HELENA, Mont. (April 21, 2020) – On Monday, April 20, 2020, MSGA and 22 other state cattlemen’s associations signed a letter requesting an investigation of beef pricing margins by the Department of Justice (DOJ) which resulted from two recent extreme market shifts due to a packing plant fire in Holcomb, Kansas, in August 2019, and more recently due to COVID-19.
MSGA believes determining evidence of any fraudulent business practices within the meatpacking industry is vital to our producer’s continuity of business and needs to be identified quickly and rectified immediately.
“We have long supported an investigation into this issue. Last August MSGA supported USDA’s investigation following the packing plant fire and again in March during the first impacts of COVID-19,” said Fred Wacker, MSGA President. “We’re hoping by joining together with other states, we can show the DOJ just how serious this issue is.”
The extreme market degradation to the producer segment, followed by sharp increases and unseasonal profitability of the packing segment through boxed beef prices, is reason for tremendous concern. These market reactions absolutely emphasize how the production sector of the industry is exposed to the highest potential for risk with little-to-no leverage to change that risk position.
The letter explains both the packing plant fire and COVID-19 situations, and how they have impacted the market and negatively affected the producer. Both situations saw average cash fed cattle prices drop while packing plants maintained harvest capacity and boxed beef values increased significantly. Only now, COVID-19 includes logistical stressors on the nation’s food production and distribution system.
MSGA will continue to address this issue on behalf of our Montana ranching families. We believe the DOJ is the appropriate agency to open an investigation and can also support the USDA in its investigation – allowing this process to be concluded in a timely manner.
This is of vital importance to the future of one of the largest sectors of U.S. agriculture. Both events continue the undue financial burden for all cattle producers within the production side of the beef cattle industry and in turn affect rural America short-term and long-term.
Director of Marketing & Communications
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