This week, lawmakers in both chambers of Congress turned their attention to how consolidation and unfair practices within cattle markets are hurting America’s farmers, ranchers, and rural communities. During two hearings that spanned more than eight hours combined, they questioned ranchers, economists, U.S. Department of Agriculture (USDA) officials, and the CEOs of the four companies that control most of the U.S. beef industry.
“Rural America is drying up because we can’t get fair prices at the farm gate,” Senator Jon Tester (D-Montana), who is a third-generation farmer, said during the Senate Agriculture Committee hearing. “This is a moment in time, folks. We have an opportunity to do something.”
His call to action comes even after the Biden Administration and Congress have directed considerable attention and resources over the past year to how much power a shrinking number of meatpackers have over producers. The White House has released an Action Plan to increase competition, which includes a $1 billion investment in small and mid-sized processing plants and new rules to strengthen the Packers & Stockyards Act. In an appropriations package passed in March, the Senate also included a pilot program for a cattle contract library.
Still, witnesses and lawmakers on both sides of the aisle said that much more transparency and accountability are needed to ensure fair cattle markets. And the impacts of power were on display as Senator Deb Fischer (R-Nebraska) submitted a letter from Nebraska ranchers, whom she said were too afraid of retaliation to testify; in the House Agriculture Committee hearing the following day, committee chairman David Scott (D-Georgia) said one farmer witness had backed out of testifying “out of fear.”
Shelly Ziesch, a North Dakota rancher representing the National Farmers’ Union, and William “Ricky” Ruffin of Mississippi, who represented the United States Cattleman’s Association, both linked unprecedented consolidation to the fact that as prices for meat have risen in recent years, meatpacking companies have seen record profits while ranchers have not gotten more for their animals. “I can’t get but one bid for my cattle anymore,” said Ruffin, who said he’s been in the cattle business his entire life and has more recently been watching other producers in his area go out of business.
“There’s enough money to go around in the beef industry. It’s the distribution of profits that are proportionally unbalanced.”
The Senate hearing was convened on Tuesday to consider two bills that have been introduced as solutions. The Cattle Price Discovery and Transparency Act of 2022 would make more price data available to producers and regulate one aspect of how cattle are sold. The Meat and Poultry Special Investigator Act of 2022 would create a new office within the Packers and Stockyards division to investigate anticompetitive behavior. Both bills have strong bipartisan support. However, one cohort of Republicans during the hearing repeatedly referred to the bills as overregulation, which they believe harms, not boosts, competition. One Kansas feedlot operator who was called as a witness supported that point, and a Colorado ag economist supported a claim that regulations in the first bill could end up hurting producers in Southern Plains states.
In the House Agriculture Committee Hearing the following day, a panel of farmers and ranchers preceded Congressional questioning of the CEOs of Cargill, Tyson, JBS USA, and National Beef. The same legislative proposals being discussed in the Senate were brought up, as were other policy fixes such as country of origin labeling, or COOL.
“American cattle farmers and ranchers are tired, tired of being taken advantage of and losing money year after year while watching the Big Four post record profits every single quarter,” said Coy Young, a cow-calf producer from Missouri. “There’s enough money to go around in the beef industry. It’s the distribution of profits that are proportionally unbalanced.”
Throughout this second hearing, the partisan divide was much more pronounced (although not cleanly split). Ranking member Glenn Thompson (R-Pennsylvania) kicked it off by objecting to the way he said Scott convened the hearing quickly and without enough Republican input. “It’s time to stop demonizing the packing industry out of political convenience,” he said.
Thompson and other Republicans repeatedly asked meat company CEOs to speak about how the pandemic and inflation raised costs for both ranchers and packers, and asked them to confirm that the prices paid to ranchers are cyclical and influenced by the dynamics of supply and demand and not by consolidation. Representatives Rick Crawford (R-Arkansas) and Austin Scott (R-Georgia) also used their time to accuse Cargill CEO David MacLennan of racism against white people and discrimination against other groups based on a Black Farmer Equity Initiative the company launched in February to increase the number of Black farmers participating in its supply chains. (Lawsuits brought by white farmers that have stopped the USDA from distributing debt relief to Black farmers have been backed by influential Republican officials and advisors.)
On the other hand, David Scott, other Democrats, and a few Republicans held meatpacking CEOs’ feet to the fire at a few points, asking them to explain why their margins had grown while ranchers went out of business and to address price fixing in the industry. But they rarely pushed the executives for deeper answers, and in the end, the executives provided almost no new insights. They simply pointed over and over to the lingering impacts of COVID-19 and to market forces outside their control that impact prices. “We will continue to provide markets for the ranchers to sell their cattle,” MacLennan said. “Several witnesses . . . have testified to the cyclicality of this industry . . . and we are starting to see that . . . the prices in the cattle market are starting to change.”
As a result, versions of the same question were asked repeatedly, with no clear answers in sight. “Why are cattle producers struggling to get by when beef prices are high and your companies are making record profits?” asked Representative Cindy Axne (D-Iowa), as the hearing neared its end. “We have 17,000 cattle producers leaving the market every single year. You’ve got to be doing more when you’re controlling 80 percent of the market.”
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New Pavement and Solar Panels. Cattle ranchers aren’t the only Americans outside of big cities currently being courted by D.C. politicians. Earlier this month, the Biden-Harris administration launched the Building a Better America Rural Infrastructure Tour to spread the news about its plan to put billions of dollars in funding from the infrastructure bill to work in small towns around the country. The USDA is at the center of the initiative: Last week, the agency announced $800 million in what it called “climate-smart infrastructure projects” in honor of Earth Day. The list includes grants for renewable energy audits and loans for electric infrastructure, but the bulk of the funding falls into two categories.
First, the USDA is distributing grant funds to rural communities that have already been affected by extreme weather to help them replace damaged infrastructure and prepare for future climate events. That includes replacing public works and police vehicles in Georgia towns hit by Hurricane Michael, paying for ambulances and other medical equipment in Iowa communities, and funding an emergency storm siren in Minnesota. The other big chunk of money is for loans and grants for renewable energy, the vast majority of which will fund ground-mounted and rooftop solar systems on grain and livestock farms all over the country. (There are also a few big anaerobic digester projects.)
On Tuesday, Agriculture Secretary Tom Vilsack continued the tour by traveling to North Carolina with Environmental Protection Agency (EPA) Administrator Michael Regan, where they highlighted $39 million in funding for six watershed infrastructure projects.
Exposing the Politics of Food. Activist shareholders have long put pressure on the companies they invest in to advance policies around issues including climate action and labor practices. Now, investors are using their voting power to get food companies, which have historically kept their contributions secret, to be more transparent about their political spending. On Tuesday, investors representing 13 percent of Coca-Cola’s share ownership voted to compel the company to disclose its global political activity and spending. The vote was spurred by new information on how Coca-Cola has used its political influence to shape public policy in Mexico, where high rates of soda consumption have contributed to a national public health crisis. “What remains in the shadows by way of global corporate political action is causing great harm, and must stop. I’d challenge Coca-Cola to prove otherwise by fully leveling with investors and the public on this front,” said Ashka Naik, research director of Corporate Accountability, in a press release. Both PepsiCo and McDonald’s face similar shareholder votes within the next several weeks.
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