Beef industry looks to fix issues with price transparency
By Morgan Rose, The Prairie Star
Sep 12, 2020
The meat packing portion of the American beef industry has long been a bone of contention. With only four major meat packing companies controlling 85 percent of the beef market in the United States, ranchers nowadays are suffering from lowering live cattle prices while boxed beef prices continue to spiral upward.
Tensions against the packing industry peaked in August of 2019 when a Tyson processing facility in Holcomb, Kan., caught fire and was badly damaged. The event at this singular processing plant led to downward pressures across the entire live cattle market. Boxed beef, on the other hand, jumped in price.
Unfortunately, the Holcomb fire was not the last black swan market event to plague the U.S. cattle industry. Some seven months after the fire, fed cattle again were backlogged as the COVID-19 pandemic caused a decrease in processing capacity, and again, live cattle prices plummeted with boxed beef prices setting record highs.
With an obvious trend of market coercion being highlighted in the beef industry, Iowa Senator Chuck Grassley and other members of Congress, including both of Montana’s Senators, Jon Tester and Steve Daines, introduced legislation in May of 2020 that aims to promote price transparency while increasing market competition within the beef industry.
The bill mandates that 50 percent of a meat packer’s weekly volume of beef be bought on the spot market. Further, the bill states that those fed cattle that are bought must be slaughtered within 14 days of purchase. Currently, fed cattle are not required to be purchased on the cash/spot market and the delivery window is 30 days.
Referred to simply as the 50/14 legislation, the bill has garnered mixed responses from industry organizations on the national level. R-CALF and U.S. Cattlemen’s Association support the bill, while the National Cattlemen’s Beef Association does not.
All three of the these major organization’s constituents can agree issues of price transparency have crippled the beef markets, but as an industry whose markets have traditionally been completely free of any sort of government intervention, some eyebrows are being raised since this bill puts a government mandate on a portion of the cattle business.
Gilles Stockton, a cattle rancher from Grass Range, Mont., and president of the Montana Cattlemen’s Association (MCA), says there is a split, even within that organization with some members applauding this ground breaking legislation, while others, Stockton included, have reservations about the bill.
“I think it is a blind alley and there are other things we should be pushing that would be an actual solution to our market dysfunctions,” Stockton stated.
Stockton continued by pointing out...