Did someone forward you this newsletter?

Get your own copy by subscribing here [[link removed]], and to share this story click here. [[link removed]]

Photo courtesy of iStock by Getty Images

Ranchers and Lawmakers Decry Market Manipulation, as Cattle Prices Plummet and Monopolies Profit on Coronavirus

Wholesale beef prices have jumped to record levels, as shoppers stockpile meat in response to the global coronavirus pandemic. But this run on beef isn’t helping cattle ranchers. On the contrary, cattle prices have plummeted since January, putting many ranchers on the brink of collapse. “It’s never been worse. The futures market is crashing … and box beef prices are skyrocketing. It’s nuts,” says rancher Mike Callicrate in St. Francis, Kansas.

Callicrate and other ranchers say this illogical price collapse reflects meatpackers’ monopoly power to set cattle prices. Before this shock, the top four beef packers already faced litigation and a Department of Agriculture (USDA) investigation for alleged collusion and price-fixing.

Lawmakers from both parties are calling on the USDA [[link removed]] to take more immediate action and for the Department of Justice [[link removed]] to open an antitrust investigation of its own.

“We’re seeing some pretty bad stuff in the livestock market right now,” Sen. Jon Tester (D-MT) told the Billings Gazette [[link removed]]. “Somebody is taking advantage of the situation. And I think that 'somebody' is industrial packers.”

“The packers seem to be making out like bandits, and our producers are seeing record low prices,” Sen. Steve Daines (R-MT) also told the Gazette [[link removed]], after asking the Department of Justice to open an antitrust investigation into the beef industry. “I think we’ve got an issue with monopolies here.”

Coronavirus panic shopping has prompted an unprecedented spike [[link removed]] in the price wholesalers and supermarkets pay for processed beef, increasing nearly 20% [[link removed]] in just four days, although those higher prices have yet to be passed on to consumers. At the same time, slaughter-ready cattle prices are down 11% [[link removed]] since January, and cattle futures lost nearly a quarter of their value [[link removed]] since then.

Prices paid to ranchers could fall even further [[link removed]] if meatpacking plant workers fall sick or stay home and facilities begin to slow production or shutter. Ranchers got a taste of such slaughter disruption last summer, when a fire [[link removed]] took out one of Tyson’s beef processing plants and created a glut of slaughter-ready cattle. Packers made a then-record $415 per head [[link removed]], up from around $150 before the fire, while cattle producers lost an average of $200 per head.

“If the coronavirus impacts these plants and they have to shut down, then we’ve got a real disaster on our hands, with just a handful of plants being able to kill the nation’s cattle,” says Callicrate. He notes that, if there was a more diverse network of local, smaller-scale meat processors, then any individual pandemic-related plant closure “would have a lot less impact.”

While ranchers fear the worst, meatpackers have reaped record profit margins from both the Tyson fire and now the coronavirus pandemic, and ranchers are raising concerns about market manipulation. Just four dominant corporations buy 85% of all beef in the U.S., and ranchers say that the behemoths can collude to manipulate cattle markets and hold down the prices paid to ranchers.

Almost a year ago, several Midwestern feedlot owners and the Ranchers-Cattlemen Action Legal Fund (R-CALF) filed a class-action lawsuit [[link removed]] alleging that the four dominant beef packers had strategically cut back on open market cattle bids, closed plants, and imported costly foreign cattle, in order to lower spot market cattle values. This case has been consolidated [[link removed]] with two similar suits brought by consumers and wholesale beef buyers.

Following the Tyson fire, the USDA began investigating [[link removed]] the unprecedented packer profits to determine whether there was “any evidence of price manipulation, collusion, restrictions of competition or other unfair practices” enabling the profits. At a recent appropriations hearing, Agriculture Secretary Sonny Perdue told senators that he wanted more tools to address potential market-rigging.

The coronavirus shock puts new pressure on the USDA to wrap up its investigation and take action against packer profiteering. In a letter [[link removed]] to Perdue, Tester cited “rapid consolidation of the industry” as a key issue facing ranchers and urged the USDA to act immediately to support cattle producers. “Your actions now could make the difference between folks going broke or staying in the industry for another generation,” Tester wrote.

Tester introduced a bill on March 20 [[link removed]]that would set a guaranteed base price on feeder and fattened cattle. The government would make up any difference in base pay for sales of up to 10,000 cattle, in order to prevent large feedlots from disproportionately benefiting over independent producers.

Daines joined Sens. Michael Rounds (R-SD), Kevin Cramer (R-ND), and John Hoeven (R-ND) in requesting that the Department of Justice open an antitrust investigation into price-fixing by beef packers. “At a time when cattle producers are seeing record losses and bankruptcies, now exacerbated by the COVID-19, compared to the shelf price of meat at record highs – these margins fail to make sense,” the senators wrote on March 19 [[link removed]].

Perdue took to Twitter [[link removed]] on March 23 to assure farmers that the agency is “paying special attention to the difference in prices from the farm gate to the grocery shelf” in the wake of the COVID-19 pandemic.

However, ranchers want to see more systemic changes to the livestock industry after the pandemic. “Hopefully we come out of this thing with more awareness of the importance of local regional food systems and just kill the monopolies,” says Callicrate. R-CALF urged the USDA [[link removed]] to limit contracted beef purchases to preserve competitive cattle bidding, and R-CALF requested mandatory country of origin labeling, in addition to emergency stopgap measures.

Top packers Cargill, JBS, Tyson Foods, and National Beef were not immediately available for comment.

This story was co-published with the Food & Environment Reporting Network [[link removed]]. Find and share this story original published on Food & Power [[link removed]].

What We're Reading

Fishers at sea during the coronavirus outbreak have no place to sell their catch, as restaurants shut down and wholesalers stop buying. (The Associated Press [[link removed]]) Farm groups seek aid from any potential COVID-19 stimulus package. The latest House proposal would boost funding for food banks and failing dairy farms, among other food spending. The latest bi-partisan Senate proposal allocates $9.5 billion in emergency funding for food producers. (The FERN’s Ag [[link removed]] Insider [[link removed]]; Politico’s Morning Agriculture [[link removed]]; National Sustainable Agriculture Coalition [[link removed]])The Institute for Local Self-Reliance’s Stacy Mitchell explains how the coronavirus pandemic could wipe out small businesses and hand even more power to corporations such as Amazon and Walmart. ( The American Prospect [[link removed]]) About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

Follow F&P on Twitter [[link removed]] | Subscribe [[link removed]] to this Newsletter | F&P Website [[link removed]] | Contact Us [[link removed]]

Written by Claire Kelloway

Edited by Michael Bluhm and Sam Fromartz

Open Markets Institute

1440 G Street NW

Washington D.C., xxxxxx Tweet [link removed] Share [[link removed]] Forward [link removed] Unsubscribe [link removed]