SEN. GRASSLEY: Consolidation of beef industry has threatened livelihood of farm families, rural communities

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Iowa is home to 86,000 family farms and leads the nation in the production of commodities, such as corn, soybeans, pork and eggs.

Iowa also ranks in the top ten in cattle production as many family farms raise livestock alongside corn and beans.


The 2017 USDA Census of Agriculture showed over 23,000 farms in Iowa that raise cattle or calves with annual sales of over $4.7 billion.

Caring for livestock takes a spirit of commitment, selflessness and of course, hard work.

These farmers get up before the sun rises, work in their fields all day, and are active members of their communities.

These families and their values form the foundation of what makes up our rural communities across Iowa.

However, over the years, the consolidation of the beef industry has threatened the very livelihood of these families and the rural communities where they reside.

From the 2012 USDA Agriculture Census to the 2017 Census, Iowa lost nearly 1,500 cattle producers.

This is not a new issue to the beef industry. The concern of fair and transparent cattle pricing has seen increased attention due to disruptions on our food supply chain.

For background, USDA mandates price reporting for live cattle and tracks the spread between fed cattle prices – what the producer gets paid – and the boxed beef values – what the packing company gets paid.

From 2016 to 2018, this spread averaged $21 per hundredweight.

However, during April and May, there were major beef supply disruptions as large numbers of plant workers contracted COVID-19.

Because there are only four companies that slaughter 80% of cattle, companies have the advantage of purchasing cattle from thousands of producers, acting as a chokepoint for the entire industry.

These packers dominate the marketplace and limit opportunity for pricing negotiations.

During this time, packer profit margin topped out at a spread of $279 per hundredweight.

This was the largest spread between the price of fed cattle and the price of boxed beef since the inception of Mandatory Price Reporting in 2001.

So while the packers were making record profits, the independent producer had nowhere to take their livestock.

It is important to note, the impact of consolidation doesn’t just hurt producers.

Prices for ground beef and steaks, a staple in many Americans’ diets, doubled and tripled.

Grocery stores also limited the amount of meat that families could buy.

All of this has made clear that the cattle market is broken and real action is needed to fix it.

Thankfully the Trump Administration has responded with two decisive actions to address the country’s cattle market.

First, the USDA and the Department of Justice are both investigating the practices of these packing companies.

While this will take time, President Trump personally asked for these investigations and said he wants to protect farmers.

Second, on July 22nd, the USDA issued a significant report that lays out a roadmap to fix the cattle marketplace.

USDA mentions 12 ways to create additional price discovery, increase marketplace competition, and have a more transparent relationship between the price for live cattle and beef products.

This investigation and report is a breath of fresh air.

Multiple Administrations, from Democrats to Republicans, have ignored independent cattle producers and the broken cattle market.

I’m grateful that President Trump and Secretary Perdue take this issue seriously when so many others before them ignored it.

In the report issued by Secretary Perdue, one of the considerations for Congress is to create a mechanism to mandate negotiated cash trade.

I see this as an endorsement of the Grassley-Tester 50/14 concept.

The Grassley-Tester bill will require half of packer’s weekly volume of beef slaughter to come as a result of purchases made on the cash market.

The fact is without a mandated amount of cash trade, independent producers will be residual suppliers and will lack the leverage to fairly negotiate with packing companies.

Besides the Grassley-Tester bill, Congress has a responsibility to fully vet the 11 other considerations that the Trump Administration lays out in its report.

The Agriculture Committee should hold a hearing on this roadmap. We should bring a diverse set of stakeholders from government officials, business executives, and subject matter experts to explain the challenges that cattle producers are facing.

A hearing would allow the committee to properly vet proposals to improve mandatory price reporting, which needs reauthorized by September 30th of this year.

The beef industry employs hundreds of thousands of hardworking men and women who work each day to help feed our country and the world.

As the USDA Agriculture Census shows, we are losing producers due to consolidation.

We need to show these men and women that Washington, D.C. is listening. We need to show our rural communities that we want them to survive. We must develop solutions to the problems they are facing.

I will continue to be the voice for independent producers. Today, I’m asking my colleagues in Congress to be that voice with me. Support my bill with Senator Tester and bring competition and price transparency back to cattle markets.


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