Cattle Producers Call for Investigations into Beef Margins

Despite unprecedented demand for retail beef, farmers across the nation are struggling to find fair market value at the auction house.

The National Cattlemen’s Beef Association (NCBA) called on President Trump and USDA to investigate the situation as far back as a fire at a packing plant in Holcomb, KS, in Aug. 2019. NCBA president Marty Smith urged the agency to expand a current investigation to include the COVID-19 pandemic and its effects on the market.

“Fair and functioning cattle markets are vital to the sustain­ability of our industry,” Smith wrote. Additionally, he pointed out the importance of keeping the beef supply chain moving during the pandemic.

“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.”

USDA said it would investigate the surge in meatpackers’ margins for beef during the coronavirus outbreak. The margin between retail prices for beef and the price that proces­sors pay for cattle more than doubled between late Febru­ary and March 21, according to an analysis by the American Farm Bureau Federation, reported Bloomberg (April 8).

Via an April 8 tweet, Secretary of Agriculture Sonny Perdue confirmed USDA’s Packers and Stockyards Division would extend oversight to better determine the causes of diver­gence between box and live beef prices, beginning with the Holcomb Fire and extending through the COVID-19 pandemic. Sen. Deb Fischer confirmed Secretary Perdue’s sen­timent via a tweet of her own the same day.

It remains unclear how closures will further alter the mar­ket and complicate an investigation. The U.S. meat industry, consisting primarily of Tyson Foods, JBS USA, Cargill, and National Beef Packing Co., are contending with the coronavirus pandemic at their facilities. JBS and Tyson were forced to shut down numerous pork operations, while Cargill reported disruptions due to the virus.

Meanwhile, the Wyoming Stock Growers Association joined cattle organizations from 22 states to send a letter to U.S. Attorney General William Barr and the Department of Justice demanding an investigation into beef market prices. The group’s EVP Jim Magagna called for a quick inquiry while its president Scott Simms echoed the call, reported KPVI (April 20).

“The system is broken,” Simms said. “Ranchers pride themselves on their independence and the ability to be successful by their own creativity and smart decisions. All we want is to be able to market livestock on a fair playing field. Controlling expenses is very important but a fair marketing system is vitally important as well.”

Nebraska’s producers also called for an investigation, with the Nebraska Farm Bureau urging the Justice Department to launch a full investigation. Nebraska Farm Bureau Federation president Steve Nelson pointed to the disparity between prices received by farmers and wholesale beef pric­es, citing both the Kansas fire and the pandemic, reported KHGI (April 20).

“Both of these events have highlighted long-term concerns expressed by cattle producers and now is the time for the department to fully examine the situation and fully prosecute any wrongdoing,” he said.

According to the Alabama Cattleman’s Association, it was supposed to be a decent year for the U.S. cattle industry. Erin Beasley, the organization’s VP, said retail beef sales surged nearly 80% as consumers began to panic buy beef in the early days of the coronavirus pandemic, reported WSFA (April 16).