WASHINGTON (KMTV) — It’s been a tough few years for beef producers. Due to COVID-19, a ransomware attack of processor JBS and a fire at a JBS beef processing plant in Kansas, the market has been off for a couple years.
Some producers are losing money, customers are paying more for beef at the grocery store, all while the biggest meat processors in the country are making more money.
Wednesday, the US Senate Agriculture Committee held a hearing to learn more from all sides about the pricing and transparency issue.
“There is a crisis in rural America," said Justin Tupper, vice president of the U.S. Cattlemen's Association. “We’re losing our producers at an alarming rate, all the while watching big corporate feeders, packers make record profits.”
Tupper says says while the current system may be efficient, it doesn’t work well for all.
“We have squeezed out the smaller guy and bigger is not always better, and efficiency shouldn't always be given up for competition," Tupper said.
Producers like him are losing money, or making little on a head of cattle. But processors, like Tyson, JBS, Cargill and National Beef, are making around $1,000 for every head of cattle they sell.
Those processors, three of which have plants in Nebraska, control 80 percent of the market.
“The fact that there is a oligopoly and that price setting and market power is being misused in a way that disadvantages the very people that are out there trying to a make a living on the land,” said Sen. John Thune, a Republican from South Dakota.
Some at the hearing told the Ag Committee that the system will work itself out, saying the economics take time, but will swing back.
“Today we have too many cattle and too little processing capacity. We have a volatile marketplace created by outside unavoidable factors. Not anyone market player,” said Mark Gardiner, partner at Gardiner Angus Ranch in Kansas.
Some senators want changes to the market. Currently producers can sell their cattle at a cash auction or use alternative marketing agreements. Those AMA’s are used about 75 percent of the time currently.
One bill Sen. Deb Fischer of Nebraska is pushing would require the US Department of Agriculture to require cash sale minimums in regions throughout the United States.
Others at the hearing said the AMA system, which is less transparent than cash auctions, is a good system for both the little and small guys. They say it allows for the system to be more efficient and it allows for the U.S. to keep their high standard of beef that much of the world seeks out.
Dr. Dustin Aherin said a government mandate on selling at auctions would hurt big and little businesses.
“If cash were mandated in this situation, it would severely hamstring the ability for these smaller regional plants, that are likely going to have to compete in niche markets, to be able to differentiate themselves from the large more efficient incumbents,” said Aherin, Vice President of RaboResearch Animal Protein Analyst.
But people like Tupper, who runs cattle auctions, says he needs a second bidder, which results in more competition at his auctions.
“American cattle producers don’t want or are looking for a handout. We just want a fair and equitable playing field,” said Tupper.
Fischer is also pushing for her Cattle Market Transparency Act, which includes a public library for beef contracts, saying more transparency helps everybody.
“They can then have access to examples of what already exists in the marketplace,” said Fischer, a Republican and cattle rancher from Valentine. “We need every segment of this industry to be able to succeed.”
Regardless, multiple senators said this issue isn’t going away and said further action in Washington is needed.
“That is going to demand action from this congress to take care of that unfair situation,” said Sen. Chuck Grassley, a Republican from Iowa.