Senators bring #faircattlemarkets to capitol hill
- Last week, Senator John Tester of Montana and Senator Chuck Grassley of Iowa both advocated the cause of fair cattle markets for U.S. cattle producers in front of the U.S. Senate. Both senators urged support for their 50/14 legislation.
- Senator Tester explained that something is amiss within competition in the cattle business. Rural America is being cast aside and falling prey to corporate interest whose sole purpose is to make a quick buck.
- Tester explained that the Holcomb fire halted five percent of the country’s beef distribution capacity. In the weeks following this event, consumers saw a sharp increase in meat prices, while cattle producers saw a steep decline in cattle prices.
- It was no coincidence that the meatpacking industry reported record profits during this time.
- The cash market took a steep decline following the fire, followed by more price manipulation by the packers as cattle slaughters increased by 5,000 hd. that following week.
- In April and May of this year, we saw the highest price disparity between the price of boxed beef and the price cattle producers were receiving for their cattle. This was caused by the U.S. beef processing industry reducing their capacity by 40% because of slowdowns or shutdowns triggered by the coronavirus.
- The packers again used this crisis to manipulate the markets and take advantage of cow calf producers, along with small and mid-sized feeders.
- The packing industry has used both of these events to force markets to work only for them. One of the ways packers enable this is by limiting the transactions taking place on the cash market. Senator Tester and Grassley have introduced the 50/14 legislation to hold corporate packers accountable, make pricing more fair for producers, and bring money back into rural economies.
- Senator Grassley explained that consolidation of the beef industry is threatening the livelihood of farmers and ranchers across the U.S. Rural communities are also threatened by this consolidation.
- Not only are producers hurt by consolidation, consumers are impacted greatly as we’ve seen the price of beef in the grocery store sky rocket to the point of hurting beef demand.
- Packers dominate the marketplace and they are able to limit opportunities for price negotiation.
- Senator Grassley feels that the ag committee needs to hold a hearing on the issues facing the cattle industry and the roadmap which USDA laid out with their report concerning market conditions.
- The report released by the USDA about three weeks ago came close to endorsing the 50/14 concept that Senator Grassley and Tester are proposing.
- Tester explained that the Holcomb fire halted five percent of the country’s beef distribution capacity. In the weeks following this event, consumers saw a sharp increase in meat prices, while cattle producers saw a steep decline in cattle prices.
Tyson beef plant fire will be historically significant to beef producers
- The Tyson plant fire in Holcomb, KS occurred on August 9th, 2019. The week following this event, the industry saw cattle markets react with limit down days.
- The plant represents six percent of the total U.S. fed cattle packing.
- “It’s a disaster. This is our tsunami,” said Herreid, SD, cattle feeder Herman Schumacher.
- There were specific events throughout history that caused the market to crash; Nixon’s 1973 beef “freeze,” the 1986 dairy buyout, and the 2003 BSE cow said Schumacher. All these events had a common theme- beef got cheaper for the consumer, but we didn’t see that with the Holcomb fire.
- The week following the fire, the reported price for a choice carcass went up almost $200 per carcass while the active bidding for a finished steer dropped about $130 per head.
- Schumacher said that his Tyson buyer bid $2-$4 per hundred weight lower than other regional buyers just before the fire, which meant that Tyson had enough cattle secured for that week.
Boxed beef prices
- Choice boxed beef: $205.47 (+0.81)
- Select boxed beef: $192.75 (+0.74)
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