Western States Ask Justice Department to Investigate Meat Packers

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Montana Attorney General Tim Fox and attorneys general from other ranching states are asking the U.S. Department of Justice to launch an antitrust investigation of the beef processing industry. In a letter to U.S. Attorney General William Barr, the states request an investigation to determine if the companies have entered into agreements that deprive consumers and cattle ranchers of a competitive market.

“Consolidation in the meat packing industry has certainly benefited those companies, but has brought no benefit to ranchers and consumers,” Attorney General Fox said. “The nationwide cattle market is sending signals of manipulation and artificial distortion, and so we are asking Attorney General Barr to investigate possible violations of federal antitrust laws.”

Fox told Northern Ag Network that his office began looking in to the issue in August of 2019 after the Tyson beef packing plant fire in Kansas. Now with the COVID-19 pandemic, the situation has only been exacerbated with rising beef values and falling cattle prices.

“Ultimately, we need to get a different system,” Fox said. “We need to have a system that cattle producers have some control in and are protected from any anticompetitive buying practices.”

Tim Fox spoke with U.S. Attorney General William Barr about the issue earlier this spring. Barr was unfamiliar with what was going on in the beef industry and after speaking with Fox, he directed the Justice Department’s Antitrust Division to examine the issue.

The letter from the Attorneys General states that, “The U.S. beef processing market is highly concentrated, with the four largest beef processors controlling 80 percent of U.S. beef processing. In this highly concentrated industry, meat packers have achieved sizeable profit margins. Cattle ranchers, however, who for generations have supplied our nation’s beef, are squeezed and often struggle to survive. Consumers, moreover, do not realize the benefits from a competitive market.”

“The disparity between the price of live weight cattle and the retail cost of boxed beef sold to consumers is a sign of a market that lacks full and fair competition,” the letter reads. “Consider, for example, that live cattle futures recently hit 18-year lows, while both the price of boxed beef and consumer demand remain healthy, especially as consumers navigate these unprecedented times.”

The letter was also signed by Attorneys General from North Dakota, South Dakota, Wyoming, Colorado, Missouri, Arizona, Idaho, Iowa, Minnesota, and Nebraska.

Montana Stockgrowers Association President Fred Wacker welcomed the action.

“Determining evidence of any fraudulent business practices within the meatpacking industry is vital to our producers’ continuity of business and needs to be identified quickly and rectified immediately,” said Wacker. “MSGA would like to thank Montana Attorney General Tim Fox for his involvement in this issue.”

Montana Farm Bureau President Hans McPherson also appreciated the request.

“Montana Farm Bureau appreciates Attorney General Fox elevating this conversation,” McPherson said.  “It is important that Montana ranchers have transparency in the markets in order to receive a fair price for their cattle.”

The letter is available online here.

 

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MT Dept. of Justice / Northern Ag Network


1 comment

Joane Bayer May 5, 2020 - 7:54 pm

It’s about time the Feds look into pricing collusion amongst the beef packers, it is getting worse. Thank you Tim Fox for spear heading this effort.

Reply

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