July 23, 2020

USDA study shows cattle prices disparity between farmers and meat processors

A 20-page US Department of Agriculture (USDA) study showed the price disparity between what meat processors pay to cattle farmers and the high prices earned by meat processors, AP reported.

According to the study, a Tyson Foods Kansas beef plant fire in 2019 and the temporary shut down of slaughterhouses due to COVID-19 resulted in cattle farmers selling their cattle for less, but meat supply fears increased retail prices for meat.

A number of US Congress members have urged for a probe into suspected violations of the Packers and Stockyard Act designed to protect consumers and cattle farmers, especially as the beef industry is controlled by four major meat processing companies.

The study found that the price disparity was not because of Packers and Stockyard Act violations, but investigations are ongoing.

Senator John Thune of South Dakota, one of the members that urged for an investigation, said he will persist with calls to the Department of Justice to finish its suspected market manipulation investigation.

Senator Deb Fischer of Nebraska said she will introduce legislation at the Senate to provide equity and transparency to the market.

The study showed both the Kansas fire and COVID-19 related closures resulted in livestock backlog, leading to declining demand for cattle and prices to fall. Then, scarce supply concerns and increased consumer demand pushed prices up.

The study also found that the situation would have been more favourable for all parties if market conditions were more clearly disseminated and competition was reinvigorated.

-          AP News