Price Discovery and CaptiveSupply Implications for AlbertaBeef Producers and Feeders

Concerns about potential impacts of captive supply on fed cattle prices have been present for several years inboth Canada and the US. In Canada, the magnitude of concern escalated during closure of the US border to fedcattle trade (May 2003 to July 2005) and has remained at an elevated level. Many producers in both Canada andthe US argue that presence of captive supplies results in lower cash fed cattle prices. These concerns havemotivated policy proposals targeted toward controlling how fed cattle can be marketed and who can own andfeed cattle. However, captive supply arrangements evolved out of economic incentives of cattle producers andbeef packers to engage in new business arrangements. Therefore, policies that may curtail such practices aremet with considerable opposition by those who enjoy direct benefits from these arrangements. This study wasdesigned to assist Alberta Beef Producers in their assessment of captive supplies and possible action paths. Wesummarize what we know about the impacts of captive supply on fed cattle markets and identify marketinformation and research needs related to fed cattle markets and captive supply in Canada.