The Iowa Farm Bureau Federation (IFBF) applauded the ef­­forts of Iowa Sens. Charles Grassley and Joni Ernst and others on the U.S. Senate Agriculture Committee to examine problems from the lack of transparency and fairness in today’s cattle markets.

During a hearing last week in Washington, the senators questioned cattle raisers, economists and others on ways to create more price transparency, improve market access for producers and reduce unfair practices by meat processors.

“Livestock producers’ livelihood depends on providing care for animals and ensuring a healthy and safe product for consumers, and it’s essential they receive equal opportunities when marketing their animals,” said Craig Hill, a Warren County livestock producer and IFBF president. “Today, many cattle farmers are taking a loss on each animal raised, while grocery store prices continue to rise. Trust in our food supply chain is essential; and livestock producers deserve a transparent marketplace to have confidence in the system.”

Zippy Duvall, American Farm Bureau Federation (AFBF) president, agreed. “It’s time for Congress and the administration to get serious about determining what’s driving the imbalance,” he said. 

During the hearing, Grassley, Ernst and other lawmakers questioned panelists about problems stemming from the concentration in beef processing, with four large processors slaughtering 85% of U.S. beef cattle. They also questioned the unusually wide spread between prices that packers pay for cattle and the prices charged retailers for boxed beef, as well as the lack of competition for cattle at sale barns and in private transactions.

Two unusual events
The panelists and lawmakers noted that the supply/demand balance in the cattle market has been upset by two unusual events: a 2019 fire at a large Kansas packing plant and the pandemic. Both events reduced processing capacity and drove down prices paid to cattle producers, while allowing processors to charge higher prices to retailers. In addition, they said, the meat industry’s vulnerability was spotlighted when a recent ransomware attack on JBS USA temporarily halted production at nearly all of company’s beef and pork plants.

Steps to address issues

The Iowa Farm Bureau, working in tandem with AFBF, has taken several steps to address the problems in the beef industry. Iowa’s county Farm Bureau delegates developed a range of policy recommendations de­signed to improve cattle markets, which were subsequently adopted by AFBF. Those recommendations call for a larger share of negotiated sales in fed cattle markets to improve price transparency and taking a regional approach to any federal effort to improve negotiated sales.

In addition, AFBF adopted an Iowa recommendation to establish a group to study regional mandatory minimum cash cattle trade to help determine levels needed to achieve robust price discovery.

AFBF, working with other cattle groups, urged the U.S. Department of Agriculture (USDA) to expedite its renewal of the Livestock Mandatory Reporting system. That renewal should include making formula base prices subject to the same reporting requirements as negotiated cash cattle sales, as well as the creation of a contract library to provide more pricing information to producers, the organization said.

AFBF and other groups have also demanded that the Department of Justice issue a status report on its investigation of cattle pricing. That investigation was launched after the disruptions from the Kansas meat plant fire and was expanded to include cattle pricing issues during the pandemic. But the department has yet to issue a report on the investigation.

In addition, IFBF, AFBF and other groups are working to encourage the investment in and the development of independent regional beef processors to improve the overall market for cattle.

“The results of all of our efforts will hopefully rebuild trust and benefit both producers and consumers of U.S. quality beef,” Hill added.