USDA provides update on investigation following beef plant closures

As part of its commitment to ensuring fair and competitive markets for the livestock, meat and poultry industries, the US Department of Agriculture (USDA) has released a Boxed Beef and Fed Cattle Price Spread Investigation Report on its ongoing boxed beef and fed cattle price spread investigation.

“The closure of the Tyson beef packing plant in Holcomb, Kansas, after a fire at the facility [in 2019], and the COVID-19 pandemic clearly disrupted the markets and processing systems responsible for the production and sale of US beef,” said US Secretary of Agriculture Sonny Perdue. “The report examines these economic disruptions and the significant increase in the spread between boxed beef and fed cattle prices that resulted from them. While we are pleased to provide this update, we assure producers that our work continues in order to determine if there are any violations of the Packers and Stockyards Act. If any unfair practices are detected, we will take quick enforcement action.”

The Boxed Beef and Fed Cattle Price Spread Investigation Report, prepared by USDA’s Agricultural Marketing Service in coordination with the Office of the Chief Economist, summarised market conditions, fed cattle prices, boxed beef values and the spread before and after the fire and plant closure at the Tyson Holcomb plant, and before and during the COVID-19 pandemic.

The report also discussed several policy considerations in light of the desire by many beef and cattle market participants for improved price discovery, reinvigorated competition, and a more transparent relationship between the prices for live cattle and the resulting products. Considerations included:

• Potential updates to Livestock Mandatory Reporting to reduce instances of non-reporting and increase percentages of negotiated cash transactions
• Risk management outreach
• Education and product improvements for small and medium-sized producers
• Small to very small meat processor outreach and opportunities
• Enhancements to the Packers and Stockyards Act investigative and enforcement tools.

While the report did not examine potential violations of the Packers and Stockyards Act, USDA noted that its staff have maintained a cooperative relationship with the staff of the Department of Justice (DOJ) Antitrust Division and have discussed allegations of anticompetitive practices in the meat packing industry. Should USDA find a violation of the Packers and Stockyards Act, it is authorised to report the violation to DOJ for prosecution.