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Editorial: Nebraska beef producers have big stake in battle over meat prices

Editorial: Nebraska beef producers have big stake in battle over meat prices

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Recent events have brought hard times to Midlands cattle producers: Last year, torrential rains and ongoing wet conditions prevented many ranchers from harvesting enough hay for their animals. This year, producers have seen a plummeting of cattle prices — even as packers benefit from a hefty boost in prices as consumers’ meat purchases soar in the wake of the virus emergency.

Since January, cattle futures have lost nearly a quarter of their value. U.S. Sen. Charles Grassley wrote in a letter last week to Attorney General William Barr: “Since Feb. 4, 2020, live cattle prices are down 16%. This is happening while American consumers bought 77% more meat during the week of March 15 compared to 2019. The spike in the purchase of beef products at the grocery store has resulted in higher beef values for meat packers, yet farmers and ranchers have seen a net decrease in the value of cattle.”

Nebraska’s beef sector has a total economic impact estimated at $12.1 billion, with major connections to many rural communities. Iowa’s cattle sector is a $6.8 billion enterprise. The cattle industry is used to ups and downs, of course, but at present it’s facing the uncertainties of recessionary conditions along with the rest of the economy.

Grassley, along with a bipartisan set of senators from farm states, are pressing the Trump administration to investigate possible price-fixing by the four largest packers, which control about 80% of U.S. beef processing. Secretary of Agriculture Sonny Perdue has publicly stated that that the USDA is “paying special attention to the difference in prices from the farm gate to the grocery shelf.” He has asked Congress to provide his department more investigative tools.

The office for Sen. Deb Fischer, a Sand Hill rancher, said she “has been concerned about equity along the supply chain, with packers and retailers making huge gains that have not been seen by cattle producers and feeders. Something must change going forward. We need a market system that works for all segments of the supply chain, including feed yards and cow/calf producers who have seen stagnant to declining cash prices and a very volatile futures market. Livestock is a major driver of our state’s economy, and a healthy livestock industry benefits all Nebraskans.”

Meanwhile, Fischer was involved in a variety of actions to ensure the recent congressional legislation for virus relief included provisions targeted specifically to ag producers.

It’s true that a considerable portion of meat recently sold on grocery store shelves was ordered at prices set weeks earlier. “The meat that retailers sell on a typical day,” an analysis by the American Farm Bureau Federation says, “is product that the retailer started planning sales around as many as three months before. They may have actually purchased the product as many as six weeks prior.”

As time passes, higher grocery sales ought to give an upward push to prices for cattle producers. Federal authorities should keep an eye on conditions, to ensure that market conditions, and not price-fixing, prevail.

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