Thursday, August 06, 2020

Cattle producers continue to struggle with 'absurdly low prices' as the four major meatpackers make record profits

Cattle producers generate more than half of U.S. farm revenue, but they've been dealt a bad hand: cattle prices dropped this spring as meatpackers had to shut down, but farmers had to keep their farms running with less income and, in many cases, continue to house and feed cattle they couldn't ship to slaughter. But during the height of the plant shutdowns in April and May, beef packers' profit margins reached historic highs, Jessica Fu reports for The Counter. That has a lot of cattle farmers upset.

"Cattle producers from one end of the country to the other are convinced their markets were long-ago hijacked by the 'Big Four.' Namely, they blame Cargill, JBS, National Beef and Tyson — who collectively control more than 80 percent of the U.S. slaughter market for beef — for pricing inequities," Victoria Myers reports for DTN/The Progressive Farmer. "Confidentiality agreements these buyers operate under are allegedly responsible for thin cash markets and what many cattlemen believe are absurdly low prices at the farm level. Simply put, as covid-19 drove up beef demand and sent prices received by packers soaring, cattle producers struggled to understand why they were losing money. That struggle continues."

Meatpackers are operating at high volumes again, but the Kansas City Federal Reserve Bank estimates that farm revenues could still decline this year because of the earlier disruptions, Chuck Abbott reports for Successful Farming

The Food and Agricultural Policy Research Institute "has estimated an 8 percent decline in livestock revenue this year, compared with 2019, with lower average hog, cattle, and poultry prices," Abbott reports. "Per-capita meat consumption would decline this year and take years to recover, said the University of Missouri think tank in June. Overall, it projected a 3% decline in farm income, thanks to record federal subsidies that would largely offset big losses in farm receipts."

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