Cattle Groups Say Historic Meeting to Fight Market Monopoly is Just the Start

Calls for change came to a head this month, as cattle groups held an industry-wide meeting making history.  

“It was a historic meeting,” says Brooke Miller, president of U.S. Cattlemen’s Association. “And in my lifetime, nothing like this has ever happened before.”

As six livestock groups held a closed-door meeting, individuals representing the U.S. Cattlemen’s Association were alongside representatives from R-CALF USA, National Cattlemen’s Beef Association (NCBA), American Farm Bureau (AFBF), National Farmers Union (NFU) and the Livestock Marketing Association (LMA). Those involved called it an unprecedented move.  

“This was a pretty drastic meeting, because never before have we had six groups meet together like this, and there been so much consensus and agreement. It was rather refreshing,” says Miller.

The six groups typically at odds, found common ground with a meeting spearheaded by the Livestock Marketing Association (LMA), a group that says the idea to collaborate was born from conversations with lawmakers.

“When you bring those issues up during our Congressional fly-ins, and they say ‘how can we help?' Well, when we tell them that maybe they ought to address the issue one way, they say ‘well, that sounds real good, but last week we had an organization in here that said we should do this thing. And there's one coming in next week and they're going say something different. Why can't you guys ever get together and agree on something so we can help you?’” Larry Schnell, president of the Livestock Marketing Association told AgriTalk’s Chip Flory.

As the groups all sat around the same table, U.S. Cattlemen’s says LMA took the needed first step.

“They brought basically the major players in the cattle world together all the organizations together and try to build some consensus on what our market is,” says Miller. “We're in such a terrible way right now as far as our market conditions and the sustainability of production agriculture and livestock production in this country, something drastic needs to be done.”

Addressing Claims of Market Monopoly 

The headline from the meeting was one echoed by every group: how to address packer concentration.

“We have four major multinational packers that control well over 80 to 85% of the market,” says Miller. “It's obvious through the market fundamentals where we're hearing they're making profits of up to $1,000 a head on these animals. Feedlot operators, feeders, cattle producers, backgrounders and stockers out there going out of business because it's not profitable.”

Miller says instead of a free, capitalistic market, U.S. cattle producers are faced with packer concentration.

“We have a monopolized market, and everything we do has something to do with trying to level the playing field,” says Miller.

The six groups agreed on five other focus areas:

• Packer concentration
• Price transparency and discovery
• Packer oversight
• Packers and stockyard act enforcement
• Level of captive supply
• Packer capacity

“We basically worked a lot on trying to improve price reporting and also getting the Department of Justice to follow through with their investigation,” says Miller.

Those same issues are now also in the spotlight by lawmakers as the issue is front and center for some Senators on Capitol Hill.

“One is a transparency issue, but I think it goes beyond that,” Senator John Thune (R-SD) told AgDay’s Clinton Griffiths. “And the question of whether or not packers are in a position to be able to manipulate prices in a way that is averse to the profitability of those who are in production agriculture, those who are actually out there raising livestock.”

Calls for Continued Investigations

Thune was one of several lawmakers who sent a letter to the DOJ last week, urging the Department to move forward with their investigation in the meatpacking industry.

“We're trying to rectify that by building additional pressure on the Department of Justice to take a look at this issue, and really do an examination of whether or not there are violations of anti-trust laws here,” says Thune.

He says the investigation was jumpstarted a year ago, but the Department has yet to produce results.

“We think they need to renew this investigation and get some answers,” he adds.

Thune says the issue is rooted from complaints he’s hearing from ranchers in his home state and acknowledges the issue is nothing new, but says there’s a renewed focus in Washington, which is being pushed directly from ranchers.

“They see that the disruption that's been caused by the volatility in the pricing and the spreads that they're seeing, they're not benefiting from the increases in the run-up that they see in prices that obviously are benefiting the packers,” says Thune. “And so these margins are not within the range of what we considered to be normal. So, I think the producers sincerely believe, and with good reason, if you look at the evidence and the statistics don't lie, that there's something going on out there.”

The evidence and statistics are shown in data from USDA’s Economic Research Service (ERS). According to ERS data, as consumers continue to pay record-high prices for beef, the cattle producers’ share of that dollar continues to diminish.

Packers Respond

The Packers don’t agree. The North American Meat Institute, an organization which represents meat packers, responded this week and defended its members against allegations of wrongdoing, saying the market remains fair and competitive.

“In July 2020, USDA analyzed the effects of the 2019 Holcomb facility fire and the pandemic, finding no wrong-doing and confirming the disruption in the beef markets was due to devastating and unprecedented events,” said a North American Meat Institute spokesperson.

Just the Start

Yet, Senators and cattle groups aren’t stopping.

“I think this is where the Department of Justice can help us by answering our questions,” says Thune. “For example, are there violations of existing anti-trust laws that need to be? Does the Justice Department need to be enforcing the Packers and Stockyards Act? Or are there changes we need to make? Are these laws so old and antiquated that they don't reflect what's happening in a modern world?”

There are already two pieces of legislation to address some of the issues, which includes Sen. Deb Fischer’s (R-Neb.) Cattle Market Transparency Act, introduced in 2020.

As several proposals on the table could possibly be turned into one, cattle groups say the calls for change are multi-faceted.

“We also discussed trying to figure out how the government can make it easier or incentivize small- and medium-sized packers throughout the country to start popping up and to increase competition that way,” says Miler.

The cattle groups involved in the May meeting reiterated it’s just a starting point.

“This is just the beginning and a very good one, but there's still work to be done,” says Schnell.

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