Trump Administration Rigs Market For Big Beef Packers

Reprinted with permission from DCReport

Trump's Agriculture Department is turning our nation's cattle ranchers and feedlot operators into modern-day sharecroppers as beef prices soar during the pandemic.

Sen. Deb Fischer (R-NE) asked the Senate Judiciary Antitrust subcommittee to hold a hearing on claims of price manipulation and collusion in the beef meatpacking industry. Fischer pointed to the spike in the index of prices for butchered beef compared with the 30 percent drop in cattle futures after Jan. 24, when the country's first coronavirus case was reported.

"Beef production is the largest section of agriculture in Nebraska," Fischer wrote. "We feed and market more than 4.7 million cattle each year."

Feedlot operators often have one or two meatpackers who buy their cattle. These large companies can dictate contract terms. Since 1980, 41 percent of U.S. cattle producers have gone out of business.

The four big meatpacking firms – Cargill, JBS, National Beef and Tyson – slaughter more than 80 percent of cattle from feedlots where the animals are fattened up before butchering. The main lobbying group representing meatpackers, the North American Meat Institute, spent $309,042 in federal lobbying in 2019.

Feedlot operators who feed cows until they are big enough to be slaughtered suffered their largest losses in three decades in 2015 and 2016. Prices sometimes dropped by as much as $600 a cow.

A regression analysis was done as part of a lawsuit against companies including Tyson and JBS. It found the prices of cows sold to be slaughtered had been artificially depressed by almost 8 percent. The lawsuit was later dismissed.

In 2008, Congress passed a farm bill that required an agency in the Agriculture Department to write rules to increase marketplace protections for farmers and ranchers. Agriculture Secretary Perdue got rid of that agency, the Grain Inspection, Packers and Stockyards Administration, folding it into the Agricultural Marketing Service.

Perdue also scrapped the rule written under the Obama administration that would make it easier for farmers and ranchers to sue under the Packers and Stockyards Act.

It is trying to replace that with a rule that makes ranchers and feedlot operators more vulnerable to being exploited by meatpackers.

The Trump version of the rule leaves out a section about "unfair, unjustly discriminatory, or deceptive practices or devices" by meatpackers, swine contractors or live poultry dealers. Team Trump also omitted the right to seek attorney fees or any discussion of the threat of retaliatory action.

The Packers and Stockyards Act, passed in 1921, prohibits meatpackers from engaging in unfair and deceptive practices. President Woodrow Wilson ordered the Federal Trade Commission to investigate the meatpacking industry from the "hoof to the table." The commission found meatpackers were manipulating markets and defrauding producers.