U.S. senator wants meat packers investigated

U.S. senator wants meat packers investigated
Apr 02, 2020

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Processors may be gouging farmers, Sen. Chuck Grassley said

By Diego Flammini
Staff Writer

A U.S. senator is asking for federal departments to look into the possible price gouging of beef producers by large meat processors.

Sen. Chuck Grassley (R-Iowa) is calling for the United States Department of Agriculture, the Department of Justice and the Commodity Futures Trading Commission to investigate whether meat processors are taking advantage of U.S. ranchers during the COVID-19 pandemic.

On March 25, live cattle prices were about US$1.10 per pound on the Chicago Board of Trade. June live cattle futures were around US$0.85 per pound as of April 2.

U.S. consumers have been purchasing more beef, yet the prices ranchers are receiving reflect a lack of demand, Grassley says.

“The spike in grocery buying has caused higher beef values for the big four meat packers (Tyson, National Beef, JBS and Cargill), and a decrease in value for Iowa farmers,” he said, the Des Moines Register reported Tuesday. “It’s very shameful if the big four packing companies are using this national crisis to gouge the farmer.”

Those four companies control around 80 per cent of the U.S. meat-processing market.

Indeed, consumers appear to be buying more beef.

The Meat Demand Monitor (MDM), a Kansas State University online monthly survey of over 2,000 people that’s been up since February, tracks information like consumer preferences and demand.

In its March 26 report, the MDM shows that late in the month of March, almost 33 per cent of respondents included beef at dinner, 29 per cent of people included the protein for lunch and 17 per cent had it with breakfast.

That’s compared to the first week of March where the numbers were about 29 per cent for dinner, 21 per cent for lunch and almost 14 per cent for breakfast.

One reason for the drop in price could be the lack of restaurant service during the outbreak.

“The April supply of meat is looking burdensome at a time when we are looking at another month without regular restaurant beef demand,” said Abhinesh Gopal, head of commodity research with Farms.com Risk Management. “And disruptions to (processing) due to COVID-19 could lead to cattle backing up in the country.”

The meat-processing sector isn’t gouging farmers, a representative said.

Open communication is the key to fairness, said Julie Anna Potts, CEO of the North American Meat Institute (NAMI).

“NAMI will do everything it can to alleviate the adverse effects the pandemic is having on critically important suppliers. Everyone benefits from a transparent marketing system that ensures effective price discovery,” she told Farms.com in an emailed statement.

Farms.com has reached out to the National Cattlemen's Beef Association for comment.


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