R-CALF Urges Trump, Congress To ‘Restructure’ Packers
R-CALF USA has asked President Trump and House and Senate leaders to conduct a review the beef supply chain and consider “whether a physical and geographical restructuring of the meatpacking industry is required to disaggregate and decentralize beef processing capacity.”
The request comes in a letter delivered Wednesday (April 29, 2020), a day after Trump invoked the Defense Production Act to mandate that packing plants continue to function in the ongoing COVID-19 pandemic. Major U.S. packing companies have closed some facilities temporarily and slowed line speeds at others in attempt to stop the spread of COVID-19 among employees. The result has been a reduced supply of beef moving to retail outlets.
In a statement, R-CALF said the ongoing restricted market access and “seriously depressed prices for America’s cattle farmers and ranchers, lack of available beef in some or many of America’s grocery stores, and near record to record beef prices charged to America’s consumers, reveal that the United States must immediately begin the development of a strategic, national food production, processing and distribution policy that can meet America's food security interests.”
Over the past two weeks, harvest capacity at America’s beef packing plants has slowed to near 60% of normal levels. According to USDA’s estimated slaughter report, through Wednesday of this week harvest totaled 221,000 head. That’s 34,000 head fewer than the same period last week, and 141,000 head fewer than the 362,000 harvested during the same three-day period a year ago.
Reduced slaughter means packer demand is significantly softer and price discovery is minimal. The price spreads on market-ready cattle are wide this week, from $93 to $100 per cwt., and $150 to $160 dressed. Meanwhile, Choice boxed beef prices are spiking at tremendous rates. Wednesday’s Choice boxed beef price was $357.38 per cwt., some $64 per cwt. higher than just last Friday.
In calling for consideration of the breakup of America’s large packing companies, R-CALF says any review should “consider whether a fundamental restructuring of the United States' multisegmented beef supply chain is required to ensure that never again will the closure of one or a few plants destroy the livelihoods of America's cattle farmers and ranchers, or disrupt America's access to an abundant supply of an important protein source: safe, wholesome and nutritious beef.”
R-CALF argues that two immediate “triage reforms” be implemented, including a new mandatory country-of-origin labeling (COOL) law for beef. The group argues that mCOOL will better help American cattle producers compete with “importers who lessen demand for USA-produced beef with their cheaper, undifferentiated foreign beef products.”
R-CALF also asks for Congress to reintroduce Senate Bill 786, “and modify it to require beef packers to participate in the price discovery market at a level greater than half, i.e., above 50%.” R-CALF says this reform will help to “immediately reignite competition” for cattle in the marketplace.
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