A U.S. Department of Agriculture report released Wednesday, July 22, doesn't say whether the U.S. beef industry did anything illegal involving volatility in cattle markets. But the report also said the investigation into potential violations of the Packers and Stockyards Act is ongoing and that the agencies responsible for the report have limited ability to comment on it.
Many livestock producers were concerned by what they saw as extreme volatility in cattle markets after production and sale of U.S. beef were disrupted by a fire at the Tyson beef packing in Holcomb, Kan., on Aug. 9, 2019, and the coronavirus pandemic of 2020. That led to calls by some producers and farm groups for an investigation into whether the Packers and Stockyards Act of 1921 had been violated.
The act "is designed to insure effective competition and integrity in livestock, meat, and poultry markets," according to the National Agricultural Law Center.
The report, http://www.themarketworks.org/sites/default/files/uploads/studies/CattleandBeefPriceMarginReportfinal.pdf , from USDA's Agricultural Marketing Service and USDA’s Office of the Chief Economist, drew differing responses.
“In its analysis of the effects of the fire and the pandemic, USDA found no wrong-doing and confirms the disruption in the beef markets was due to devastating and unprecedented events,” Julie Ann Potts, president and CEO of the North American Meat Institute, members of which process the vast majority of U.S. beef, pork, lamb, and poultry, said in a written statement.
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The institute offered this analysis of the USDA report: http://www.themarketworks.org/sites/default/files/uploads/studies/USDA%20PSD%20Investigation%20Background%20Paper.pdf .
Rep. Dusty Johnson, R-S.D., who had pressed USDA to investigate the market volatility, said he was "a little disappointed" by the report. Johnson, in a conference call with the news media Wednesday afternoon said he had thought the report would assess possible wrong-doing.
"It doesn't address that in any meaningful way, so it's important for Congress to continue to keep — it's important for me to continue to keep — the fire on USDA to make sure they finish the job," Johnson said.
Wednesday's report stressed that it "does not examine potential violations of the Packers and Stockyards Act. The investigation into potential violations is ongoing, and therefore, AMS has limited ability to publicly report the full scope and status of the investigation."
Rather, the report summarized such factors as market conditions, fed cattle prices and boxed beef values before and after the plant fire and before and during the pandemic. One example of what the report found:
"Despite the loss of the Holcomb plant, the total number of fed cattle harvested during the first three post-fire weeks actually outpaced that of the three weeks prior to the fire by approximately 5,000 head. This should not be unexpected as rising boxed beef prices and the higher price spread provided an incentive to packers to increase production. In the weeks after the fire, Tyson appears to have shipped a significant portion of the cattle it would have previously processed at the Holcomb plant to its other plants. "
Investigation continues
Wednesday's report concluded with this:
"Findings thus far do not preclude the possibility that individual entities or groups of entities violated the Packers and Stockyards Act during the aftermath of the Tyson Holcomb fire and the COVID-19 pandemic. The investigation into potential violations under the Packers and Stockyards Act is continuing.
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"USDA does not solely own investigatory authority over anticompetitive practices in the meatpacking industry and has been engaged in discussions with the Department of Justice (DOJ) regarding allegations of anticompetitive practices in the meat packing industry. Should USDA find a violation of the Packers and Stockyards Act, it is authorized to report the violation to DOJ for prosecution."
It was uncertain Wednesday when more information on the investigation might be released.
