U.S. Sen. John Thune (R-S.D.), a longtime member of the Senate Agriculture Committee, today heard testimony from stakeholders, including South Dakota cattle producer and St. Onge livestock auction manager Justin Tupper, about their experiences with the cattle market. Thune requested that the Senate Agriculture committee hold this important hearing to help shed light on concerns about cattle market manipulation and examine possible ways to improve the situation for producers.
Thune asked Mr. Tupper about his view on the steps that can be taken to level the playing field between cattle producers and meatpackers. Thune emphasized the importance of encouraging fairness and transparency so both producers and consumers are getting a fair price at market.
Excerpts of Thune’s remarks below:
“We are here today because we need answers. We have cattle producers who produce the highest quality beef in the world, and they deserve to be able to participate in a marketplace that operates fairly, transparently, and with integrity.”
“Mr. Tupper, help me understand a little bit here. You’ve heard some of your collages talk about on the panel today – talk about the prices being simply a function of supply and demand. I think I heard you say that the livestock producer, in many cases, is generating a margin of maybe 1 percent? And that packers were generating a margins of 80 percent? So if you’ve got a food chain that consists of a producer… a processer, and ultimately a retailer and the consumer, the consumer is paying at record high prices, and the producer is going out of business. Which means that the profitability in the middle of that food chain is hardly evenly distributed at all.
“Now, if there’s a true market, supply chain, supply and demand regulating this, you would think that there would be some benefit that would accrue to the folk that were in the supply chain – maybe at the end of that supply chain or the start of it, whichever way you want to look at it – and that’s the producer.
“For a free market to work, you have to have competition. So if we’re trying to come up with solutions and answers to what’s happening out there – this volatility in the cattle market, these huge spreads that the packers continue to get that are driving producers out of business – what I’m hearing is that there is a virtual monopoly, and there’s a choke point there where there isn’t enough competition. So even though you have huge demand from the consumer, and you have adequate supply at the producer level, that’s not making it through the food chain in a way that saves the consumer any money.”