Packer purchasing under scrutiny

May 7, 2021  | 2 min  | Ep4638

The price for lean hogs topped live cattle for a time this week as the two similar but different markets worked through higher grain prices and strong demand.

One farm state senator is again proposing a bill aimed at leveling the playing field in the cattle sector.

Peter Tubbs has more. This week’s Drought Monitor reveals 68 percent of the U.S. is in some form of drought - the highest mark since January of 2013. 

Meatpacking purchasing habits have, again, attracted the attention of Congress.
Senator Charles Grassley of Iowa, a Republican, has submitted a bill that would require meatpackers to purchase at least 50 percent of their daily kill on the spot market. According to … , slaughterhouses currently purchase less than 20 percent of their cattle supply on the cash market, and are approaching cash purchase rates seen in the poultry and pork markets.
While cattle producers have seen their prices rise over the past year, packer profits in April soared to over $670 per head. Many producers believe the consolidation of the beef packing industry has given too much pricing power to packers, who now have the ability to prioritize their own animals over cattle for sale on the cash market. After four decades of consolidation, the four largest meatpackers control 85 percent of the slaughter capacity in the U.S. beef industry.
(Grassley bite from IP)
The National Cattlemen’s Beef Association opposes the bill. 
“As we have seen in other sectors, a one-size-fits-all government mandate rarely achieves the intended goal.”

The NCBA is throwing its support towards a similar bill sponsored by Senator Deb Fischer of Nebraska, who is also a Republican.
This is the eleventh time Senator Grassley has introduced this bill to the Senate Agriculture Committee. None of the previous ten versions have advanced to the Senate floor.
For Market to Market, I’m Peter Tubbs.

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