May 26 2020
Cattle Ranchers Are Essential, Too
By U.S. Senator Deb Fischer
The Wall Street Journal
Tuesday, May 26, 2020
Even before the nation’s first stay-at-home orders, Americans were panic-buying at the store. Grocery aisles across the country still see some empty shelves, and families are worried about having enough food during the Covid-19 pandemic.
The food supply chain has mostly kept up with increased demand, but some links have snapped. President Trump has asked meat processors to stay open to help provide Americans with nutritious protein, but many of these plants have experienced outbreaks and had to close down temporarily or reduce capacity.
Livestock producers are experiencing some of the worst problems. In early May, beef-processing capacity was about 40% below last year’s levels. Many pork farmers, with nowhere to sell their animals, are having to make the difficult decision to euthanize their hogs.
My home state has been hit particularly hard. One in four Nebraska jobs is tied to production agriculture, and the livestock industry is worth more than $12 billion. I’m also concerned about corn and soybean farmers. We are consuming much less fuel, forcing many ethanol facilities to slow production or shut down. At least $1 billion of a projected $20 billion decline in farm income is expected to come from Nebraska’s mostly family-owned farms and ranches.
At the same time, meat sales are up more than 40%. Beef has been in particularly high demand, with grocery sales up nearly 80% at their peak. Wholesale prices—what retailers pay meat packers—are also up significantly. The profits are captured by packers, who have significant leverage due to market concentration, stifling opportunities for price negotiation along the supply chain. In fact, only four meat-packing companies control 80% of cattle slaughter in the U.S. Coupled with the dip in production capacity, this has led to higher prices for consumers.
Yet many ranchers are losing hundreds of dollars per head of cattle. A similar scenario played out on a smaller scale last summer, when a fire at a Tyson Foods processing plant in Kansas led to a drop in the availability of beef. Meat packers enjoyed windfall profits, while every other link in the supply chain suffered.
The Agriculture Department is investigating whether price manipulation or other unfair practices played a part. Secretary Sonny Perdue announced in April that the department will extend this investigation to explore the current market disruptions.
Earlier this month, 11 state attorneys general asked the Justice Department to investigate meat packers for potential market manipulation. I recently led a bipartisan group of Senators in writing to the Justice Department, urging it to look into these concerning discrepancies and work with state antitrust enforcers. The market has begun to respond to this additional scrutiny, and cattle prices are slowly increasing.
Agriculture’s challenges might seem confined to Nebraska or to the Midwest, but that’s a shortsighted view: If the people who raise the delicious products that all Americans like to serve for dinner can’t keep their businesses running, the entire country will suffer.