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Concerns expressed on packer vs. producer cattle prices

DarcyMaulsby/iStock/Thinkstock Cattle in feedlot
Livestock producers are seeing a 15-20% slash in prices, while packers only seeing a 3% drop.

Sen. Jon Tester (D., Mont.) pressed Agriculture Secretary Sonny Perdue Thursday on the widespread in price drops experienced for cattle producers, while packer cutout prices have not seen the same drop.

During questioning of Perdue during a Senate appropriations subcommittee on agriculture, Tester shared livestock producers are seeing a 15-20% slash in prices, while packers only seeing a 3% drop. Since Jan. 23, live cattle prices dropped from $126.90 to $102.80 on March 11, feeder cattle prices dropped from $148.52 on the same dates to $125.25 and cash cattle down to $110 from $124. Meanwhile, the processor choice cutout went from only $214.78 to when it bottomed out at $204.50 recently.

Tester said it’s creating a real bind on feeders and cow calf operators where “producers are getting gouged” and consumers aren’t received a fair price when compared to prices paid to cattlemen.

Perdue responded to Tester, “I’m sure as frustrated as you are,” and shared that after the Holcomb, Kansas fire last fall the agency has been conducting an investigation into the price differences between what cattle producers receive and prices for packers and processors.

Tester said in a discussion earlier that day, he spoke with a feeder who was on the cusp of going broke. At the end of the day, the “pie hasn’t been cut fairly at all. We need to work better on that,” Tester said.

Tester offered to help create some solutions, but recognized the problem is it’s going to involve more government intervention, “and nobody wants that.”

Sen. John Hoeven (R., S.D.) shared sentiments with Tester on the beef price situation and said he was concerned about the concentration in the industry and transparency in pricing. Hoeven said he’s talked with USDA undersecretary of marketing and regulatory affairs Greg Ibach and knows USDA is working on it. “We need to get some help for our producers out there.”

Perdue welcomes suggestions from Congress on how to address the situation. “I would love to have some solutions. This is very concerning to me. I would love to have some tools to operate.”

TAGS: Policy Markets
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