Final regulations for a new cattle contract library pilot project were published this week by the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS). The rule will go into effect Jan. 6, 2023, giving cattle producers more details about marketing contracts.

The final rule will require packers that slaughtered an average of not less than 5% of the number of fed cattle slaughtered nationally during the immediately preceding five calendar years to submit contractual information for the purchase of cattle.

Packers will be required to provide contract information and the number of actual and estimated cattle purchased under active contracts within particular timeframes. AMS will only record contract terms without any personally identifiable information to protect the confidentiality of participants.

“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,” AMS said in the rule published in the Federal Register.

Demands for a contract library for cattle heightened after the record spreads between live cattle prices and boxed beef prices due to situations such as the fire at a Tyson’s plant in Kansas in 2019 and the pandemic shutdowns that hit meatpacking processors in spring 2020.

According to USDA, alternative marketing arrangements (AMAs) for cattle feeders jumped from about 35% in 2005 to more than 73% now. Since 2005, negotiated cash trade nationally for cattle has fallen from 65% to 27% during the same period.

AMS stated the agency will host a listening session in January 2023 before the cattle contract library is officially rolled out.

If successful, the pilot project would likely be rolled into extended authorization under the Livestock Price Reporting rule or in the next farm bill.

All information related to the library pilot is posted on the AMS Cattle Contract Library webpage.