Will the Run Up in Retail Meat Prices Continue? USDA Thinks So, Says Consolidation Isn’t Fully to Blame
According to Drovers, an updated Consumer Price Index (CPI) released from USDA Economic Research Service (ERS) shows wholesale beef prices climbed 14.2% from July to August of 2021, and price projections point to a possible 20% increase in wholesale beef prices this year.
The price projections released are for a wide variety of grocery store items, and According to Farm Journal Washington Correspondent Jim Wiesemeyer, meat prices are expected to see the largest increase.
The updated ERS forecast shows prices for meats, poultry and fish now sits at 4.5% to 5.5%, up from the 4% to 5% posted last month, with higher pork prices and what is now expected to be 6.5% to 7.5% higher beef prices compared to an increase of 4.5% to 6% last month driving the upsurge.
Compared to the same period in 2020, Wiesemeyer points out that beef and veal prices went up 6.5%, with prices in September up 17.6% from year-ago.
Jayson Lusk, agricultural economist with Purdue University, looked to the strong domestic and international demand for US meat products, labor shortages, supply chain disruptions, and increased input costs as factors in the rise of recent meat prices.
The ERS report reiterated that there are a plethora of factors driving the increase in meat prices, not just consolidation in the meat industry, pointing out that the level of consolidation has not changed remotely compared to the upward swings in meat prices.
The ERS report follows recent claims from the Biden administration, with USDA Secretary Tom Vilsack blaming consolidation for the run-up in meat prices at the retail level during a press conference at the White House in September.
During the U.S. Farm Report College Roadshow last week, Lusk told U.S. Farm Report he also doesn’t see consolidation being a major factor in the rise in retail meat prices, but that it certainly is the case that meat is a big driver of the overall price inflation that we’re seeing.
Lusk says even with protein prices racing higher at the grocery store, he doesn’t expect them to scare away the record domestic demand the U.S. has seen so far this year.
North Dakota interim committee takes testimony on North Dakota Beef Commission makeup
According to Tri-State Livestock News, the North Dakota Ag and Natural Resources Interim Committee hosted a hearing Oct. 7 to discuss the makeup and operations of the North Dakota Beef Commission after being assigned to determine whether changes to the makeup of the board or its management of state and federal checkoff dollars need updating.
NDBC Executive Director, Nancy Bateman, reported that the commission had fielded refund requests from 504 producers in FY 2019, from 574 producers in FY 2020 and that over 14 percent of state checkoff dollars had been refunded in the recent fiscal year.
Bateman said she does not know how much of the state checkoff budget and how much of the federal checkoff budget is given to the NCBA Federation of State Beef Councils, stating that the beef commission sends set percentages that go in as part of the big picture.
She said that although the check is written to the National Cattlemen’s Beef Association, that a firewall prevents that organization from using checkoff dollars to conduct lobbying activity which the producers that wrote the checkoff laws specifically forbid checkoff dollars to be used for.
Independent Beef Association President, Kerry Dockter, said in 2015 when the bill was introduced, IBA North Dakota requested that the North Dakota State Beef Checkoff be approved by a majority of producers, and that producers be allowed a periodic vote on the state checkoff.
He said one of his group’s main concerns is the fact that producers who request their state checkoff refund are ineligible to serve on the North Dakota Beef Council, and that even those who request their state checkoff dollars to be refunded must continue to contribute to the NDBC budget through the mandatory federal checkoff, of which the NDBC keeps half.
IBA ND suggested that the North Dakota Ag Commissioner, rather than the Governor, appoint NDBC members in the future, and that all nominations become “at large” with no political organizations being guaranteed seats, where currently the North Dakota Stockmen’s Association is guaranteed four of the nine seats (between three producers and one feeder).
After Dockter’s testimony and significant discussion about the possibility of an election process, a representative for the North Dakota Farmers Union said her group supports an election process, while Jeff Schaefer, president of the North Dakota Stockmen’s Association said he didn’t know enough about how the process would work to grant support or not, and Dockter said his group would be open to considering that idea.
Chicken Executives Face Prison in Denver Price-Fixing Trial
A group of 10 executives and employees of top U.S. poultry companies — including two former chief executives — are facing criminal antitrust charges, prison, and million-dollar fines if convicted for price fixing and rigging bids in a trial getting underway this week in Denver.
According to Bloomberg, the trial, the first to result from a years-long investigation in the $95 billion U.S. market for chicken, spotlights affiliates of Pilgrim’s Pride Corp. and Perdue Farms LLC among other companies who, combined, supply about a third of the chicken Americans eat.
The move comes as the meat industry has been thrust into the spotlight amid soaring prices and after a wave of Covid-19 outbreaks at packing plants.
While the U.S. has imposed hefty fines on numerous companies over the last 20 years, the chicken trial is unusual because it’s individuals facing the jury.
U.S. District Judge Philip Brimmer told selected jurors Monday that the case may run until Dec. 21, not counting deliberations, and that the jury will be asked to decide whether the executives agreed to coordinate pricing and bids to limit competition.
In a court filing last week, the defendants said their price discussions weren’t illegal and that the government can’t prove they agreed to participate in a single, overarching conspiracy.
The filing described the charges as “a muddle of different sporadic communications over many years involving different people, different products, different customers, and different price outcomes.”
Former Pilgrim’s Pride CEOs Jayson Penn and William Lovette face charges for conspiring with other industry employees and officials to fix prices and rig bidding from 2012 to early 2019, after the Greeley, Colorado-based unit of Brazilian food giant JBS SA pleaded guilty to price-fixing conspiracy in February and sentenced to pay $108 million in fines.
In addition to Penn and Lovette, prosecutors charged 8 other executives and industry workers – all facing charges of conspiring to restrain trade, while Jimmie Lee Little, a former Pilgrim’s Pride sales director, is also charged with obstruction of justice for allegedly lying to federal agents – a charge with a top penalty of 20 years in prison if convicted.
Antitrust lawyer and professor, John Francis said, “While the details can be complicated, the law on price fixing is pretty simple – did you agree or did you not agree on price?”
Court papers name industry employees who haven’t been charged, raising the possibility that additional companies and individuals could face prosecution.