Grain News

NGFA and Ag Organizations: Agricultural Customers Disappointed by CFTC Action on Customer Protection Rule ... Statement

Date Posted: October 31, 2013

Our organizations, representing customers in virtually all segments of agriculture and agribusiness that use futures for risk management, are disappointed by the final rule approved by the Commodity Futures Trading Commission Oct. 30.

Although the Commission improved on its initial concepts of how margin would be collected, its decision to maintain an automatic trigger that would move the residual interest calculation by futures commission merchants to first thing in the morning the day following the trade does not address practical impediments that many smaller futures market participants in the agricultural sector face.

Ultimately, this requirement likely will lead to smaller entities including farmers, ranchers and hedgers being disadvantaged disproportionately and being driven from futures markets as fewer risk management tools become economically feasible.

This will likely also lead to dramatically increased costs for all commodity hedgers.

We believe the amendment offered by Commissioner Scott O'Malia offered a very reasonable compromise approach that would have eased the transition for farmers, ranchers and other commodity hedgers.

The irony of yesterday's vote is that a significant and diverse customer group - America's farmers, ranchers and hedgers - cannot support a mostly beneficial rule intended by the Commission to protect customers, because the Commission failed to correct very specific provisions we believe are harmful to agricultural market participants.

We deeply appreciate the efforts of Commissioner O'Malia and his staff to address the concerns of the agricultural community, and we look forward to continuing the discussion of market impacts of this rule and working with all of the CFTC Commissioners, their staffs and the U.S. Congress for corrective measures.

American Cotton Shippers Association

American Farm Bureau Federation

American Feed Industry Association

American Soybean Association

Commodity Markets Council

National Cattlemens Beef Association

National Corn Growers Association

National Cotton Council

National Council of Farmer Cooperatives

National Grain and Feed Association

National Pork Producers Council

USA Rice Federation

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