Ranch group urges leaders to determine if packing industry should be decentralized

Staff reports
Farm Forum

BILLINGS, Mont. — In a letter delivered on April 29 to President Trump and House and Senate congressional leaders, R-CALF USA states the COVID-19 pandemic demonstrates the United States' beef supply chain lacks resiliency and redundancy and urges a review to consider whether a physical and geographical restructuring of the meatpacking industry is required to disaggregate and decentralize beef processing capacity.

The group explains that the ongoing restricted market access and seriously depressed prices for America's cattle farmers and ranchers, lack of available beef in some or many of America's grocery stores, and near record to record beef prices charged to America's consumers, reveal that the United States must immediately begin the development of a strategic, national food production, processing and distribution policy that can meet America's food security interests.

The letter states that food security interests are arguably the most vital of interests to all of America and that the high level of physical and geographical concentration of America's vital beef supply chain is intuitively and inherently contrary to those food security interests.

The letter states the requested review should consider whether a fundamental restructuring of the United States' multi-segmented beef supply chain is required to ensure that never again will the closure of one or a few plants destroy the livelihoods of America's cattle farmers and ranchers, or disrupt America's access to an abundant supply of an important protein source: safe, wholesome and nutritious beef.

It also states that such a restructuring appears necessary to ensure that never again will America's cattle farmers and ranchers require an infusion of taxpayer subsidies to substitute what a robust, competitive marketplace could and should have continually provided, even in the face of a pandemic.

The group urges two immediate "triage reforms" to rebalance the cattle market to prevent the loss of the critical mass of cattle farmers and ranchers essential to achieving America's food security interests.

Those reforms include empowering America's consumers to begin supporting America's cattle farmers and ranchers with a new mandatory country-of-origin labeling (MCOOL) law for beef. The group states MCOOL will reignite the flame of competition extinguished by importers who lessen demand for USA-produced beef with their cheaper, undifferentiated foreign beef products.

The second urgent reform requested is designed to restore the integrity of the cattle market's most important price discovery market — its cash market. The group suggests the current Congress reintroduce the 110th Congress' Senate Bill 786 and modify it to require beef packers to participate in the price discovery market at a level greater than half, i.e., above 50%. The group states this reform will help to immediately reignite competition in the marketplace itself.

The group makes clear that more reforms are needed but acknowledges that additional comprehensive reforms would be outside of the specific investigation it was asking Congress to consider now and should be discussed later.

In conclusion, the group pledges to work with the President and Congress to rebuild America's economy and offers its organization's expertise in identifying the deficiencies hamstringing a robustly competitive beef supply chain that is resilient and maintains redundancy at all times, even in the face of crisis.