Yesterday, USDA Secretary Sonny Perdue announced on Twitter that the USDA’s Packers and Stockyards Division would extend their oversight to determine the causes of divergence between box and live beef prices, not only with the Holcomb Fire in Kansas last year, but also with the coronavirus crisis.
Last year, the USDA launched an investigation into the Tyson food processing facility that caught fire. The impact was felt by cattle producers as prices dropped, but retail prices remained the same.
.@USDA’s Packers and Stockyards Division will be extending our oversight to determine the causes of divergence between box and live beef prices, beginning with the Holcomb Fire in KS last summer and now with COVID-19.
— Sec. Sonny Perdue (@SecretarySonny) April 8, 2020
National Cattlemen’s Beef Association President Marty Smith said, “I would like to thank President Donald Trump and Agriculture Secretary Sonny Perdue for their quick response to NCBA’s request to expand the agency’s investigation into cattle markets. Secretary Perdue’s decision to examine market reactions surrounding the Holcomb fire and the spread of COVID-19 in the United States, will help restore the confidence of cattle producers in the market. We also look forward to the agency’s recommendations about improvements the industry can make to its markets, improvements that will ensure we have the fair and functioning markets that are so vital to cattle producers.”
In addition, Smith sent a letter to President Donald Trump, requesting the government to act quickly to investigate the striking disparity between boxed beef prices and cattle prices in the futures and cash markets during the current COVID-19 crisis and following the packing plant fire in Kansas.
In his letter, Smith requests President Trump to direct USDA to expand the ongoing investigation into market activity after the Holcomb fire to include current market volatility, “in the hope of identifying whether inappropriate influence occurred in the markets, and to provide our industry with recommendations on how we can update cattle markets to ensure they are equipped to function within today’s market realities.”
The letter also requests the Commodity Futures Trading Commission to study the influence of speculators on live and feeder cattle futures contracts to determine whether these contracts remain a useful risk-management tool for cattle producers.
“Fair and functioning cattle markets are vital to the sustainability of our industry,” Smith wrote. He also pointed out the importance of keeping the beef supply chain moving during this time of volatility and instability.
“The market woes for cattle producers will only grow if packing plants shut down or slow down for an extended period,” Smith stated. “As cattle producers, we are the beginning of the beef supply chain, and we need continued vigilance and oversight of all cattle market participants – for the benefit of America’s cattle producers and all Americans.”
Read the full letter here.