Cattle Producers and Congress Prod For Answers

May 21, 2021

Cattle groups weren’t messing around last week in Phoenix when they pulled out the sticky notes and started inking a serious industry to-do list.

One of those items being a status update of the Department of Justice’s (DOJ) antitrust investigation into the country’s four biggest meatpackers: Tyson Foods, JBS, National Beef Packing, and Cargill.

Congress grabs its megaphone: On Monday, Sen. John Thune (R-SD), Rep. Dusty Johnson (R-SD), and 14 other lawmakers sent a letter to Attorney General Merrick Garland, echoing the industry’s request for continued focus and an update on the investigation that began last May.

While the DOJ was just getting started at this time last year, the USDA released a report in July analyzing the record-breaking spreads seen after the August 2019 fire at the Tyson plant in Holcomb, Kansas, and the COVID-19 plant closures.

Some context: Between 2016-2018, the average spread between fed cattle (producers’ revenue) and the boxed beef cutout value (packers’ revenue) was $21 per cwt. After the Holcomb fire, the spread lept to $67.17 per cwt. And then, in the midst of the pandemic, the spread skyrocketed to $279 per cwt.

While other commodity producers are riding price highs, cattle producers are getting burnt, taking $100-$120 losses per head sold.

Where this goes: An investigation update has yet to be released, but many don’t see a speedy resolution for tough cattle market economics. Noted by Chelsea Good of the Livestock Marketing Association, “The issues in the fed cattle marketing space didn’t show up overnight and won’t get fixed overnight either.