National and state affiliates of various cattle organizations are unified in their support of U.S. Secretary of Agriculture’s Sonny Perdue call on Aug. 28 to have the USDA’s Packers and Stockyards Division to investigate recent beef pricing margins to determine if there was any unfair trade practices that occurred.
In particular, Perdue said the division would see if there was any evidence of price manipulation, collusion, restrictions or competition or other unfair prices.
The particular focus was on how prices reacted shortly after a fire on Aug. 9 shut down the Tyson Foods plant in Holcomb, Kansas, which killed about 6,000 head a day and accounts for about 6% of the total United States fed cattle packing capacity.
Perdue said he was responding to calls by cattle ranchers.
National Cattlemen’s Beef Association President Jennifer Houston said the announcement by Perdue demonstrates the government’s understanding of the extreme strain placed on the cattle industry by the plant fire.
"We encourage USDA to look at all aspects of the beef supply chain and to utilize internal and external expertise in this investigation,” Houston said. “We believe it adds transparency that will help build confidence in the markets among cattlemen and women."
Missouri Cattlemen’s Association
In a release the organization noted that ranchers in all phases of the industry understand markets and their concerns were heard by Perdue, who they said was willing to listen to them.
"Cattle producers have sound reason to question market events that transpired after the Holcomb fire. While a sharp decrease in slaughter capacity was anticipated, slaughter actually increased some 9,000 head from the week prior to the fire,” the MCA stated. “Further, most expected this market disruption to cause uncertainty, but few could believe in one week fed cattle prices would drop 5% and Choice boxes would spike 9% while total slaughter increased. All the while, prices for feeder calves plummeted. The financial woes do not reside within one segment of the industry. It impacts the entire chain and causes lending institutions a high level of uncertainty as equity dwindles across the board."
"Like others in the industry, R-CALF USA has been very concerned by the packers' market activity following the fire at Tyson's Holcomb, Kansas, plant, and the impact that activity has had on cattle producers across the country,” said R-CALF USA CEO Bill Bullard. “It therefore welcomes the USDA's announcement that it is investigating the packers' conduct in the aftermath of the fire.”
He also noted his organization and four cattle-feeding ranchers from Iowa, Nebraska, Kansas and Wyoming filed a lawsuit alleging the four largest beef packers have violated antitrust laws, Packers and Stockyards Act of 1921 and Commodity Exchange Act to unlawfully depress prices paid to cattle farmers since January 2015.
Iowa Cattlemen’s Association
The Iowa Cattlemen’s Association in a release stated over the past two weeks, cattle producers have expressed concern that changes in the live cattle and boxed beef markets since the fire are unjustified.
“We recognize that there are market fundamentals at play,” says David Trowbridge, Iowa Cattlemen’s Association president, “But given the extreme effect the current market conditions are having on Iowa’s cattle industry, we believe it is in our members’ best interests to eliminate any doubts regarding the market reaction.”
The Packers and Stockyards Act was signed by President Harding in 1921 to address concerns about anticompetitive activities among meat packers. The Act has been updated by Congress many times since then. Section 202 of the Act states that it is unlawful for packers to “Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device,” or “Engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce”.