By Julie Tomascik
Editor

The coronavirus (COVID-19) pandemic sparked extreme volatility in beef and cattle markets, leading the American Farm Bureau Federation (AFBF) to urge a close examination of livestock markets.

“The level of frustration with market volatility among livestock producers has never been higher,” AFBF President Zippy Duvall said. “I applaud Secretary (Sonny) Perdue for his commitment to expand USDA’s investigation. It won’t bring back lost income for producers, but it will help to restore confidence in our pricing system.”

Duvall addressed the issue with Perdue and the Commodity Futures Trading Commission (CTFC) Chairman Heath Tarbert in April.

The U.S. Department of Agriculture is expanding its investigation into market activity surrounding the Holcolmb, Kansas fire to include the volatility and disparities surrounding the COVID-19 outbreak in the U.S.

AFBF sent a letter to the CTFC stressing the need to monitor and analyze market activity.

“We believe an intense examination of the volatility in cash and futures markets for beef, pork and dairy is needed to determine if any market manipulations have occurred to the financial detriment of farmers and ranchers,” the letter states. “The disparity between the farm-level prices that producers receive and wholesale prices is alarming. We cannot afford to lose confidence in the integrity of the futures market, nor the price discovery efforts in cash markets, on top of the many other market disruptions and stresses farmers and ranchers are facing.”
Texas cattlemen and women are among those experiencing financial loss.

“Our members are seeing and feeling the effects of the market downturn, and that makes it difficult to operate a farm and ranch,” Texas Farm Bureau President Russell Boening said. “The futures market has been incredibly volatile, and the coronavirus is just the latest in a string of misfortunes that have kept the farm and ranch economy down for several years.”

State Rep. Drew Springer, chairman of the House Committee on Agriculture and Livestock, asked Texas Attorney General Ken Paxton to investigate meat packers for market manipulation and price gouging amid the COVID-19 pandemic.

In a letter dated March 31, Springer said boxed beef prices were up over 20 percent, more than doubling packer margins.

“Yet despite the incredible demand in Texas, as well as across the U.S., cattle have dropped hundreds of dollars per head at auction,” he wrote. “All indications are that the market manipulation has cost the Texas cattle industry over $150 million, while the potential price gouging has cost Texas consumers $225 million in just the last 30 days. For consumers, these prices are seen and felt at the checkout counter. And while consumers are blaming the retailers, the real culprit for higher consumer prices are the packers.”

Cargill, JBS, National Beef and Tyson control about 85 percent of the nation’s beef packing market, which Springer said puts them in a unique position to exert control over cattle and wholesale prices.

While he realizes Paxton cannot change the national market, Springer said he will continue to fight for fairness for his constituents and other Texans.

Other U.S. and state senators have also called for the increased investigation into cattle market issues.

A Market Intel report from AFBF in late March shows how the COVID-19 pandemic added volatility into live cattle and beef markets. That report covers cattle futures, production and availability of product, as well as boxed beef prices.