New packing plant already looking to the future

Cutters at the CS Beef Packers plant section out ribeyes and send them on down the line.

After being called out by members of the cattle industry and lawmakers, the meat packing industry has rebutted claims that there are issues with market transparency and antitrust laws.

A meeting held in mid-May among members of major livestock groups—Livestock Marketing Association, National Cattlemen’s Beef Association, United States Cattlemen’s Association, R-CALF USA, National Farmers Union and American Farm Bureau Federation—allowed for open discussion about the state of the cattle markets.

Participants agreed there needed to be improvements on packer concentration and oversight, and price transparency and discovery. Members left the meeting with several action items to bring back to their respective groups: expediting the renewal of the Livestock Mandatory Reporting program; developing new packing facilities; and calling on the Department of Justice (DOJ) to release a report on their ongoing investigation into packers and antitrust laws.

A week after the meeting, Sen. John Thune (R-SD) and Rep. Dusty Johnson (R-SD-At large) penned a letter to Attorney General Merrick Garland, urging the DOJ to move ahead with their investigation. The letter was signed by 14 additional congresspeople.

In response to the increased pressure on the packers’ part in the markets, the North American Meat Institute (NAMI) defended the packers, citing black swan events as the reason for the current state of the markets. NAMI is “the oldest and largest trade association representing U.S. packers and processors of beef, pork, lamb, veal and turkey.”

Sarah Little, NAMI vice president of communications, told the Hagstrom Report, “The members of the Meat Institute and their livestock suppliers benefit from a fair and competitive market.

She added that, “In July 2020, USDA analyzed the effects of the 2019 Holcomb facility fire and the pandemic, finding no wrongdoing and confirming the disruption in the beef markets was due to devastating and unprecedented events.”

She also pointed out that new and expanded packing plants are in the works and should boost cattle slaughter capacity by 4 percent. In addition, she noted labor issues are impacting capacity. Little also remarked that income from marketing all cattle was down 4.7 percent, but producers earned 5 percent more in revenue than they did in 2019 due to government COVID-19 aid payments.

“The Meat Institute will continue to work with livestock producer organizations to ensure proposed changes to the beef markets do not have unintended consequences for producers and consumers,” Little concluded.

On May 26, Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) released a document that was circulated by NAMI in Congress that detailed a list of what NAMI called myths about the beef market. The fact sheet claimed the market is competitive and growing, and that the beef packing industry is one of the most highly scrutinized industries for antitrust issues.

“The cattle market works just as economists would have predicted given the current conditions: When supplies of cattle increase, prices decrease—and vice versa,” the document read. “If packers are ‘able to control prices’ why has that profitability not attracted more investors into the market?”

In response, R-CALF USA CEO Bill Bullard rebutted, “If cattle prices were responding to supply/demand signals, the exceptional beef demand for the past several years along with the record exports would have driven cattle prices upward. Instead, cattle prices have been driven down and consumer beef prices have been driven up.”

The document also called attention to the claim that “large price disparities are leading independent cattle producers to go broke,” but refuted once again that government aid provided a safety net from impacts of COVID—“a once-in-a-century event.”

R-CALF USA is now circulating a document of their own, in which it disputes the claims NAMI made in its released memo.

“The NAMI document is long on misleading propaganda but short on facts,” the R-CALF document read. “Congress must not allow the NAMI document to dissuade it from taking decisive action to fix what is plainly wrong with the cattle and beef market as it is relied upon by millions of consumers and hundreds of thousands of independent cattle farmers and ranchers located all across America.” Anna Miller, WLJ managing editor

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