Address imbalances in cattle market, say farm groups

In a joint statement on Monday, six farm groups called on the Justice Department to investigate the highly consolidated meatpacking industry and urged the development of “new independent, local and regional packers.” Ranch and farm groups have complained repeatedly during the pandemic that high beef prices in the grocery store have not translated into stronger prices for slaughter cattle.

In particular, producers say cattle pricing is opaque so it is hard to know if they are offered a fair price. A handful of packers dominate the industry and a fraction of cattle are sold on the cash market. Most are fed under contract or delivered under formulas that set the sale price.

“Unfair markets and lack of competition in the beef industry has been extremely harmful to producers and consumers alike, especially during the last year,” said president Rob Larew of the National Farmers Union. “The time for action is long overdue and the NFU is glad to be part of this effort to bring strong, swift and meaningful reform.”

The two largest farm groups plus three often fractious cattle groups met in a day-long session arranged by the Livestock Marketing Association in Phoenix a week ago. In their statement, they said they shared “the ultimate goal of bringing about a more financial sustainable situation for cattle feeders and cow-calf producers.” Their discussion included packer concentration, price transparency, the “captive supply” of cattle controlled by packers and slaughter capacity.

“Attending organization representatives were pleased to have reached consensus on many issues and are committed to the ultimate goal of achieving a fair and transparent cattle marketing system,” said the groups.

They said they would ask Congress to renew a federal law that requires meatpackers to report purchase prices for cattle with the addition of a new provision for reporting of “formula” prices along with cash prices. The statement also called for a federal investigation of meatpackers and development of new packers, which would mean more bidders and higher slaughter capacity.

Also on Monday, 16 senators and representatives sent a letter to Attorney General Merrick Garland, asking for examination of “potential instances of improper and anti-competitive activities in the live cattle and beef industry.” Several of the lawmakers are sponsors of bills to require packers to buy a larger portion of cattle on the spot market as a way to assure prices are set in public.

“We have a high supply of cattle at one end of this equation and a high demand for U.S. beef at the other, but the middle is being absolutely choked by the lack of processing capacity,” said Ethan Lane of the National Cattlemen’s Beef Association, one of the groups at the Phoenix meeting. “Cattle producers deserve to know whether or not the price disparity that has plagued our market is the result of anti-competitive or other inappropriate practices in the packing sector.”