On August 9 a fire broke out at one of the largest beef packing plants in the U.S., significantly impacting beef markets in the days and weeks that followed. The fire, at a plant in Holcomb, Kansas, which accounted for 5 to 6 percent of processing capacity before the fire, stressed an already sensitive balance between processing capacity and a growing fed cattle supply. A new report unveiled today by the American Farm Bureau Federation provides an in-depth examination of the causes and price implications resulting from extreme market volatility in the cattle industry. It also sets the stage to explore policy solutions.
The Cattle Market Working Group, comprised of 10 state farm Bureau presidents, spent more than two months investigating factors that led to market disruptions following the Holcomb packing plant fire and the COVID-19 pandemic. They invited input and consultation from government and university experts, among others.
The report is designed to equip state and county Farm Bureau organizations with deep insight and policy considerations as Farm Bureau leaders debate policy recommendations for 2021.
“Our cattle producers suffered a one-two punch with the fallout from the Holcomb fire and the COVID-19 pandemic,” said AFBF President Zippy Duvall. “The prices families were paying at the grocery store went up, but the prices paid to farmers dropped through the floor. That’s not fair to consumers or producers. We must work toward a more stable, resilient food supply chain that can better endure unforeseen challenges so we can keep America’s pantry stocked while ensuring farmers are paid a fair price for their products.”
Key topics of the report include:
Mandatory Minimum Negotiated Trade
- The working group discussed “triggered”-style mandatory minimum pricing that is set on a region-by-region basis.
- Various and fluctuating levels would be determined regionally, including input from state Farm Bureau members.
Risk Management and Education
- The working group is interested in AFBF working with the Chicago Mercantile Exchange to better address concerns from smaller producers.
- Existing risk management tools, such as Livestock Risk Protection crop insurance, could be adjusted to be more affordable for smaller producers.
Small Capacity Meat Packing
- The working group discussed policy solutions that would allow smaller packing facilities to play a larger role in the food supply chain.
- Create incentives for smaller packing plants to become federally inspected.
Grain Inspection, Packers and Stockyards Administration (GIPSA)
- Farm Bureau supports strengthening the Grain Inspection, Packers and Stockyards Administration’s ability to enforce market rules.
Read the full Cattle Market Working Group report here.
The working group extensively discussed and debated the various factors that led to the market disruptions, policy proposals currently being examined in the public arena, and potential actions to mitigate the impacts on producers if similar events occur in the future.