the
economic impact of this action on large and small entities.
Accordingly, AMS has prepared this Regulatory Flexibility Analysis. The
purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions so that small businesses will not be
unduly or disproportionately burdened.
For the duration of the Pilot, this rule requires regulated packers
to submit contractual information for the purchase of cattle to AMS,
including any supplemental information on cattle requirements,
schedules of premiums or discounts, delivery and transportation terms
and payments, schedules or appendices of financing, risk-sharing,
profit sharing, or other financial arrangements associated with such
contracts, whenever new contracts are offered or existing contracts are
updated. This rule also requires packers to report monthly both the
number of cattle purchased under active contracts in the prior month
and an estimate of the maximum total number of cattle to be purchased
under active contracts for delivery to each plant for slaughter within
the current calendar month.
Packers subject to this Pilot are classified under code 311611 of
the North American Industry Classification System (under the title
``Animal (except Poultry) Slaughtering'').\7\ As per 13 CFR 121.601,
the Small Business Administration (SBA) has established that packers
are small businesses if they employ fewer than 1,000 employees across
all their operations. AMS excludes packers slaughtering less than 5
percent of the number of fed cattle slaughtered nationally annually
from the rule's requirements to report cattle contracts, a definition
that precludes all small packers. Because of this exclusion, AMS
determines that establishment of this program will not create economic
costs for small entities and does not impose a burden on them.
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\7\ <a href="https://www.census.gov/naics/?input=311611&year=2022&details=311611">https://www.census.gov/naics/?input=311611&year=2022&details=311611</a>.
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Benefits and Costs of the Rule
To evaluate the total costs of the rule, AMS first calculates the
costs on a per packer basis as follows: AMS assumes that four packers
will be required to report contractual information under the Rule. Each
packer will be required to electronically enter specific information on
contract terms, an activity that AMS assumes will not need to occur
more frequently than on a weekly basis. AMS assumes packers subject to
this Pilot maintain, on average, 60 active contracts each. Allowing for
15 minutes for each contract, each packer will require about 15 hours
of manager worktime to report contract information. AMS assumes that
reporting contract information occurs 52 times per year per packer so
that reporting requires 780 hours of managerial time per packer
annually. Also, AMS estimates that each packer subject to the Pilot
requires 2 hours of managerial worktime to report the prior month's
total cattle purchased under each active contract and to estimate and
report the maximum number of cattle to be purchased under each active
contract within the current calendar month. Occurring 12 times a year,
AMS estimates monthly purchase volume reporting requires 24 hours of
managerial worktime per plant annually. Furthermore, AMS estimates that
mangers reporting contract data require 4 hours to learn to the rules
reporting requirements and process.
In total, AMS expects each packer subject to the Pilot to require
808 hours of managerial labor time annually to comply with the rule's
reporting requirements. AMS also estimates that 4 hours will be
required annually, on average, for each packer's legal staff to review
the rule and understand the conditions of compliance. Based on Bureau
of Labor Statistics wage statistics,\8\ each packer will incur $30,470
(808 hours * $37.71 per hour) of managerial labor costs and $218 (4
hours * $54.38 per hour) of legal specialist labor costs annually for a
total of $30,688 in costs per packer each year. In total across all
packers subject to this Pilot, the rule will create costs to regulated
entities of $122,752 annually.
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\8\ The wage rate for a ``first-line supervisor'' under code 45-
1011 is $26.18 and for a worker in ``legal occupations'' under code
23-0000 is $54.38 (<a href="https://www.bls.gov/oes/current/oes451011.htm">https://www.bls.gov/oes/current/oes451011.htm</a>).
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AMS does not quantify the benefits to the Pilot rule but considers
the benefits to be large and multi-faceted. First, the rule will
improve market efficiency by improving price discovery, price
transparency, and price transmission. While current AMS reports provide
information on price premiums received for cattle based on grading
percentage at the lot level, reports published with information
obtained through the Pilot are expected to provide more detailed and
specific information on how contract payments vary directly with
individual carcass grades, yield grades, and cattle weights. This more
precise information will improve price transmission and transparency
regarding the demand for and cost of cattle of different qualities.
Second, reports published with information obtained through the Pilot
will likely facilitate the differentiation of cattle along quality
dimensions and the development of new product markets by providing
market information on premiums paid for cattle carcass characteristics
not already documented in existing AMS reports. These can include
grass-fed, organic, quality certification, breed, or hormone free
programs. Third, reports published with information obtained through
the Pilot are likely to enhance competition by reducing market
inefficiencies associated with incomplete or asymmetric information.
Currently, incomplete information on the availability of premiums
associated with cattle characteristics is likely to create uncertainty
regarding the return on investment in cattle quality improvement. By
documenting the availability of such premiums for specific quality
traits, producers are more likely to be reassured of having a market
for final products and be more
[[Page 74955]]
likely to undertake appropriate investments.
Similarly, incomplete or asymmetric information may also mask the
true value of certain cattle. Making such information more transparent
may improve efficiencies in the price discovery and trading markets and
provide enhanced signals to producers with respect to output, owing to
better insights regarding market demand and supply for cattle. Volume
information and volume-related context may provide similar benefits.
