Beef prices at the center of the US Senate hearing on agriculture
WASHINGTON (KMTV) – The past few years have been tough for beef producers. Due to COVID-19, a JBS processor ransomware attack, and a fire at a JBS beef processing plant in Kansas, the market has been closed for a few years.
Some producers are losing money, customers pay more for beef at the grocery store, while the country’s largest meat processors are making more money.
The U.S. Senate Agriculture Committee held a hearing on Wednesday to learn more from all sides on the issue of pricing and transparency.
“There is a crisis in rural America,” said Justin Tupper, vice president of the US Cattlemen’s Association. “We are losing our producers at an alarming rate, while watching the big feeder companies, the packers make record profits.”
Tupper says that while the current system may be effective, it does not work well for everyone.
“We’ve taken out the smaller and bigger isn’t always better, and efficiency shouldn’t always be abandoned for competition,” said Tupper.
Producers like him lose money or earn little on a head of cattle. But processors, like Tyson, JBS, Cargill, and National Beef, earn about $ 1,000 for every head of cattle they sell.
These processors, three of which have factories in Nebraska, control 80 percent of the market.
“The fact that there is an oligopoly and that pricing and market power are being misused in a way that disadvantages the very people who are trying to make a living on the land,” said Senator John Thune , a Republican from South Dakota.
Some at the hearing told the agriculture committee that the system would work on its own, saying the economics would take time but go backwards.
“Today we have too many cattle and too little processing capacity. We have a volatile market created by inevitable external factors. No market player, ”said Mark Gardiner, partner at Gardiner Angus Ranch in Kansas.
Some senators want changes in the market. Currently, producers can sell their livestock at a cash auction or use other marketing arrangements. These AMAs are currently used approximately 75% of the time.
A bill that Senator Deb Fischer of Nebraska is proposing would force cash auctions about 50 percent of the time.
Other audience participants said the AMA system, which is less transparent than cash auctions, is a good system for young and old. They say it allows the system to be more efficient and it allows the United States to maintain their high level of beef that much of the world is looking for.
Dr Dustin Aherin said a government mandate on the auction would hurt businesses large and small.
“If liquidity were mandatory in this situation, it would seriously hamper the ability of these small regional factories, which will likely have to compete in niche markets, to differentiate themselves from the larger, more efficient incumbents,” said Aherin, vice president of RaboResearch Animal protein analyst.
But people like Tupper, who runs cattle auctions, say he needs a second bidder, which leads to more competition at his auctions.
“American cattle producers don’t want or seek handouts. We just want a fair and level playing field, ”Tupper said.
Fischer is also pushing for his Livestock Market Transparency Act, which includes a public library for beef contracts, saying greater transparency helps everyone.
“They can then have access to examples of what is already on the market,” said Fischer, Republican and Valentine’s cattle breeder. “We need every segment of this industry to be successful. “
Either way, several senators said this problem would not go away and said further action in Washington was needed.
“It’s going to require this Congress to take action to address this unfair situation,” said Senator Chuck Grassley, a Republican from Iowa.