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USDA Issues Initial Report on Cattle Market Disruptions

August 10, 2020 By Ron Sylvester Leave a Comment

Click Here to download the entire report in pdf.

In a report released in late July, the U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) provided an update on its investigation into recent market disruptions and price volatility in the beef industry.

The investigation was prompted by complaints from ranchers, who attributed the rising spread between live cattle prices and boxed beef prices to anticompetitive practices among meat processors. The report neither exonerates beef packers nor reveals violations of the Packers and Stockyards Act. However, it does provide policy recommendations for strengthening competition and transparency in the industry.

Said the USDA in the opening of its report:

This report, prepared by AMS in coordination with USDA’s Office of the Chief Economist, first summarizes market conditions, fed cattle prices, boxed beef values, and the spread before and after the fire and plant closure at the Tyson Holcomb plant. The report then summarizes market conditions, fed cattle prices, boxed beef values, and the spread before and during the COVID-19 pandemic. It does not examine potential violations of the Packers and Stockyards Act.  The investigation into potential violations is ongoing, and therefore, AMS has limited ability to publicly report the full scope and status of the investigation.

A vocal proponent of open and competitive markets, National Farmers Union (NFU) welcomes USDA’s inquiry into these two events. However, as farmers endure unfair and abusive conditions, the report must be accompanied by real and meaningful reforms, as NFU President Rob Larew affirmed in a statement:

“Price fixing in the meat industry is not a new phenomenon; a century ago, Farmers Union members were contending with similarly high levels of concentration among meatpackers and the anticompetitive practices that kind of market power enables. Recognizing the immense danger of unchecked corporate consolidation, Congress and the White House worked together to restore competition and shield farmers and ranchers from abusive treatment.

“We appreciate USDA’s efforts to examine this issue and present potential solutions, but it is clear that this is just the beginning; now, like 100 years ago, radical and immediate action is needed to create a fair and balanced food system. The agency must thoroughly conduct its ongoing investigation, for which we intend to hold them to account. Additionally, we urge legislators, USDA, and other federal agencies to strengthen protections for farmers and ranchers, enforce existing antitrust regulations, and prevent future abuses of market power.”

To download a copy of the report, CLICK HERE.

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