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Family cattle farmers are the lifeline of rural communities across Iowa and the country, Sen. Chuck Grassley told the Senate Judiciary Committee on Wednesday, but “they’re currently on life support” because of consolidation in the meatpacking industry.
Grassley, a farmer and ranking Republican on the committee, has been expressing concerns about consolidation in agriculture for years. Now four packers — JBS, Tyson, Cargill and National Beef — hold a tremendous amount of market power because they control more than 80 percent of the cattle market, he told the committee.
“Independent cattle producers in Iowa and across the country deserve a free and fair market,” Grassley said during a hearing, Beefing up Competition: Examining America’s Food Supply Chain. However, the share of cattle traded on the cash market has dropped from more than 50 percent in the early 2000s to about 20 percent today.
The coronavirus pandemic exposed problems in the food supply chain. According to the U.S. Department of Agriculture, for every one dollar Americans spend on food, only 14.3 cents go to farmers even though the supermarket price of beef has increased.
“I want to make it clear that I’m not upset about paying more for my beef. I’m upset the farmer isn’t getting paid,” Grassley said.
“The market’s clearly not working fairly when demand is extraordinarily strong and supply is strong, but the packers are making record profits and ranchers are losing money.”
According to USDA data, Iowa had 3.71 million head of cattle in 1997. That grew to nearly 4 million, but has dropped to 3.65 million today. The number of Iowa farms that sold cattle decreased 41 percent to 23,400 between 1997 and 2017.
Also Wednesday, Iowa 4th District GOP Rep. Randy Feenstra, who represents the third-largest livestock-producing congressional district in the nation, criticized the disproportionate market share meatpackers hold in the beef industry.
“I’m not calling for the government to mandate changes in all these areas,” Feenstra said at a hearing by the House Livestock and Foreign Agriculture Subcommittee. Instead, he called for Congress to focus on transparency, competition and processing capacity to “naturally resolve some of these serious issues.”
With price contracts and control of processing, “the system is set up where the packers will never see a loss — creating massive guaranteed profits while rural farmers lose their livelihoods,” Feenstra said. Producers in his district tell Feenstra they are losing $150 or more on every head sold.
“Packers like to blame the Tyson Holcomb fire, COVID-19 pandemic and the cyberattack on JBS, yet fail to see the price gouging and price-fixing that is occurring,” Feenstra said.
However, Iowan Shane Miller, who leads Tyson Fresh Meats, the company’s pork and beef business, rejected that narrative in his Judiciary Committee testimony. Tyson is committed to fair compensation for producers and ensuring that the meat American consumers are demanding “remains reasonably priced.
“We believe market forces are working as they should,” Miller said, adding, “Tyson does not and cannot control market forces, and our success depends on the entire beef supply chain being properly incentivized to meet America’s continued demand for higher-quality beef.”
The spread between live cattle prices and grocery store prices “is not the result of a consolidated industry, lack of competition or the cash markets,” Miller said. It’s due to “the law of supply and demand and the unprecedented and massive -- but we believe, temporary -- system shock brought on by the COVID-19 pandemic.”
Grassley has legislation pending to address concerns about cash trade in the cattle market and another bill with Montana Democratic Sen. Jon Tester, also a farmer, to create a special investigator for competitive matters within USDA’s Packers and Stockyards Division.
He credited the Biden administration and USDA Secretary Tom Vilsack for actions to restore the Packers and Stockyards Act to fight unfair practices and provide assistance to small and medium-size meat processors.
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