Beef prices are on the rise while live cattle prices are falling. One reason for that is COVID-19 disrupting meat processing plants. There are more cattle and less product because some cows can’t get processed. But many suspect there's more to the story.
Cattlemen’s associations and state attorneys general are among those expressing concerns about possible beef price fixing. They say meat processing and packaging companies may be colluding to artificially change prices to benefit themselves.
The U.S. Department of Agriculture is looking into it, but they’ve been investigating similar allegations for a while. There was a fire at a meatpacking plant in Kansas last year, which producers blamed for similar price fluctuations.
Just last week, the president responded to calls from attorneys general by asking the Justice Department to investigate, too.
Jim Magagna, the Wyoming Stockgrowers Association's executive vice president, says cattlemen are seeing lower prices for their livestocks while beef prices for consumers are going up. He believes that discrepancy needs to be scrutinized.
"What the coronavirus outbreak and the demand for more beef in the grocery stores did was...demonstrate more clearly the ability of the processors to create a major discrepancy between the prices that they were receiving for boxed beef and the prices that our producers were receiving for live cattle," Magagna said.
The investigation into possible price fixing "needs to be done thoroughly and needs to be done rather quickly," he added. "And then beyond that, the structural issues that exist are something that are going to take time to address.”
He’s referring to structural issues like antitrust concerns stemming from consolidation. The latest USDA data shows that four companies control at least 80% of the beef processing market.
"With such high concentration and the threat of increasing consolidation, we have concerns that beef processors are well positioned to coordinate their behavior and create a bottleneck in the cattle industry – to the detriment of ranchers and consumers alike," 11 state attorneys general – including those representing Wyoming, Colorado, Montana and Idaho – wrote in a letter to U.S. Attorney General Wiliam Barr last week.
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.
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