News Article –
Over the past year, the cattle industry has experienced significant market disruptions. The closure of a Tyson packing plant last fall after a catastrophic fire combined with the loss of packer capacity and change in consumer spending during the COVID-19 pandemic has led to record spreads between live cattle prices and boxed beef prices. Following these events, the wholesale price of beef surged upward and live cattle prices decreased, forcing producers to accept lower prices for their cattle.
Keeping its commitment to ensuring fair and competitive markets for the livestock industry, these events prompted USDA to investigate whether any regulated entities violated the Packers and Stockyards Act by taking advantage of disruptions through collusion, price manipulation, reduction of competition or other unfair practices. A summary of the Boxed Beef and Fed Cattle Price Spread Investigation Report follows:
USDA’s Agricultural Marketing Service and Office of the Chief Economist examined market conditions in the cattle industry before, during and after the disruptions. At this time, any potential violations of the Packers and Stockyards Act have not been reported. The investigation is still ongoing, and while USDA is unable to report the full scope of the results publicly, the agency is authorized to share any discovered violations with the U.S. Department of Justice.
The report also discusses industry recommendations, such as improved price discovery, regenerated competition, and more transparency between the prices for live cattle and the finalized product. Recommendations USDA lists include updates to Livestock Mandatory Reporting, increasing risk management outreach, education and product improvements for small and medium-sized producers, generating opportunities for smaller meat processors and enhancing the Packers and Stockyards Act.