Accusations Of Anti-Competitive Practices In The Cattle Industry Drive Senate Ag Committee Hearing

Demand for beef remains high at the grocery store, but some livestock producers say they're losing money.

On Wednesday, the Senate Ag Committee went looking for answers amid accusations of a lack of transparency and anti-competitive practices in the cattle industry. The hearing revealed differing opinions about the cause and solutions to market manipulation claims. 

The committee holding a hearing is inviting a rancher, a leader with the U.S. Cattlemen's Association, economists and researchers. No representatives from the meat packing industry took part.

Among those calling for the hearing was Sen. Chuck Grassley (R-Iowa). Grassley has also proposed legislation that would have 50% of the daily kill come from the spot market. Right now, he says that figure averages less than 20%.

"Does captive supply create more leverage for packers to pay lower prices for fed cattle in the cash market? And how does a lack of cash trade ultimately impact livestock auction markets," asked Grassley during the hearing.

"Thank you, Sen. Grassley, and it definitely is a definite yes," responded Justin Tupper, U.S. Cattlemen's Association."It impacts it hugely when the big four can have all of that captive supply so they do not have to go out and compete for those cattle, then they can push down the prices."

"Today, we had too many cattle and too little processing capacity," said Mark Gardiner, partner with Gardiner Angus Ranch in Ashland, Kan. "We have a volatile marketplace created by outside unavoidable factors, not any one market player."

"In my opinion, it is inaccurate to assert this simply reflects how fed cattle are marketed," said Glynn Tonsor, an economist with Kansas State University, during his testimony. "Rather, in my opinion, core differences in supply and demand reflect these market changes. I encourage the industry to proceed forward in a manner that does not deteriorate economic benefits of the industry's evolution to improve beef quality and align effort with beef demand signals."

The North American Meat Institute, which represents meat companies, wasn't present during the hearing Wednesday, saying it would be submitting detailed written testimony to lawmakers that proves market fundamentals drive the cattle and beef markets. The Institute added it was prepared to work with the Committee on the issues facing the industry.