The Department of Justice held a press conference this week to announce its launch of an investigation into the top four meatpackers over possible antitrust violations.
The Big Four meatpackers under investigation are Tyson Foods and Cargill Incorporated, both controlled by U.S. owners, and National Beef and JBS, both under Brazilian ownership. The DOJ is investigating possible inflation of consumer prices and suppression of payments to ranchers.
Transcript
The Department of Justice held a press conference this week to announce its launch of an investigation into the top four meatpackers over possible antitrust violations.
Atty. Gen. Todd Blanche, U.S. Department of Justice: “In the beef industry, the big four processors control over 85% of the beef processing market. Two of the big four are primarily foreign owned. Multiple plant closures across the country, the current market structure and high concentration in the industry indicate anti-competitive activity.”
The Big Four meatpackers under investigation are Tyson Foods and Cargill Incorporated, both controlled by U.S. owners, and National Beef and JBS, both under Brazilian ownership. The DOJ is investigating possible inflation of consumer prices and suppression of payments to ranchers.
Sec. Brooke Rollins, USDA: “Industry consolidation reduces options for our ranchers looking to sell their cattle. It weakens their negotiating power and it risks reliance upon a single buyer…As ranchers face fewer options for selling their animals, the Big Four grow stronger and stronger.”
The DOJ claims the concentration among the Big Four allows packers to dictate prices. However, industry experts say the picture is far more complicated, pointing out that market consolidation in the packing industry has been roughly unchanged over the last three decades.
Dr. Derrell Peel, Oklahoma State University Extension: “Packers have been the subject of suspicions and accusations for well over a century by some elements of the cattle industry as well as politicians at various times…And it’s ironic in some sense that we are doing this now because packers have lost millions and millions of dollars in the current market environment.”
Over the past several years, the cattle industry has been facing persistent drought, high operational costs, and an aging workforce. The shrinking herd is expected to keep beef prices elevated for the foreseeable future.
Secretary of Agriculture Brooke Rollins: “As of January 1st of this year, we have about 86.2 million head of cattle and calves in America. That is the lowest since the 1950s. And this year, we are looking to be slightly down again. In the past decade alone, we’ve lost over 17% of our cattle ranchers. More than 100,000 ranchers across the country are no more.”
President Trump signed the executive order to investigate price fixing in the food supply chain late last year. Attorney General Blanche says the DOJ has reviewed more than three million documents and contacted hundreds of stakeholders including ranchers, cattlemen, producers and processors.
Dr. Derrell Peel, Oklahoma State University Extension: “We’re accusing them of manipulating the markets and frankly, if they were, they’re not doing very good at it because they are still losing millions of dollars.”
For Market to Market, I’m Laurel Bower.
Contact: [email protected]
Watch More
Brad Matthews talks weather, cattle, and corn in our Market Plus.
Brad Matthews discusses the commodity markets with stories of weather, seasonality and Iran all in the mix this week.
This week, the Office of the United States Trade Representative held the first of three bilateral negotiating rounds with Mexico.
Entering the final review of USMCA without Canada. The battle blueberry growers face after harvest. And, commodity market analysis with Brad Matthews.
The White House adds detail to the new trade deal, while China dodges the details. The drought continues to hammer the south and west. We’ll look at the ticking clock facing the dairy industry. And, commodity market analysis with Sue Martin.
The White House announced this week that President Trump has secured “historic trade deals with China” after his visit last week with President Xi.