There is a high demand for high-quality U.S.-raised beef in this country. If there was any doubt, the bare supermarket shelves throughout parts of 2020 proved it. I believe the South Dakota producers who work day in and day out to raise this livestock should be the ones benefitting from this high market demand, but that’s not exactly what’s happening these days.
Just four meatpackers control over 80 percent of the beef processing capacity in this country. These companies are buying beef at low prices and selling it for a much higher margin. Something isn’t adding up, and both cattle producers and consumers deserve answers about this potential market manipulation.
I want the market to operate freely and with as little government intervention as possible, but producers in our state are feeling the pinch. There are consumer protections and oversight mechanisms in place for a reason, and, using those tools, we must get to the bottom of this.
The last few years have been especially difficult for cattle producers in South Dakota and across the country. In 2019, a fire at a meat processing plant in Kansas caused significant market disruptions. Last year, COVID outbreaks caused temporary plant closures. This year, meatpackers are again running at reduced capacity because workers aren’t showing up for work, in part because of the enhanced unemployment benefits the Biden administration is providing. Regardless, the meatpackers have seen substantial profit margins while producers struggle to make ends meet.
At the beginning of the pandemic, I urged the Department of Justice (DOJ) to investigate the meatpacking industry – again, four companies control more than 80 percent of the market. With such concentrated control, there’s opportunity for manipulation. And while it’s been one year since the DOJ Antitrust Division sent civil investigative demands to these companies, no results from the investigation have been released to the public.
Because of the lack of transparency, and due to the change in leadership at DOJ, I recently led several of my Senate and House colleagues, including Rep. Dusty Johnson, in urging Attorney General Merrick Garland and the DOJ to continue investigating the beef sector to determine if improper and anticompetitive activity has occurred. This is one of the most important ways we can hold the highly concentrated meatpacker industry accountable to the producers and the consumers who depend on them.
In addition to conducting this investigation, another way to reduce cattle producers’ dependence on the big four meatpackers would be to expand smaller processing capacity, which is why I reintroduced my Strengthening Local Processing Act in February. My bill would provide resources to establish and expand small meat processing capacity. It would also provide meat processors more access to information that is critical to food safety planning, allow more inspector-approved meat products to be sold across state lines, and funnel federal dollars toward training, education, and technical assistance grants. South Dakota’s producers work hard to raise high-quality livestock, and we need to invest in expanded processing capacity to help create more market opportunities for producers and meet consumer demand for their products.
Last month, I requested the Senate Agriculture Committee hold a hearing to consider the challenges facing the livestock industry as well as the bills that have been introduced this year that seek to improve the situation. I recognize that there are contrasting views among the organizations that represent cattle producers on the best path forward to improve the cattle market, but I am hopeful that a hearing would help lead to the passage of meaningful legislation that would create positive results for cattle producers in South Dakota.
It’s critically important that producers have fair and transparent markets for the commodities they produce. I will keep pushing the administration and my colleagues in Congress as we work to meet those goals.