The aftermath of the Aug. 6 Tyson Fresh Meats fire that shuttered the Holcomb, Kansas, plant until January 2020 continues to linger in beef country.
Producers took note of the dramatic price drop in futures that seemed to defy cowboy logic at a time of peak summer demand. Those who study the intricacies of the industry recognized within a week the processing side of getting beef into the food chain was resuming some normalcy. Choice beef prices remain vexing and that is what is generating questions. The industry is right to want answers.
As Oklahoma State University Beef Extension Beef Marketing Specialist Derrell Peel noted in a recent High Plains Journal story, the market responded in about a week to get slaughter numbers up. He also asked important questions that should be asked. Is there enough competition so events like the Tyson fire have less influence? Also what needs to happen to fix the marketplace and what changes need to be made to fix the market functions so it is more competitive for producers and consumers?
“These are still legitimate questions,” he said. Producers at all levels would agree.
High Plains Journal columnist Jerry Nine noted in the same story, neither the American consumer nor the rancher benefited from the gyration in prices.
Few disagree that packing plants need to be profitable and pay their employees so they can provide for their families. They do an exemplary job of getting meat safely into the hands of consumers. They have all been good corporate neighbors in their respective communities.
But the four largest packers—Tyson, Cargill, JBS and National Beef—all have plants in the High Plains region, and collectively they harvest more than 80% of the beef in this country. That has left an open-ended question about whether the level of concentration is too high.
That bleeds into questions about the transparency of the pricing system, which is designed to make sure producers are able to receive an equitable long-term return on their investment while recognizing individual events can and do temporarily disrupt markets.
Collectively, the beef price concerns expressed by those throughout the livestock chain caught the attention of Secretary of Agriculture Sonny Perdue, who has asked the U.S. Department of Agriculture’s Packer and Stockyards Division to launch an investigation into beef pricing margins. The beef marketing system is a complex one, and finding consensus on changes that the entire industry could accept will be a challenge. From the cow-calf producer, to the feeder to the processing plant and ultimately the consumer, all have diverse, conflicting and fickle interests.
The scope of investigating the entire system should entail the retailer’s role, too.
All of this comes at time when some companies are pursuing strategies for plant-based meat, which has raised the eyebrows of bovine, swine and poultry producers who rightfully should be concerned about how it can impact their bottom line.
Perdue deserves credit for calling for a review of what happened, but any study of how to balance the needs of the entire chain, has to be done in a way to serve the overall free market system.
Dave Bergmeier can be reached at 620-227-1822 or firstname.lastname@example.org.