USDA's packer analysis aims to prevent future market shifts
By Lacey Newlin, High Plains Journal (KS)
Jul 29, 2020
The results of the U.S. Department of Agriculture’s boxed beef and fed cattle price spread investigation, launched by Secretary of Agriculture Sonny Perdue August 2019, has been eagerly awaited by many in the cattle industry.
On July 22, 2020, the first analysis of a three-part report was released. U.S. Rep. Frank Lucas, an Oklahoma Republican and major supporter of the investigation, said the initial target of this deep market examination was the wild price swings that plagued cattlemen after the Holcomb, Kansas, packing plant fire in August 2019, which skyrocketed the price of processed beef and dramatically decreased the value of live cattle. Lucas said once the COVID-19 pandemic hit, it caused more one-sided see-sawing in the price consumers were paying for meat and a near collapse in the value of live cattle going to market, leading the USDA to expand their analysis to include the pandemic as well.
“I represent a district that is essentially the northwest half of the great state of Oklahoma,” Lucas explained. “We’ve got cow-calf producers, feedlots and pork processing facilities, but no beef packing plants facilities. As the past chairman of the House Agriculture Committee, I am always concerned about the ability to raise our food, create the food supply we need, and make sure that food gets into the hands of our consumers in a safe and affordable fashion. What we’ve seen in the markets and the aftermath of Holcomb and COVID-19 has caused tremendous financial hardships on my producers and, for a short period of time, dramatically raised the cost of eating and living for folks on the other end. I want to make sure that both producers and consumers are being treated equitably and the laws are being followed.”
Lucas refers to the first report as an analysis because it is a look at the economic impact from these two major events and also includes a list of suggestions to improve the situations that have arisen from those dealings. In addition to the analysis released by USDA, there are two potential criminal investigations underway at both the USDA and the U.S. Department of Justice.
USDA is examining the regulated entities under the Packer and Stockyards Act to see if there were violations such as manipulation, collusion, restriction of competition or other unfair practices. The Department of Justice is in the process of investigating to see if any entities violated the Sherman Antitrust Act of 1890, which prohibits activities that restrict interstate commerce and competition in the marketplace or the Clayton Antitrust Act of 1914, which pertains to unethical business practices, such as price-fixing and monopolies.
Revamping an unfair system ...