DOJ asked to investigate beef market

Twenty-three state cattle groups seek immediate Department of Justice investigation on cattle prices in addition to USDA investigation.

Jacqui Fatka, Policy editor

April 20, 2020

3 Min Read
DOJ asked to investigate beef market

A total of 23 state cattle organizations sent a letter to U.S. Attorney General William Barr April 20, requesting a formal investigation by the U.S. Department of Justice to identify and investigate any evidence of fraudulent business practices within the beef meatpacking industry. The letter was prompted by extreme beef market volatility following the fire of a Tyson processing plant in August and the current cornonavirus crisis (COVID-19).  

"Our members are facing economic and financial destruction during the current crisis, which is compounded by the extreme market shift following the fire in Holcomb, Kan., eight months ago," said Missouri Cattlemen’s Assn. president Marvin Dieckman. "One segment of the industry is making unprecedented profits while the rest of us are counting pennies. We cannot afford to wait another eight months for results of an investigation. We need DOJ to open an investigation immediately."

The 23 state cattle organizations made clear in the letter that these events have emphasized how volatile cattle producers are.

"The nature of previous and current concern in both situations is extreme market degradation to the producer segment quickly followed by sharp increases and unseasonal profitability to the packing segment through boxed beef prices," penned the 23 state cattle organizations. "The repeat nature of these market reactions absolutely emphasizes how the production sector of the industry is exposed to the highest potential for risk with little-to-no leverage to change that risk position."

Related:Concerns expressed on packer vs. producer cattle prices

Following the fire at Tyson’s Holcomb beef harvest plant in August, average cash fed cattle prices dropped $150-200 per head during the next five weeks. During this same time, packing plants managed to maintain "pre-fire" harvest capacity and boxed beef values moved sharply higher.

“The outcomes – windfall profits for the beef packing industry while the production sector dealt with multi-year market-low prices for calves, yearlings, and fed cattle. We are now seeing that same type of price action repeated – only in a more extreme manner and during a time of crisis that includes logistical stressors on the nation’s food production and distribution system,” the letter said.

The day after the first COVID-19 diagnosis in the U.S. (Jan. 22, 2020), the CME Live Cattle Futures April Contract closed at $126.775/cwt. and negotiated fed steers traded at $124.17/cwt., according to the U.S. Department of Agriculture's LMR Daily Direct Steer & Heifer Slaughter Cattle Summary 5-Area average. USDA-LMR’s closing Choice boxed beef index for the week ending Jan. 24, 2020, was $214.78/cwt. and the Select index closed at $212.17/cwt. As of April 3, 2020, the CME live cattle futures April contract had declined over 30% in price to close at $88.325/cwt. with the average fed steer trading at $111.28/cwt. as reported by the USDA-LMR Weekly Direct Steer & Heifer Slaughter Cattle Summary. Meanwhile, boxed beef for the week ending March 27, 2020, was $252.84/cwt. for Choice and $242.38/cwt. for Select.

Related:COVID-19 stands to forever change cattle industry

While USDA is still investigating subsequent to the fire and have added the current crisis to that investigation, the state cattle organizations collectively believe DOJ engagement is critical.  

"We understand and acknowledge there is a pending USDA investigation. However, as our industry looks for clarity of business function moving forward, we believe the DOJ would be the appropriate agency to open an investigation and also support USDA in its investigation allowing this process to be concluded in a timely manner," the letter stated. "This is of vital importance to the future of one of the largest sectors of U.S. agriculture."

According to Dieckman, both events continue the undue financial burden for all cattle producers within the production side of the beef cattle industry and in turn affect rural America short-term and long-term.  

In addition to Missouri Cattlemen's, the letter was signed by Alabama Cattlemen's Assn.; Arizona Cattle Growers' Assn.; Arkansas Cattlemen's Assn.; Georgia Cattlemen's Assn.; Hawaii Cattlemen's Council; Illinois Beef Assn.; Iowa Cattlemen's Assn.; Michigan Cattlemen's Assn.; Minnesota State Cattlemen's Assn.; Mississippi Cattlemen's Assn.; Montana Stockgrowers Assn.;  North Carolina Cattlemen's Assn.; North Dakota Stockmen's Assn.; Ohio Cattlemen's Assn.; Oregon Cattlemen's Assn.; South Dakota Cattlemen's Assn.; Tennessee Cattlemen's Assn.; Utah Cattlemen's Assn.; Washington Cattlemen's Assn.; West Virginia Cattlemen's Assn.; Wisconsin Cattlemen's Assn., and Wyoming Stock Growers Assn.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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