Yes, and I'm glad you raised that question. We did examine that issue. It has a few different labels—some participants refer to it as “captive supply”. It's a good example of the differing perspectives that exist in the industry. What we mean here, really, is the purchase or ownership of cattle by packers two or more weeks prior to slaughter.
When we spoke to cattle suppliers in western Canada, they did not express concerns about captive supply. What they included in that definition would be common arrangements, like purchasing agreements or forward contracts, under which suppliers commit to supply a certain volume of cattle to packers for a predetermined time and are paid a price based on an agreed-upon formula. It would also include what's known as grid pricing, where suppliers commit a certain volume of cattle to beef packers and are paid under a formula. The cattle suppliers we spoke to told us that these types of arrangements can significantly reduce the risk taken by feedlots and increase the return to suppliers by locking in profits and allowing suppliers to take advantage of higher-yield cattle. These types of arrangements provide suppliers with stability that they may need to survive in what are otherwise volatile markets.
I want to give my colleagues an opportunity to comment, because—