While AMS does not explicitly quantify the benefits to the rule,
AMS believes these benefits significantly exceed the rule's calculated
costs. Additionally, the Pilot is currently funded for approximately
one calendar year. Accordingly, because the costs to the rule do not
exceed minimum threshold levels for a rule to be considered
significant, the rule does not meet the definition of a significant
regulatory action under Executive Order 12866.
Paperwork Reduction Act
Sec. 779 of the Act provides that the promulgation of the
regulations and administration of the Cattle Contracts Library pilot
program shall be made without regard to the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35). Accordingly, the Office
of Management and Budget has not reviewed or approved the information
collection requirements of the Pilot.
E-Government Act
USDA is committed to complying with the E-Government Act (44 U.S.C.
3601, et seq.) by promoting the use of the internet and other
information technologies to provide increased opportunities for citizen
access to Government information and services, and for other purposes.
Executive Order 13175
This rule has been reviewed under E.O. 13175--Consultation and
Coordination with Indian Tribal Governments. E.O. 13175 requires
Federal agencies to consult and coordinate with tribes on a government-
to-government basis on (1) policies that have tribal implications,
including regulations, legislative comments, or proposed legislation;
and (2) other policy statements or actions that have substantial direct
effects on one or more Indian tribes, on the relationship between the
Federal Government and Indian tribes, or on the distribution of power
and responsibilities between the Federal Government and Indian Tribes.
AMS has assessed the impact of this rule on Indian tribes and
determined that it would not have tribal implications that require
consultation under E.O. 13175. AMS hosts a quarterly teleconference
with tribal leaders, where matters of mutual interest regarding the
marketing of agricultural products are discussed. Information about the
Cattle Contract Library pilot program will be shared during an upcoming
quarterly call, and tribal leaders will be informed about the Pilot.
AMS will work with the USDA Office of Tribal Relations to ensure
meaningful consultation is provided as needed with regards to the
Pilot.
Executive Order 12988
This rule has been reviewed in accordance with E.O. 12988--Civil
Justice Reform. This rule does not have retroactive effect. There are
no administrative procedures that must be exhausted prior to judicial
challenges to the provisions of this rule. This rule does not preempt
any state or local laws, regulations, or policies, unless they present
an irreconcilable conflict with this rule.
Civil Rights Review
AMS has considered the potential civil rights implications of this
rule on minorities, women, and persons with disabilities to ensure that
no person or group shall be discriminated against on the basis of race,
color, national origin, gender, religion, age, disability, sexual
orientation, marital or family status, political beliefs, parental
status, or protected genetic information.
List of Subjects in 7 CFR Part 180
Cattle, Contracts, Library, Pilot, Reporting requirements.
0
For the reasons set forth in the preamble, AMS amends 7 CFR subtitle B,
chapter 1, subchapter G by adding part 180 to read as follows:
PART 180--CATTLE CONTRACTS LIBRARY PILOT PROGRAM
Sec.
180.1 General administration.
180.2 Definitions.
180.3 Cattle Contracts Library.
180.4 Monthly cattle volume reporting.
Authority: 7 U.S.C. 1621-1627
Sec. 180.1 General administration.
(a) Confidentiality. The Secretary shall make information obtained
under this part available to the public only in a manner that ensures
that confidentiality is preserved regarding --
(1) The identity of persons, including parties to a contract; and
(2) Proprietary business information.
(b) Disclosure by Federal Government employees--(1) In general.
Subject to paragraph (b)(2) of this section, no officer, employee, or
agent of the United States shall, without the consent of the packer or
other person concerned, divulge or make known in any manner, any facts
or information regarding the business of the packer or other person
that was acquired through reporting required under this part.
(2) Exceptions. Information obtained by the Secretary under this
part may be disclosed--
(i) To agents or employees of the Department of Agriculture in the
course of their official duties under this part;
(ii) As directed by the Secretary or the Attorney General, for
enforcement purposes; or
(iii) By a court of competent jurisdiction.
(3) Disclosure under Freedom of Information Act. Notwithstanding
any other provision of law, no facts or information obtained under this
part shall be disclosed in accordance with section 552 of title 5,
United States Code.
(c) Regional reporting. The Secretary shall make information
obtained under this part available to the public only in a manner that
ensures that the information is published on a national or regional
basis as the Secretary determines to be appropriate.
(d) Adjustments. Prior to the publication of any contract
information obtained under this part, the Secretary may make reasonable
adjustments to address aberrations or other unusual or unique
occurrences that the Secretary determines would distort the published
information to the detriment of producers, packers, or other market
participants.
(e) Reporting methods. Information required to be reported under
this part shall be reported by electronic means in the manner
prescribed by the Secretary. Information may be reported in an
alternative manner in emergencies or in cases when an alternative
method is agreed to by both the entity required to report and the
Secretary.
(f) Verification. The Secretary may take such actions as are
necessary to verify the accuracy of the information submitted or
reported under this part.
(g) Noncompliance. The Secretary may refer instances of non-
compliance with this part of the appropriate office of the Department
for further investigation.
