June 9, 2020

 

Soaring US beef prices may settle down soon

 

 

US beef prices are now at their highest since drought devastated the nation's beef herd in 2014, but are seen to settle down soon, said the National Cattlemen's Beef Association's chief executive, The Meadville Tribune reported.

 

There is some question, however, that they ever needed to go as high as they did.

 

Colin Woodall, the association's CEO, said the price in the grocery stores now is tied to orders placed by retailers two to three weeks ago when the processing plants were still straining to operate due to coronavirus-driven worker-shortages.

 

At the worst, the nation's meat-packing plants were only functioning at about 60% their normal capacity, Woodall said. Now, they are back up to about 90% capacity, and that is while employing social-distancing measures to protect workers from the spread of virus.

 

While industry and government officials agree that the spike in prices has been influenced by the disruptions in the supply chain due to the COVID-19 pandemic, some have expressed scepticism that prices needed to be as high as they have been.

 

"Nationally, the USDA estimates prices for beef products are up US$0.20 to US$0.50 per pound since last December. However, it's difficult to say who is profiting off those higher prices. But it's certainly not the farmers," said state Senator Elder Vogel, R-Beaver County, the chairman of the Senate Agriculture and Rural Affairs Committee. "COVID-19 is hurting the bottom line for livestock farmers across the commonwealth and will continue to do so for the foreseeable future."

 

The nation's meat supply is dominated by four meat-packing companies—Tyson Foods, JBS, Cargill and National Beef—which control 80% of the industry.

 

President Donald Trump in early May said he had direct the Department of Justice to investigate whether the big meat-packing companies had conspired to inflate meat prices.

 

Bloomberg reported Thursday that the Department of Justice had issued subpoenas to the four meat-packing companies as part of its investigation into possible violations of federal anti-trust laws. The move came after pressure from attorneys general who had pressed for action by the federal government.

 

"Given the concentrated market structure of the beef industry, it may be particularly susceptible to market manipulation, particularly during times of food insecurity, such as the current COVID-19 crisis," according to a letter to the Department of Justice from the attorneys general of 11 states—North Dakota, Missouri, Colorado, South Dakota, Montana, Arizona, Idaho, Iowa, Minnesota, Nebraska and Wyoming.

 

Pennsylvania Attorney General Josh Shapiro did not sign the letter, his spokesman Mark Shade confirmed without explanation.

 

Shade added though that the attorney general has received 128 complaints from consumers concerned about possible price gouging related to beef prices, none of those complaints prompted Shapiro's office to act against the businesses involved, he said.

 

Marty Yahner, a Cambria County farmer, said the meat-packing companies used the opportunity to increase prices, but that eventually market forces will bring the prices back down.

 

"Sure, they jacked up the prices. But the demand is there. American people love their beef," he said.

 

Yahner said any investigation into the prices charged by the meat-packing companies certainly would not hurt.

 

Yahner sells most of his beef cattle to major meat-packing companies, but he has also been selling a portion of his herd direct-to-consumer. His direct-to-consumer sales have been limited by the amount of business local butchers can provide and he now has a waiting list of customers that stretches into October.

 

"I didn't raise my price. It's a fair price," he said.

 

Woodall said his organisation supports the idea of investigating to determine if there was price gouging at play to settle the question.

 

"We want to know for sure" whether there were more than the normal market forces of supply-and-demand at play, he said.

 

While the plants are back up-and-running, they are still working their way through the backlog of beef cattle that normally would have gone to the slaughterhouse weeks ago but didn't because of the supply chain disruptions, said Liam Migdail, a spokesman for the Pennsylvania Farm Bureau.

 

"This means that there's still less beef than usual being processed, which drives up retail prices. But there are still more market-ready cattle on farms than the supply chain has the capacity to process, which drives down the price that farmers are paid." Migdail said. "In addition, farms are likely getting a lower price for cattle they had to hold onto longer than expected due to the backlog because the meat quality decreases if they continue to feed cattle past when they were supposed to go to market."