Home 5 Ag Stories Somebody is making money on this situation and it isn’t producers

Somebody is making money on this situation and it isn’t producers

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Questions and accusations have been flying at a high rate in the past few weeks. Hog and cattle producers are looking for answers. They are seeing their prices drop like a stone while they see the prices in the grocery stores remain steady or rise during this COVID-19 pandemic. With grocery store shelves being emptied, demand is obviously still high. Meatpackers are also strained from the pandemic and are shuttering to protect the health of their employees, but farmers aren’t blaming them for that. Their concerned with how they are going to stay in business.

Iowa Senator Chuck Grassley talked about the strains for livestock producers during his weekly call with Ag media on Tuesday. He talked about the strains being felt in the food supply chain. He agrees that worker health and wellness at these plants should be a top priority.

What Grassley said shouldn’t be a priority is meatpackers taking advantage of a global pandemic to make huge profits off consumers while their suppliers, the Iowa farmers, are losing money on their investments. Senator Grassley says he is pleased that U.S. Agriculture Secretary Sonny Perdue responded to his letter asking for an investigation into the activities of meatpackers by announcing an investigation.

The Senator said there are many issues that must be considered. A lot of different players have different perspectives on the issues. He says we need to see these issues and needs all discussed and addressed for the good of the farmers, the food chain, and the consumers.

Some suppliers and industry spokespeople have gone so far as to blame the fact that they are having to ship more products, more often, and that adds to their overhead costs. The markets keep talking about how we have more supply than we know what to do with and that demand isn’t strong. Farmers, like any other consumers, are seeing empty grocery shelves due to panic buying during this crisis. So, there is obviously the demand there. As packers shut down plants, they are reassuring farmers that killing capacity at other facilities will be adjusted to meet their needs. They are also reassuring consumers that there will be no drop in food supplies.

The markets say we have more than enough supply and store shelves are empty. The packers are increasing prices because they must make more deliveries to keep stores stocked, but the grocery store shelves are still empty. If they are lucky, producers will weather this downturn with minimal losses, if they booked their sales contracts in advance of the downturn.

A quick perusal of my local grocery stores before press time showed that hamburger prices are roughly $4.99 per pound for 80/20. That is the price we used to pay for 93/7 which is now over $6 per pound. Ribeye, which is normally a premium steak, is selling for right around $16 per pound. That is no better than it is under normal circumstances. Some grocers are having sales, so check our local stores. However, the point is that with supposed ample supplies, we are seeing prices associated with supply chain shortfalls.

When many people are out of work or on reduced incomes, the thought of having packers making a premium on essential food items is sad.

At a time like this, it is easy for producers to blame the associations they support. I spoke with a producer associated with the beef checkoff on a condition of anonymity. He said, “this is not the time to be scaling back your investment in promotion. Groups like the USMEF and the checkoff programs are working hard to maintain our markets overseas. We are still seeing good numbers from those exports. If we scale back on promotion to those markets, we are actually going to be doing more harm than good. Many of us who work with the promotion of meat products are producers as well. We stand to lose just as much as you do.”

Something stinks, and it isn’t what is being scraped off the feedlots and pumped out of the pit barns of Iowa’s livestock producers.

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