April 6, 2023
US researchers study impact of US beef plant closures on beef prices
A joint research study conducted by the University of Tennessee Institute of Agriculture and Mississippi State University delved into the interaction of national slaughter and beef price spread dynamics, which resulted from temporary closures of beef processing plants in the past few years, Phys.org reported.
Consumers were hit by higher beef prices when the COVID-19 pandemic forced the temporary closure of US cattle slaughter facilities, while beef producers suffered from lower cattle prices.
These occurrences sparked ongoing worries about market dominance in the beef sector and prompted an inquiry into meatpackers' anticompetitive practises.
Charley Martinez, project leader and director of the University of Tennessee Centre of Farm Management, said the beef price spread and slaughter numbers have traditionally been used as indicators of potential packer profitability.
Martinez said their study analyses causal relationships between price spread and a weekly and Saturday slaughter capacity utilisation measurement.
The study discovered that while weekly and Saturday slaughter capacity utilisation have a direct impact on the spread of live cattle to boxes of beef and vice versa, these causal relationships are not always present. The study demonstrates that when price spread is considered for the majority of the time period under the study (2010–2021), it has a positive impact on national Saturday slaughter capacity utilisation.
This might imply that Saturday slaughter is more than just a day for processing catch-up. It might be a tactic to increase slaughter when the price spread is widening. But further investigation revealed no statistical support for this idea during the time period examined.
Despite the fact that these measurements interact, Martinez said that they don't find any statistical support for the idea that beef packers use weekly or Saturday slaughter capacity utilisation to control the price spread.
- Phys.org
