The Department of Agriculture has expanded an existing investigation into pricing practices in the beef industry to also include recent developments brought about by the spread of the coronavirus.
The news, confirmed by Ag Secretary Sonny Perdue in a Wednesday tweet, follows several requests from Capitol Hill and the cattle industry to take a look at shifting margins between packer and producer profits.
Perdue said USDA would be “extending our oversight” to explore “the causes of divergence between box and live beef prices, beginning with the Holcomb Fire in KS last summer and now with COVID-19.”
The news will fall on welcome ears in cattle country, where frustration about the amount of money making its way to beef producers has only grown in recent weeks. On Wednesday, the National Cattlemen’s Beef Association sent a letter to President Donald Trump asking for a broader look into the issue.
“The onset of COVID-19 has resulted in the steep decline of both the cattle futures market and cash trade — resulting in significant financial challenges for our members,” NCBA President Marty Smith said in the letter. “After weeks of striking disparity between boxed beef price increases and declines in both the cattle futures and cash price, we fear this trend could have devastating long-term impacts on cattle producers.”
NCBA’s Ethan Lane said the organization was concerned that producers were seeing “same kind of market dynamics at play” now as what was observed after the Kansas fire, when the industry’s processing capacity was called into question after the damaged beef plant was taken offline. USDA’s investigation — which is still pending — was launched to “any evidence of price manipulation, collusion, restrictions of competition or other unfair practices.”
Lane says NCBA members want USDA to act quickly in their analysis.
“Part of the frustration that we’ve heard from our members across the country is that we’ve been expecting the results from that original investigation for quite some time, and clearly the problems that were identified then are still very much a factor in the market and impacting our producers,” he said.
“It’s time to take that data, wrap that investigation up, get the results out, and if there is wrongdoing identified, engage the Department of Justice to follow their course of action,” Lane added.
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Many in the cattle industry say the lingering market issues are not specific to any one event, but are instead reflective of a broader issue in the cattle industry. In a statement to Agri-Pulse, the U.S. Cattlemen’s Association said “COVID-19 did not cause the ongoing issues in the cattle marketplace. Rather, the current pandemic has highlighted the urgent need to find solutions that realign the cattle marketplace with its true fundamentals.”
Sen. Deb Fischer, R-Neb., sent a letter to USDA earlier this week requesting an expanded investigation. In a statement after Perdue’s confirmation of the news, she noted the frustration of many producers in her state and said she was glad to see it was being addressed.
“Expanding the scope of this investigation to cover COVID market disruption is the first step towards ensuring fairness throughout the beef supply chain,” she said.
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