Price manipulation in the beef industry has been a hot topic for almost two years now. A few unexpected events affected the price of cattle at the time, but the price disparity has yet to correct itself in the months after these ?black swan events.? The Holcomb, KS fire at a Tyson plant and the COVID-19 pandemic were both unanticipated events that rocked the supply chain and caused ripple effects that have lasted for an extended period.
The Iowa Cattlemen?s Association (ICA) has again called for an investigation as to why those ripples have not dissipated in the months that have followed.
Audio: Full interview with Cora Fox, Government Relations Director for ICA.
Cora Fox is Government Relations Director for the ICA. She talks about the concerns that are being raised by their producer membership about the situation surrounding the ?Big 4? packers; Tyson, JBS, National Beef, and Cargill.
Fox said it is not unreasonable to expect ripple effects from these events. What is unreasonable is the fact that the packers? profit margins keep going higher and higher while the price they pay for the cattle is not going the same direction. Investigations were called for much earlier. Several lawmakers, including Iowa Senator Chuck Grassley and former President Trump, joined the call for there to be an examination of the situation.
While some of the findings of the USDA investigation verified the issues that were being raised, it failed to link the issues to the packers. That part of the investigation was said to be ?ongoing.? It has been almost a year and nothing else has been said about it. Fox says it is time to finish the job. The situation facing producers is no longer about these ?black swan events.?
For the average consumer of beef products, you may not understand why this is a problem for producers. Fox explains how these events caused a ripple effect, how the packers have bounced back from them, how beef demand is high, but the packers are manipulating the prices they pay to farmers so they can pocket the extra profits.
For consumers to understand, the price you pay at the grocery store is determined by the box beef price. That is determined by the supply and demand for the product. Right now, beef has high demand and that is being reflected at the meat counter. What is aggravating producers is that the price they are being paid is not supporting the input costs they have in raising the cattle. When only four packers control 85% of the supply chain, they are dictating what they are willing to pay, and producers have no real options to shop around. They are basically being given a ?take it or leave it? option because there is hardly any competition in the marketplace. Fox explains how some producers are ?hemorrhaging money.?
The situation with price manipulation by packers is nothing new. President Theodore Roosevelt went after meat packing monopolies over a hundred years ago, and the situation was not even as consolidated as it is now. Fox talks about the legislation on the books, known as the Packers & Stockyards Act. Fox says that the legislation needs to be enforced. That is the duty of the USDA and the Department of Justice. Fox reminds consumers that the higher prices you are paying at the meat counter is not going into the pockets of the family farmers who are producing the product. It is going into the funds of large corporations.
You can read a copy of the letter sent to Ag Secretary Tom Vilsack and Attorney General Merrick Garland, right here. Fox is urging producers and consumers alike to contact your local representatives and tell them that you don?t want to see the food chain be controlled by a select few.
