To help facilitate fair and competitive markets for the livestock, meat, and poultry industries, the U.S. Department of Agriculture released a report on its ongoing boxed beef and fed cattle price spread investigation.
“The closure of the Tyson beef packing plant in Holcomb, Kansas, after a fire at the facility, and the COVID-19 pandemic clearly disrupted the markets and processing systems responsible for the production and sale of U.S. beef,” said U.S. Secretary of Agriculture Sonny Perdue. “The report examines these economic disruptions and the significant increase in the spread between boxed beef and fed cattle prices that resulted from them. While we’re pleased to provide this update, we assure producers that our work continues in order to determine if there are any violations of the Packers and Stockyards Act. If any unfair practices are detected, we will take quick enforcement action.”
The report, prepared by USDA’s Agricultural Marketing Service in coordination with the Office of the Chief Economist, 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, and before and during the COVID-19 pandemic.
The report also discusses several policy considerations in light of the desire by many market participants for improved price discovery, reinvigorated competition, and a more transparent relationship between the prices for live cattle and the resulting products. Considerations include potential updates to Livestock Mandatory Reporting to reduce instances of non-reporting and increase percentages of negotiated cash transactions, risk management outreach, education and product improvements for small and medium-sized producers, small to very small meat processor outreach and opportunities, and enhancements to the Packers and Stockyards Act investigative and enforcement tools.
While the report does not examine potential violations of the Packers and Stockyards Act, USDA staff and Department of Justice Antitrust Division staff have discussed allegations of anticompetitive practices in the meat packing industry. Should USDA find a violation of the Packers and Stockyards Act, it is authorized to report the violation to DOJ for prosecution.
Livestock groups have long awaited the report. United States Cattlemen’s Association President Brooke Miller said, “The top-line considerations detailed in this report provide a roadmap for returning transparency and true price discovery in the cattle marketplace. USCA has long since advocated for making these changes through the reauthorization of Livestock Mandatory Reporting (LMR), a program which is due to expire on September 30, 2020.
“On July 1, USCA and twelve other organizations sent a letter to Senate Agriculture Committee Chairman Pat Roberts requesting a hearing be held on the state of the U.S. cattle industry. It is simply unacceptable to be met with silence, while producers are asked to weather another year of declining farm and ranch income. Producer organizations have brought forth real, tangible marketplace solutions that are underscored in this report, and that deserve to be brought forward for discussion on Capitol Hill.”
National Cattlemen’s Beef Association Vice President, Government Affairs, Ethan Lane said, “We are pleased that USDA has produced a report into the market dynamics impacting cattle producers across the country. Since NCBA initially requested this investigation, this issue has remained a central topic of conversation for NCBA, our state affiliates, and cattle producers throughout the country.”