Sec. 180.2 Definitions.
The following definitions apply to this part.
[[Page 74956]]
Active contract. The term ``active contract'' means a contract that
is currently available between a packer and producer under which fed
cattle may be purchased.
Base price. The term ``base price'' means the price paid for
livestock, before application of any adjustments, premiums or
discounts, expressed in dollars per hundred pounds of hot carcass
weight or live weight.
Base price adjustment. The term ``base price adjustment'' means the
positive or negative adjustment to the base price before any premiums
or discounts are applied.
Business day. The term ``business day'' means a day on which the
packer conducts normal business regarding livestock committed to the
packer, or livestock purchased or sold by the packer, and the
Department of Agriculture is open to conduct business, typically Monday
through Friday and excluding Federal holidays.
Calendar month. The term ``calendar month'' means a timeframe that
begins on the first day of the month at midnight and ends on the last
day of the month at 11:59 p.m. in the central time zone.
Contract. The term ``contract'' means a written or oral agreement
concerning the specific terms and conditions under which an unknown
volume of fed cattle may be purchased by a packer during a specified
time frame, or under which a known volume of cattle is purchased by a
packer for a given plant during a specified time frame.
Contract method. The term ``contract method'' means the way in
which the contract was established, either written or oral.
Current month. The term ``current month'' means the present
calendar month.
Discount. The term ``discount'' means the adjustment, expressed
either in dollars per one hundred pound or per head, subtracted from
the base price.
Fed cattle. The term ``fed cattle'' means a steer or heifer that
has been finished on a ration of roughage and feed concentrates, such
as grains, protein meal, grass (forage), and other nutrient-rich feeds,
prior to slaughter.
Inactive contract. The term ``inactive contract'' means a fed
cattle contract that is no longer available between a packer and
producer for purchase under, or one that is not currently in use.
Packer. The term ``packer'' means a packer that has slaughtered
during the immediately preceding 5 calendar years an average of not
less than 5 percent of the number of fed cattle slaughtered nationally
during the immediately preceding 5 calendar years.
Person. The term ``person'' means any individual, group of
individuals, partnership, corporation, association, or other entity.
Premium. The term ``premium'' means the adjustment, expressed
either in dollars per one hundred pound or per head, added to the base
price.
Prior month. The term ``prior month'' means the calendar month
immediately preceding the current month.
Producer. The term ``producer'' means any person engaged in the
business of selling livestock to a packer for slaughter (including the
sale of livestock from a packer to another packer).
Secretary. The term ``Secretary'' means the Secretary of
Agriculture of the United States or any other officer or employee of
the Department of Agriculture to whom authority has been delegated or
may hereafter be delegated to act in the Secretary's stead.
Selling basis. The term ``selling basis'' refers to cattle that are
sold on a live, dressed, live converted to dressed, or dressed
converted to live weight basis under a contract.
Unique identifier. The term ``unique identifier'' means a unique
code chosen by the packer for the contract, specific to the contract,
and utilized and trackable through the life of the contract.
Sec. 180.3 Cattle Contracts Library.
(a) Initial contract information submission. On January 6, 2023,
each packer shall submit to the Secretary information for each active
contract with a unique identifier. The information shall be submitted
in accordance with Sec. 180.1(e). The contract information required to
be reported includes:
(1) The contract method;
(2) The contract start and end dates; and
(3) All terms associated with:
(i) Each base price source and adjustment;
(ii) Selling basis;
(iii) Premiums and discounts;
(iv) Specifications relating to cattle attributes;
(v) Delivery and transportation terms and payments;
(vi) Financing, risk-sharing, profit-sharing or other financial
arrangements; and,
(vii) Volume provisions.
(b) Reporting deadlines. Within 1 business day of making a new
contract available, making a change to an existing contract, or making
a contract no longer available, each packer must submit the following:
(1) Packers must submit all contract terms in accordance Sec.
108.4(a) for each new active contract for each producer or producers at
each plant that it operates or at which it has cattle slaughtered;
(2) Packers must submit any changes to the terms of a previously
submitted active contract and associated schedules or appendices,
including the unique identifier for the previously submitted contract
it supersedes; and
(3) Packers must submit information to remove inactive contracts
from the library, including the unique identifier for the now inactive
contract.
Sec. 180.4 Monthly cattle volume reporting.
(a) Initial estimated volume submission. On January 6, 2023, each
packer shall submit to the Secretary an initial estimate of the total
volume of cattle to be contracted for in the current calendar month in
accordance with Sec. 180.1(e).
(b) Reporting deadlines. By the close of business on the second
Friday of each month, each packer must submit the following information
in accordance with Sec. 180.1(e). If the second Friday of a month
falls on a non-business day, the deadline is due no later than the
close of the next business day following the second Friday of the
month:
(1) Number of cattle purchased by each base price source under each
active contract in the prior month reported by unique identifier and
(2) Estimate of the total number of cattle to be purchased under
active contracts for delivery to each plant for slaughter within the
current calendar month.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-26389 Filed 12-6-22; 8:45 am]
BILLING CODE P
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</html>Indexed from Federal Register on December 7, 2022.
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