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Secretary Perdue will examine cattle price market reactions

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USDA said it will expand Holcomb fire investigation to include COVID-19 market disruption.

The U.S. Department of Agriculture decided Wednesday that it will expand an ongoing investigation into cattle pricing margins that was launched following a fire in August 2019 at a Holcomb, Kan., beef plant to include potentially unfair market practices occurring during the COVID-19 crisis.

Sen. Deb Fischer (R., Neb.), a member of the Senate Agriculture Committee who sent a letter April 7 calling for USDA to take this exact action, said, "After hearing from so many Nebraskans about potential unfair practices in the beef packing industry, I knew something needed to be done. I thank USDA for taking this action I requested on behalf of Nebraska’s cattle producers and feeders. Expanding the scope of this investigation to cover COVID market disruption is the first step towards ensuring fairness throughout the beef supply chain.”

COVID-19 is having a major impact on cattle operations. Americans are purchasing more beef products at grocery stores, and that is resulting in a round of windfall profits for meatpackers. Cattle producers, however, are taking price losses that threaten the viability of their businesses.

National Cattlemen’s Beef Assn. (NCBA) president Marty Smith sent a letter to President Donald Trump on April 8 requesting that the government act quickly to investigate the striking disparity between boxed beef prices and cattle prices in the futures and cash markets during the current COVID-19 crisis and following the beef packing plant fire in Holcomb last August.

In the letter, Smith asked Trump to direct USDA to expand the ongoing investigation into market activity after the Holcomb fire to include current market volatility “in the hope of identifying whether inappropriate influence occurred in the markets and to provide our industry with recommendations on how we can update cattle markets to ensure they are equipped to function within today’s market realities.”

The letter also requests the Commodity Futures Trading Commission to study the influence of speculators on live and feeder cattle futures contracts to determine whether these contracts remain a useful risk management tool for cattle producers.

Regarding the investigation announcement, Smith thanked Trump and Agriculture Secretary Sonny Perdue for their quick response to NCBA’s request to expand the agency’s investigation into cattle markets.

“Secretary Perdue’s decision to examine market reactions surrounding the Holcomb fire and the spread of COVID-19 in the United States will help restore the confidence of cattle producers in the market. We also look forward to the agency’s recommendations about improvements the industry can make to its markets -- improvements that will ensure we have the fair and functioning markets that are so vital to cattle producers,” Smith said in a statement.

“Fair and functioning cattle markets are vital to the sustainability of our industry,” Smith wrote in the letter to Trump.  He also pointed out the importance of keeping the beef supply chain moving during this time of volatility and instability.

“The market woes for cattle producers will only grow if packing plants shut down or slow down for an extended period,” Smith stated. “As cattle producers, we are the beginning of the beef supply chain, and we need continued vigilance and oversight of all cattle market participants – for the benefit of America’s cattle producers and all Americans.”

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