There have been many question marks surrounding the cattle markets in the past few years. Many producers are lamenting low prices while packers have consolidated to a point that there are only four players controlling eighty percent of the slaughter capacity. Those “Big 4” are Tyson, Cargill, National Beef, and JBS USA. Questions first were raised after a fire at a Tyson plant in Holcomb, Kansas slowed processing. Then with the COVID-19 outbreak, these questions came to light again. Producers and lawmakers are asking how, in a time of decreased capacity, are farmers going under and consumers paying record prices, while the “Big 4” enjoy increased profits.
Senators Chuck Grassley (R-IA) and Jon Tester (D-MT) have been raising that question with the United States Department of Agriculture (USDA) and the Department of Justice (DOJ). In May, President Trump ordered a DOJ investigation into the situation to look for any evidence of price manipulation. A week later, Grassley and Tester were joined by Senators Joni Ernst (R-IA), Tina Smith (D-MN), Mike Rounds (R-SD), Cindy Hyde-Smith (R-MS), and Steve Daines (R-MT) in introducing a bill to increase the transparency of cattle pricing.
Yesterday Senators Grassley and Tester brought their case to the floor of the full Senate.
Audio: Senator Chuck Grassley’s full remarks.
Audio: Senator Jon Tester’s full remarks:
During his remarks, Senator Grassley highlighted the increase in the spread between the fed cattle prices, which is the price producers are paid, and the boxed beef price, which is the price that the packers get paid. That spread jumped from $21 to $279 during this past April and May because of the COVID-19 pandemic. Grassley says that without competition, the “Big 4” can create a chokepoint on the whole industry.
Grassley says this does not have an impact just on producers. It also affects the prices paid in the grocery store for beef products.
Grassley went on to highlight the action taken by President Trump and the July 22nd report from the USDA. In that report, Agriculture Secretary Sonny Perdue said one option would be for Congress to create a mechanism to mandate negotiated cash trade. Senator Grassley said that he sees this recommendation as an endorsement of the bill introduced by himself, Senator Tester, and others.
Senate Ag Committee Chairman, the Retiring Pat Roberts (R-KS), does not support this bill and has been accused of ignoring calls to take this action up in the Committee. Senator Grassley repeated that call on the Senate floor yesterday. Mandatory Price reporting has to be reauthorized by September 30th.
Senator Jon Tester followed Grassley to the podium to support what the Iowa Senator had said. He ended his remarks with maybe the bluntest statement of the moment when he said that if something does not change, there will be a drastic change in the food supply. If that happens, farmers will not be the only ones who suffer. Consumers will also pay the price, literally and figuratively.