Legislation Introduced To Try To Remedy Market Monopoly
The testimony submitted in the latest for more than a year. hearings re-stated the long-held arguments Schaben said, “We’d be remiss to not between cattle producers and packers. The recognize the value of legislation as a pathproducers claim that the market power of way forward to address the aforementioned four beef packers and the marketing arrange- issues, however, we cannot solely count on ments they have with cattlemen amount to Congress to legislate their way out of this a captive supply that results in unfair cattle mess. Thorough oversight of antitrust law by Heather Smith Thomas pricing. The Packers contend that the market and competition policy by the Department is working according to supply and demand, of Justice must accompany any legislative attle producers have become increas- and that the current system has resulted proposal.” In response, the packers pointed to econingly frustrated with shrinking markets in improved beef quality that consumers (ever-increasing consolidation of pack- want. The hearing discussions also included omists’ warnings against government intering plants, and some packing companies now academics, economists and other market vention. “Discussions of cattle prices and packing capacity can give the impression that owned by foreign interests) and packers’ con- stakeholders. Jon Schaban (a cattle producer submitting beef and cattle markets represent a zero-sum trol of market prices. The sudden shortages of meat in grocery stores during the COVID testimony to the Senate, on behalf of the game,” Jayson Lusk, head of agricultural ecopandemic in 2020 (in spite of ample supplies Iowa Cattlemen’s Association) said that the nomics at Purdue University, told the House. and market-ready animals that could not chief concern for independent cattlemen is “But, one party’s gain does not have to come be processed) brought this problem to the that ample captive supply allows meatpackers at the expense of another. What policies attention of the American public. When gro- to meet their needed supply of beef animals increase the size of the pie available to all parcery shelves were bare, it became everyone’s without participating in the cash market. “As ticipants: cow-calf producers, backgrounders, a result, independent feedlots, packers, retailers, and ultimately, problem. Several cattle feeders find consumers?” bills were introduced ... the chief concern for themselves as residuIn attempts to remedy an obviously flawed in Congress to try al suppliers for meatsystem, legislators have proposed a number to remedy the situaindependent cattlemen packers. Despite of solutions. tion, but with a new is that ample captive supply raising some of the THE FAIR ACT administration these efforts had to begin allows meatpackers to meet highest-quality cattle Several bills have been introduced to try in the nation, they again. their needed supply of beef to remedy the current situation. One of them are on the ‘short end Hearings in the is S. 2558: the FAIR (FEED AMERICA U.S. Senate and animals without participating of the stick’ because BY INCENTIVIZING RURAL) MEAT of their operating House in late July, in the cash market.” PACKING ACT. This bill was introduced July capacity. This preda2021 explored anew 30, 2021 by U.S. Senators Roger Marshall, tory practice is widethe beef industry’s M.D. (KS), and Mike Rounds (SD), along ly utilized by four main meatpackers, justified shaky structure, prompted by increasing diswith Representatives Jason Smith (MO) and by ‘efficiency,’” Schaban said. content of many cattle producers who blame Dusty Johnson (SD). This proposed legislaThe packers’ side once again stated their market concentration and anticompetitive practices for the disparity of high packer contention that the beef industry’s struc- tion’s goal is to ensure a level playing field for ture and economies of scale is due to sup- our nation’s cattlemen, and to return to fair profits and low cattle prices. This conflict between producers and pack- ply-and-demand fundamentals, and is not the prices for both the cattlemen and consumers. ers is decades old, but the supply chain dis- cause of the extreme events that happened The FAIR Meat Packing Act creates two tax ruptions in the past last two years resulting over the last two years. In its testimony, the incentives to facilitate formation of small and from the fire at Tyson Foods’ Holcomb, North American Meat Institute said, “… the mid-sized meat processing facilities, allowing Kansas plant, the COVID-19 pandemic, and price is determined by supply of cattle to sell cattle producers to compete for better prices a cybersecurity attack on JBS-USA triggered from one segment and the demand for buying in the marketplace. “The success of the Kansas economy relies heightened public scrutiny. With the recent cattle by the next segment. That explains heavily on the cattle industry at every step labor and slaughter capacity squeeze, and why each segment can experience different from pasture to plate,” said Senator Marshall. margins … When any of those segments many animals unable to be harvested, it “We must ensure robust competition at the are out of balance, prices move, and the became obvious that there is something seripacking level by providing butcher shops and moves can be dramatic, as witnessed by the ously wrong with the system. Hearings were held by the Senate’s COVID-spurred retail beef demand … and medium sized packers more opportunity for Committee on the Judiciary and the House the COVID-imposed imbalance within vari- success. With USDA providing substantial funding to expand small and medium-sized Subcommittee on Livestock and Foreign ous segments of the cattle sector.” Currently there is proposed legislation to packing capacity, it’s simply logical to help Agriculture in July, and similar discussions had been held in the Senate in June. Legislators try to resolve this issue, including legislation reduce the construction and operational costs have also been busy proposing bills that aim that would require packers to buy some cattle so the formation and expansion of small and to help independent producers get more on the cash market and improve price trans- medium-sized meat processing facilities is money for their cattle by requiring more cash parency. Cattle producers again called for the feasible for more folks in the industry.” “Our cattle producers are some of the trade; to improve price transparency; and to Department of Justice to provide an update hardest-working men and women in the empower USDA to enforce the 1921 Packers on an antitrust probe of Cargill, JBS, National country,” said Representative Smith. “They Beef and Tyson Foods that has been going on & Stockyards Act.
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Livestock Market Digest
