For Immediate Release: October 1, 2026
Contact: R-CALF USA CEO Bill Bullard
Phone: 406-252-2516; r-calfusa@r-calfusa.com
Please find below R-CALF USA’s weekly opinion/commentary that discusses the steps the government should take to restore competition to the fed cattle market. It is in three formats: written, audio and video. Anyone is welcome to use it for broadcasting or reporting.
Unpriced Contracts: How Packers Weaken the Cash Cattle Market
Commentary by Bill Bullard, CEO, R-CALF USA
In our last segment, we discussed the dangerously thin cash cattle market. Today, we’ll explain how unpriced formula contracts helped drive that market to such a low level, and how to restore competition.
The negotiated cash market is where producers and packers bargain directly over price. Those transactions also establish benchmarks used to price cattle sold through other arrangements.
Under an unpriced formula contract, a producer commits cattle to a packer before knowing the base price. Payment depends on a cash price established later, perhaps a regional or packer purchase average. A premium above that future price still leaves the dollar base unresolved.
As more cattle are committed in advance, fewer remain available for independent cash bidding. Packers can draw on contracted supplies before buying cash cattle. That reduces their need to compete in the market that establishes their contract prices.
These arrangements also discourage aggressive bidding. A higher cash bid can raise payments on cattle already secured under contract. A lower benchmark reduces those payments. The packer gains an additional financial incentive to keep cash prices down.
Consider the average of roughly ninety thousand fed cattle slaughtered per weekday reported by Oklahoma State University in November 2025. Assuming fourteen-hundred-pound cattle, a one-dollar-per-hundredweight price reduction across that volume would reduce the value of a day’s cattle slaughter by over one and a quarter million dollars.
That illustrates how even a small price reduction can translate into substantial producer losses.
Packers have used formula purchases to shift large volumes of cattle out of the negotiated cash market. USDA data show formula purchases increasing from 33.2 percent in 2005 to 63.3 percent in 2025. Over the same period, negotiated cash purchases fell from 52.1 percent to 17.8 percent.
Investigators must identify which formula purchases commit cattle before establishing a base price and tie payment to future cash transactions.
The consequences reach beyond the feedlot. Weaker bids and delayed sales can increase feeding and financing costs. Contract sellers also receive the affected benchmark. Lower returns on finished cattle can reduce what feeders pay for feeder cattle, transmitting harm to stocker operators and cow-calf producers.
A premium may benefit an individual seller while the pricing arrangement weakens the market for producers collectively.
R-CALF USA’s position is clear: contracts that bind producers before establishing a base price, then tie that price to future negotiated cash transactions, should be prohibited.
Packers and feeders can retain the benefits of a contractual relationship with a known base price. They can agree on delivery schedules, cattle specifications, and quality incentives when they agree on that price. Requiring a firm base price preserves those benefits while protecting the producer’s opportunity to compare competing offers before committing cattle.
USDA and the Justice Department should use the Packers and Stockyards Act to investigate these arrangements, Obtain contracts, bids, delivery schedules, payment records, and internal communications. And then establish the effects on competition, prices, and producers’ selling opportunities.
We recommend five reforms to restore competition.
First, require a firm base price when cattle are committed. Preserve verifiable quality premiums and discounts agreed upon in advance. Cover side agreements and transactions called negotiated grids.
Second, require open competition for advance contracts. Give multiple independent buyers an opportunity to bid, with workable access for small and midsize producers. We recommend limiting binding commitments to six months, followed by a fresh opportunity for competitive bidding.
Third, require written agreements for every cattle transaction. Producers should receive complete terms covering price, delivery, payment, adjustments, and financial obligations. Protect producers who seek competing bids, reject prohibited terms, or cooperate with investigators.
Fourth, prevent packers from replacing prohibited contracts with cattle they own, feed, or effectively control. We recommend a narrow logistical exception of no more than seven calendar days before slaughter. Cover affiliates and imported cattle destined for American plants, including control established before importation.
Fifth, prohibit preferential delivery, volume, and loyalty payments unrelated to cattle value. Preserve verifiable quality premiums and legitimate service payments under objective, nondiscriminatory standards.
Financing and profit-sharing arrangements also need safeguards. Credit terms and accumulated losses should not trap producers into supplying additional cattle. Otherwise lawful financial benefits that create undue preferences should be discontinued or made available on equivalent, fair terms.
Congress should put these protections into law, close avenues for evasion, and provide effective enforcement and producer remedies. USDA and the Justice Department should pursue the actions available under existing law while supporting those changes.
So, establish the base price while producers can still seek another buyer. Preserve contractual benefits and restore bargaining power throughout America’s cattle industry, and that’s how we begin restoring competition to America’s cattle markets.
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R-CALF USA’s weekly opinion/commentary educates and informs both consumers and producers about timely issues important to the U.S. cattle and sheep industries and rural America.
Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) is the largest producer-only trade association in the United States. It is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle and sheep industries. For more information, visit www.r-calfusa.com or call 406-252-2516.