Source: Lisa M. Keefe, MEATINGPLACE, 8/29/19


Ag Secy. Sonny Perdue has directed the agency's Packers and Stockyards Division to "launch an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices" in the markets in the wake of the devastating fire at Tyson Foods' Holcombe, Kans. plant, Perdue said in a news release. 

“If any unfair practices are detected, we will take quick enforcement action."

The fire knocked out an estimated 5% of total cattle processing capacity, and 15% to 25% of Tyson's overall capacity, and the markets were rattled. Prices rose in the week after the fire, then prices dropped for fed cattle ready for slaughter. Tyson and others also changed their processing plans to better distribute the cattle amongst the remaining facilities, adding weekend shifts, for example, to absorb the extra supply.

In his statement, Perdue did not offer evidence of market manipulation, but hinted that he had heard a lot of anecdotal concern within the beef supply chain: "USDA remains in close communication with plant management and other stakeholders to understand the fire’s impact to industry," he said in the statement.

"I have spent this summer visiting with cattle ranchers across the country, and I know this is a difficult time for the industry as a whole. USDA is committed to ensuring support is available to ranchers who work hard to the feed the United States and the world.”

Several price-fixing lawsuits aimed at beef, pork and poultry companies are simmering in the U.S. District Court system across the country.

Responses
Reaction to Perdue's announcement was measured. National Cattlemens Beef Association President Jennifer Houston said it "demonstrates the government’s understanding of the extreme strain placed on the cattle industry by the plant fire.

"We encourage USDA to look at all aspects of the beef supply chain and to utilize internal and external expertise in this investigation. We believe it adds transparency that will help build confidence in the markets among cattlemen and women," she said.

Missouri Cattlemen's Association President Bobby Simpson went further: "We applaud ... Perdue for listening not to conspiracy theories or charts and graphs of economists. Cattle producers have sound reason to question market events that transpired after the Holcomb fire," he said in a release. Specifically, "few could believe in one week fed cattle prices would drop 5% and Choice boxes would spike 9% while total slaughter increased. All the while, prices for feeder calves plummeted.

"There is no harm in conducting an investigation to ensure integrity of the markets and to respond to the justified concerns of thousands of U.S. cattle producers."

The North American Meat Institute was less enthusiastic, saying in a statement emailed to Meatingplace that "The devastating fire ... created market uncertainty and disrupted cattle slaughter capacity. No one, not producers, packers, processors, retailers or consumers could have anticipated the fire and its impact on the market.

"Our member companies rely on their suppliers, have operated in the marketplace with integrity and we are confident have acted appropriately."

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