Walt Bones and his family just wanted a little more value per head of cattle before locking in a price with beef packers.

Then the market dropped.

The global COVID-19 pandemic sent prices tumbling for what Bones and other South Dakota farmers get on the open market.

The fourth-generation farmer in Parker blames himself for mistiming the market, but he’s still frustrated by what he sees happening elsewhere, as consumers across the United States respond to the worsening crisis.

Beef coolers are picked over. Shoppers are hoarding groceries and home goods, including meat.

“Consumers are fearful, buying every piece of meat they can get their hands on. Anything with protein, it’s hard to keep on the shelves,” said Steve Hellwig with Hub City Livestock.

Yet somehow, South Dakota farmers such as Bones are losing hundreds of dollars per cow at auction.

His cows have to go by May as they continue to approach market weight, Bones said.

“Now we’ve got to look at a different strategy,” Bones said. “I can’t keep feeding them day after day after day and wait for the market to get better.”

Representatives for South Dakota farmers raised an alarm this month after a market report from the Fort Pierre Livestock Auction described exceptionally low bids and accused the nation’s four beef packers of conspiring to fix prices and “using this coronavirus ordeal as an excuse to suck the lifeblood out of the cattle industry.”

Tyson, JBS, National Beef and Cargill control 81 percent of the nation’s beef packing market, according to a federal antitrust lawsuit filed by industry representatives last year against the companies.

A Tyson representative sent an email in response to an interview request for this story, linking to a post on the company’s official website.

Tyson Fresh Meats is planning to provide a one-time premium for cattle harvested this week as a show of support for beef producers, president Steve Stouffer said in the post. The post includes no information about how the premium will work and who will benefit, and Tyson did not respond to follow-up questions.

JBS, National Beef and Cargill did not respond to requests for comment.

South Dakota is home to more than 13,000 beef farms, and the state’s industry has an economic impact of $2.2 billion, according to Ag United for South Dakota.

Prices are ticking up a bit this week after last week’s lows. Lean cattle were fetching around 63 cents per pound at this time last week. This week they’re getting about 75 cents per pound, said Kevin Larson with Aberdeen Livestock. The price per head could fetch $200 more than it did last week.

“These stealing sons of bitches, they’ve driven (the market) into the ground. Now (prices) are coming back with a head of steam. It’s still not back to what it needs to be, but it is higher,” said Larson, referring to packers.

“Meat (costs) stay high no matter if cattle prices are low or high,” Hellwig said. “The consumer is overpaying, the producers are not getting paid enough, and all the money is staying in the middle.”

Larson suspects packers could be offering another $500 a head and easily break even.

“Packers have been gouging us so hard,” said Rick Woehlhaff with Glacial Lakes Livestock in Watertown.

The cattle market started its decline around the last week of January, said Hellwig. It hit its bottom March 19 for northeast South Dakota.

“One thing we’ve lost over two or three decades is we’ve lost complete control and all competition in the fat cattle industry,” Hellwig said. “If they’re breaking the law then they should be prosecuted. If they’re not breaking the law then the law needs to be changed.”

The auction report from Fort Pierre was enough for Doug Sombke to pen a letter to the state’s congressional delegation, including Sen. Mike Rounds.

The four major beef packers have worked together to control the market, at the expense of South Dakota farmers and consumers, said Sombke, president of the South Dakota Farmers Union.

“If there’s that much demand, if we can’t meet the domestic needs, why is our price so low?” Sombke said.

Rounds asks feds to investigate

Rounds responded by taking a number of steps intended to help ranchers endure the crisis and to attempt to stabilize the market.

“This is a multi-billion dollar problem for South Dakota,” Rounds said in an interview with South Dakota News Watch. “This is not new, but it has been enhanced and brought into the spotlight because at a time of national crisis, we have seen the problems with this existing market be highlighted.”

Rounds and others are not sure if the inequities in the market are due to unfair trade practices on the part of the beef processors or if the market system itself needs an overhaul. To help find out, Rounds wrote a letter to U.S. Attorney General William Barr on March 19 “to urge the Department of Justice to investigate continued allegations of (meatpacker) price-fixing within the cattle market and to examine the current structure of the beef meatpacking industry for compliance with U.S. antitrust law.”

Accusations of unfair pricing by meatpackers arose in August 2019 after a large Tyson plant burned down in Holcomb, Kan., spurring an investigation by U.S. Secretary of Agriculture Sonny Perdue into “recent beef pricing margins to determine if there is any evidence of price manipulation, collusions, restrictions of competition of other unfair practices.”

Rounds wrote to Barr that packers have seen significant profits in recent years and remain in a “unique position within the supply chain to exert control over the input of cattle” and that “the continued effect of diverging profits and losses along the supply chain compared to high end-consumer prices further demonstrates this ongoing issue.”

Rounds also urged President Donald Trump to initiate efforts to implement Mandatory Country of Origin Labeling into the current trade deal with Canada and Mexico. That labeling program, which was repealed in 2015 under threat of major tariffs by those countries, would enable U.S. producers to clearly label their meat products as being American bred, raised and processed. That could encourage consumers to buy American beef at a time when foreign products are re-entering the market.

Finally, Rounds on March 20 submitted legislation that would use federal Commodity Credit Corp. funds “to offset losses cattle producers take in the live and feeder cattle markets.” That program, Rounds said, would be similar to the Market Facilitation Program that provided direct payments to farmers for losses stemming from tariffs placed on U.S. goods by China during the ongoing trade war led by President Trump.

As of March 16, 2020, that 2019 program had provided $8.6 billion to American farmers, including $524 million to South Dakota producers of corn, soybeans, dairy products and hogs, but no money to beef producers. Rounds said that if the new measure is successful, any relief would still be “several months” away from helping beef producers.

Rounds also said he continues to push his bill called the U.S. Beef Integrity Act, which would prevent foreign beef producers from falsely labeling their meat as a “Product of the USA” – which is being done now to confuse consumers, he said.

“In the meantime, we’ve got beef producers out there that are in dire straits because in some cases, they’re close to $400 per animal underwater, far below breaking even when they come to sell, and if you’re got 1,000 head on feed, there are very few cattle feeders can handle that kind of a loss,” Rounds told News Watch.

Sale barn precautions

In response to concerns about spreading the coronavirus, auction barns in Aberdeen and Watertown have asked that only buyers and that day’s sellers attend sales. Sale schedules have not changed.

They’re also encouraging any seller to enter the barn only when their cattle are being sold and then leave.

“Some of the sellers say they aren’t even coming. Most hire to haul them, truckers come and just drop them off,” Larson said.

Bleachers are cleaned regularly as is the arena, Hellwig said. Hub City has also limited the cafe area to carryout only. Buyers and sellers can give their orders, and then staff will deliver it to them so no one congregates in the cafe.

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.