WASHINGTON, D.C. – The Senate Ag Committee held a hearing Wednesday to discuss the issue of cattle market manipulation and anti-competitive practices by the meat packers.
South Dakota Senator John Thune was among those chairing the meeting and hearing input from witnesses – including Justin Tupper – cattle producer and manager of St Onge Livestock Auction.
Tupper testified there is a crisis in rural America.
“We are losing our producers at an alarming rate,” Tupper testified. “All the while watching big corporate feeders, packers, make record profits with the threat of vertical integration hanging over our head.”
Tupper says they want the packers to make money because that’s what makes the system work. However, the differential between them and the packers is off.
“Since 2015, corporate packers’ gross margin ballooned from an average of 100 to 200 dollars a head to well over a thousand dollars a head. Packers have enjoyed unbelievable profits while cattle producers go out of business and consumers pay double or even triple at the meat counter.”
Tupper says producers are not looking for a handout – rather a fair and equitable playing field.
“We want a fair and equitable playing field, staffed by a referee with a whistle and a flag. Producers cannot be sustainable or generational without being profitable. Building a safe and secure food supply starts with ensuring the success of our food producers.”
Today’s hearing comes as Thune has been seeking input from South Dakota producers on the alleged manipulation in the cattle markets and has been soliciting ideas for improving the situation. He’s hoping to get assistance from the Department of Justice.
During the hearing today, Thune emphasized the importance of encouraging fairness and transparency so both producers and consumers are getting a fair price at market.
Excerpts of Thune’s remarks below:
“We are here today because we need answers. We have cattle producers who produce the highest quality beef in the world, and they deserve to be able to participate in a marketplace that operates fairly, transparently, and with integrity.”
“Mr. Tupper, help me understand a little bit here. You’ve heard some of your collages talk about on the panel today – talk about the prices being simply a function of supply and demand. I think I heard you say that the livestock producer, in many cases, is generating a margin of maybe 1 percent? And that packers were generating a margins of 80 percent? So if you’ve got a food chain that consists of a producer… a processer, and ultimately a retailer and the consumer, the consumer is paying at record high prices, and the producer is going out of business. Which means that the profitability in the middle of that food chain is hardly evenly distributed at all.
“Now, if there’s a true market, supply chain, supply and demand regulating this, you would think that there would be some benefit that would accrue to the folk that were in the supply chain – maybe at the end of that supply chain or the start of it, whichever way you want to look at it – and that’s the producer.
“For a free market to work, you have to have competition. So if we’re trying to come up with solutions and answers to what’s happening out there – this volatility in the cattle market, these huge spreads that the packers continue to get that are driving producers out of business – what I’m hearing is that there is a virtual monopoly, and there’s a choke point there where there isn’t enough competition. So even though you have huge demand from the consumer, and you have adequate supply at the producer level, that’s not making it through the food chain in a way that saves the consumer any money.”
