Feenstra Criticizes Ongoing Anticompetitive Behavior in the Cattle Market

Press Release

Today during a Livestock and Foreign Agriculture Subcommittee hearing on the current state of the beef supply chain, Rep. Randy Feenstra (IA-04) criticized the disproportionate market share meatpackers hold in the beef industry. Feenstra, who represents the third-largest livestock-producing district in the country, suggested Congress needs to focus on transparency, competition, and processing capacity to bring fairness to the cattle market.

"The large packers control the price through contracts, manage the amount being slaughtered through line speeds, and decide when livestock is needed for their own profitable benefits," said Rep. Feenstra. "The system is set up where the packers will never see a loss -- creating massive guaranteed profits while rural farmers lose their livelihoods."

Feenstra called attention to producers in his district who are losing $150 or more on every head sold -- while consumers are also seeing beef prices rise at the grocery store.

"When more than 60% of cattle are sold on formula contracts, and we don't know the details of how these are broken down, it seems obvious that this asymmetric information is breaking down the market," Rep. Feenstra said.

Below are Feenstra's full remarks from the hearing. Click here or on the image below to watch his remarks.

The lack of competition in the cattle industry is one of the biggest concerns my constituents have shared with me since I was elected to Congress. Cattle producers in my district are angry.

They see everyone in the supply chain making large profits, while they lose $150 or more on every head sold. My in-laws, friends, and constituents are seeing their livelihoods end because of packer control.

The large packers control the price through contracts, manage the amount being slaughtered through line speeds, and decide when livestock is needed for their own profitable benefits. The system is set up where the packers will never see a loss, creating massive guaranteed profits while rural farmers lose their livelihoods.

Congress needs to engage on this and focus on transparency, competition, and processing capacity.

The cash market for live cattle has been declining for over a decade. At the same time, we see higher grocery prices and even higher demand. Diminished cash market participation contributes to USDA being unable to publish LMR reports, furthering the market's lack of transparency.

This is not a new idea. We need the same transparency in the cattle market that we have come to expect from other livestock markets.

Lack of competition means lack of options for our producers and an incredibly vulnerable market overall.

Packers like to blame the Tyson Holcomb fire, COVID-19 pandemic, and the cyberattack on JBS, yet fail to see the price gouging and price-fixing that is occurring.

I'm not calling for the government to mandate changes in all these areas, but I do believe that adding more transparency into the market will naturally resolve some of these serious issues.

When more than 60% of cattle are sold on formula contracts, and we don't know the details of how these are broken down, it seems obvious that this asymmetric information is breaking down the market.

It is my sincere hope that we can address this as a committee. The reauthorization of Livestock Mandatory Reporting is approaching and we should take the opportunity to ensure true price discovery and allow cattle producers sufficient leverage in the cash negotiations.

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