Ibach: USDA beef market investigation could conclude by year end

 

By Spencer Chase, AgriPulse 

10/09/19

 

An investigation of beef pricing practices in the aftermath of a Kansas slaughterhouse fire could be finished by the end of the year, a top USDA official says.

 

Greg Ibach, USDA’s undersecretary for marketing and regulatory programs, told Agri-Pulse the inquiry, launched Aug. 28 after the fire at the Tyson Foods plant in Holcomb, Kan., sent cattle prices reeling, was expected to take two or three months. But he said no hard deadline was imposed on the investigators.

 

“I don’t think there’s a time constraint on us,” Ibach said. “We want to work expeditiously, but thoroughly.”

 

The fire took about 6% of the nation’s fed slaughter capacity off line and raised questions about the industry’s slaughter capacity. Tyson quickly announced plans to rebuild the facility and pay workers in the interim. According to Tyson, the plant is expected to resume normal operations by the beginning of 2020.

 

USDA is looking for any evidence of price manipulation in the fire’s aftermath. Ibach, a former Nebraska rancher, said USDA’s investigation focuses on three possible violations of the Packers and Stockyards Act: failure to pay for livestock, unfair or unjustly discriminatory or deceptive practices, and price manipulation. Significant violations could be referred to the Justice Department.

 

“I think price manipulation could take on several forms,” he said. “We’ll see whether or not there is reason to believe that the market didn’t react the way it should have, and that’s how economists will help us evaluate some of that data.”

 

One economist, Rabo AgriFinance Senior Animal Protein Analyst Don Close, told Agri-Pulse he’s “not convinced … they’re necessarily going to find a lot.”

 

“The decline in fed cattle prices wasn’t radically out of line with what the economics imply would happen,” he said. “The market is steadily working back to normalcy. A lot of the extremes we saw in the first two weeks after the fire have started to subside.”

 

What caught the attention of Close and others were spreading margins between packers and producers. He said the jump in beef cutout values “was actually way, way more out of line than was the decline of fed cattle prices.”

 

“The real agitation with producers throughout this whole time window has been how is it just that packers are making up to $400 a head, while cattle feeders are losing approximately $200 a head?” Close said.

 

Producers across the ideological spectrum have supported USDA’s investigation. When it was first announced...

 

more, including links  

https://www.agri-pulse.com/articles/12687-ibach-usda-beef-market-investigation-could-conclude-by-year-end