Sen. Chuck Grassley (R-Iowa), Ranking Member of the Senate Judiciary Committee, today questioned witnesses at the hearing to address competition in the American food supply chain. Two Iowans testified at today’s hearing: Jon Schaben of Dunlap, owner of Dunlap Livestock Auction and member of the Iowa Cattlemen’s Association; and Shane Miller of Sioux City, group president of Fresh Meats at Tyson Foods.
Grassley questioned Miller on how the large meatpackers, including Tyson Foods, can justify paying cattle producers low prices while they make large profits and consumers are paying more.
“Mr. Miller, Iowa cattle producers tell me that during the first week of May this year Tyson wasn’t buying cattle from independent producers. With so few players in the market, that gives producers limited options. Noted in Mr. Schaben’s testimony and according to data from the National Daily Cattle and Beef Summary reported by USDA Agricultural Marketing Service, on May 10th of this year, the choice boxed beef cutout was valued at more than $309 per hundredweight. At the same time, cattle producers struggled to break even… How do you justify making such low bids when you’re turning a significant profit?” Grassley asked.
Grassley questioned Tim Schellpeper, president of USA Fed Beef at JBS USA about price transparency in the cattle market.
“Mr. Schellpeper, are independent producers offered the same opportunities to market their cattle as large or corporate feedlots do through formula contracts? Would you be opposed to having the base price, premiums, and any discounts shared with the public?” Grassley asked.
Grassley also questioned Schaben on how the lack of cash trade affects livestock auction markets.
“Mr. Schaben, I know your family has been in the livestock business since 1950. Besides the livestock auction, your farm includes a cow-calf herd, background, and fed cattle. I’m excited to hear your kids are also involved in agriculture. How does lack of cash trade in other regions impact livestock auction markets like yours?” Grassley asked.
Grassley has long worked to address anticompetitive practices in the livestock industry. Last month, Grassley introduced bipartisan legislation to create the “Office of the Special Investigator for Competition Matters” within the USDA’s Packers and Stockyards Division. Grassley also led efforts to combat corporate consolidation and protect the livelihood of family famers. He joined a bipartisan group of colleagues in demanding the Department of Justice investigate whether the control large meatpackers have over the beef processing market violates U.S. antitrust laws and principles of fair competition.
Today, only four meatpackers – JBS, Tyson, Cargill and National Beef – control more than 80 percent of the cattle market. These companies hold a tremendous amount of market power. Independent cattle producers in Iowa and across the country need a free and fair market. The amount of cattle traded on the cash market in the early 2000’s was more than 50 percent, but today it has dropped to only 20 percent.