WASHINGTON (KMTV) — From COVID-19, a ransomware attack, to a processing plant fire, it’s been a tough few years for beef producers.
Wednesday, the U.S. Senate Agriculture Committee held a hearing to learn more about beef pricing and a transparency issue.
“There is a crisis in rural America,” said Justin Tupper, VP 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 although the current system may be efficient, it isn’t fair for everyone involved.
“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 while large processors, like Tyson, JBS, Cargill, and National Beef are making around $1,000 for every head of cattle.
Those processors, three of which have plants in Nebraska, control 80% of the market.
“The fact that there is an 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.
However, some at the hearing said the system will work itself out.
“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 itself.
Currently, producers can sell their cattle at a cash auction or use alternative marketing agreements (AMA), which are used about 75% of the time.
Some at the hearing said the AMA system, which isn’t as transparent as cash auctions, is a beneficial system for both small and large processors.
Dr. Dustin Aherin, VP of RaboResearch Animal Protein Analyst, said a government mandate on selling at auctions would hurt the industry.
“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.
But Tupper and smaller producers like him say they need a second bidder to result in more competition at cattle auctions.
“American cattle producers don’t want or are looking for a handout. We just want a fair and equitable playing field,” said Tupper.
Nebraska Senator Deb Fischer is pushing for a bill that would require the U.S. Department of Agriculture to require cash sale minimums in certain regions. She’s also pushing for her Cattle Market Transparency Act, which includes a public library of beef contracts.
“They can then have access to examples of what already exists in the marketplace,” said Fischer. “We need every segment of this industry to be able to succeed.”
Regardless, most senators agreed that the issue isn’t going away any time soon.
Iowa Senator Chuck Grassley commented, “That is going to demand action from this congress to take care of that unfair situation.”