The Government Accountability Office (GAO) says supply and demand factors led to the dramatic cattle price decline from 2013 to 2016. In a report issued this week, the GAO said supply and demand factors were influenced by drought, rather than competition levels among packers, and that likely cause substantial fluctuations in prices.
“We found that while less competition among packers did not appear to result in lower national cattle prices from 2013 through 2015 on a national level, it did account for variations in prices in different parts of the country,” GAO said in its report.
In early 2016, U.S. senators asked the GAO to investigate why cattle prices dropped 15% in late 2015. GAO reviewed economic data and USDA and Commodity Futures Trading Commission documentation, analyzed transaction data on beef packer purchases from 2013 through 2015, and interviewed recognized experts, cattle industry stakeholders such as feedlot operators and packers, and agency officials.
GAO offered two recommendations, including USDA review the extent to which, under statute, the price reporting group can share daily transaction data with the Packers and Stockyards Program. And if USDA determines the statute does not permit such sharing, and it is advisable, submit to Congress a proposal to allow such sharing.
“By routinely conducting in-depth analysis of the transaction data it collects, USDA could enhance its monitoring of the fed cattle market. Such analysis could include but not be limited to examining competition levels in different areas of the country,” GAO said.
The GAO request was submitted by R-CALF USA, which called the price collapse unprecedented, with cattle prices falling farther and faster than during any time in history.
In a statement issued after the GAO report, R-CALF USA CEO Bill Bullard said, “The report used a very broad brush to describe a few of the more obvious problems in our U.S. cattle market and while it did identify some specific problems, it left several of the largest stones unturned."