An Iowa senator says there’s something fishy about falling cattle market prices at a time when beef is a top seller among consumers stocking up during the COVID-19 pandemic.
Republican Charles E. Grassley, a senior Judiciary Committee member, told reporters Tuesday he will ask the Justice Department and the U.S. Department of Agriculture to look into live cattle future prices that declined in March as meat packers saw prices rise for the boxed beef they sold to grocery stores and other retailers.
“In the last three weeks, live cattle futures have dropped three-and-half percent on the Chicago Mercantile Exchange,” Grassley said. “That may be understandable in a normal situation, but this is happening while American consumers bought 77 percent more meat year over year in the month of March. The spike in grocery buying has caused higher beef values for the big four meat packers and a decrease in the value for Iowa farmers.”
Grassley followed Montana Sen. Steve Daines, North Dakota Sens. Kevin Cramer and John Hoeven, South Dakota Sen. Mike Rounds, all Republicans, and Montana Democratic Sen. Jon Tester in noting potential irregularities in an industry where four companies control 80 percent of meat processing. The companies are Tyson Foods Inc., JBS USA Holdings, Cargill Inc. and National Beef Packing Co.
The cattle industry and some lawmakers raised concerns with the USDA last year about cattle pricing margins after a fire damaged a Kansas beef processing facility. Agriculture Secretary Sonny Perdue said the department would investigate to determine if there was price manipulation, but there’s been no report yet.
Lawmakers say they remain concerned by declines in live cattle prices since Jan. 1 and the continued dip in those prices even as the public’s demand for meat rose as COVID-19 restrictions sparked a buying spree and pushed up retail prices.
But the North American Meat Institute says its member companies have done nothing wrong.
“NAMI will do everything it can to alleviate the adverse effects the pandemic is having on critically important suppliers. Everyone benefits from a transparent marketing system that ensures effective price discovery,” said CEO Julie Anna Potts in a statement.
The institute and the National Cattlemen’s Beef Association exchanged letters about the issue on March 18.
Among other things, the cattlemen’s group asked that meat packers be more aggressive in the cash market and base bids for beef on the higher prices for boxed beef cuts sent to retailers rather than prices on the futures markets. The organization also called for greater transparency.
In the North American Meat Institute letter to the cattlemen, Potts wrote, “The economic toll this pandemic is exacting cannot be overstated and NAMI is mindful of the disruption it particularly has caused in the cattle markets. NAMI will do everything it can to alleviate the adverse effects the pandemic is having on critically important suppliers.”
Member Tyson Foods announced a one-time premium it will pay producers and live cattle prices rose the week of March 23.
Still, Grassley said Attorney General William Barr should consider launching an investigation into potential price-gouging in cattle markets along the lines of one the Justice Department is doing on medical equipment pricing during the coronavirus national emergency.
“I would assume he could something in the reverse if it’s cheating farmers out of income just because we have a pandemic,” Grassley said. “It is very shameful if the big four packing companies are using this national crisis to gouge the farmer.”