Grassley asks investigation of beef market manipulation as Farm Bureau explains disruption
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, last week asked Attorney General William Barr and Agriculture Secretary Sonny Perdue to investigate potential market manipulation and other illegal activity by large meat packing companies in the cattle industry.
“Since Feb. 4, 2020, live cattle prices are down 16%.This is happening while American consumers bought 77% more meat during the week of March 15 compared to 2019,” Grassley wrote.
“With the shelf price of meat at record highs and with the high rate of concentration in the meat packing industry, there are concerns that the difference in these margins is the result of illegal practices.
“I request that you examine the current structure of the beef meat packing industry and investigate potential market and price manipulation, collusion, restrictions on competition and/or other unfair and deceptive practices under the United States antitrust laws and the Packers and Stockyards Act,” Grassley wrote.
Meanwhile, the American Farm Bureau Federation said that the coronavirus pandemic is injecting volatility in the beef markets.
“The self-distancing and quarantine protocols put in place to slow the spread of COVID-19 have reduced economic growth, shuttered consumers in their homes, and changed the way Americans purchase and consume food.”
“A slowing economy is bad for all of the animal proteins, but beef — typically the highest priced of the proteins and considered a luxury product in economic terms — stands to suffer the most when consumers spend less in response to wage cuts and job losses,” Farm Bureau economist Michael Nepveux wrote in a Market Intel report.
Nepveux explained that the boxed beef cutout — the meat parts that make up a steer — jumped 25% in a week. But the increase in prices varied among the cuts as consumers looking to stock their freezers concentrated on ground beef and other lower-priced cuts. But he also noted that if there is a recession the demand for beef will go down. ❖