Researchers from the University of Tennessee Institute of Agriculture and Mississippi State University teamed up to investigate the interaction of national slaughter and price spread—the difference between the value of live cattle price and wholesale boxed beef—that ensued following temporary closures of beef processing facilities in recent years.
When the COVID-19 pandemic caused temporary closures of U.S. cattle slaughter facilities, consumers were hit with increased beef prices, while beef producers felt the brunt of lower fed cattle prices. The temporary shutdown following Tyson's beef packing plant fire in 2019 triggered a similar but less extreme reaction with regard to price spread. These occurrences led to lingering concerns about market power in the beef industry and resulted in an investigation on anticompetitive behavior by meat packers.
"The beef price spread and slaughter numbers have historically been used as indicators of potential packer profitability, and some have questioned if packer slaughter is used to control the price spread," said Charley Martinez, project lead and director of the UT Center of Farm Management. "Our study analyzes causal relationships between price spread and a weekly and Saturday slaughter capacity utilization measurement."