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USDA report is first step in beef price investigation

Senators introduce legislation to help small meat processors, take action on spot pricing.

USDA last week released on an update on its investigation into beef prices.

The purpose was to examine “whether any regulated entities violated the Packers and Stockyards Act by taking advantage of the situation through price manipulation, collusion, restrictions of competition, or other unfair practices.” The report found no wrongdoing, according to Meat and Poultry.

In the report, USDA outlines what has happened in cattle markets since the Holcomb fire in August 2019 and the volatilities due to COVID-19. American Farm Bureau Federation Congressional Relations Director Scott Bennett says they hope to have a robust discussion not only with legislators, but also the administration on what can be done to make sure markets are fair for U.S. cattle producers.

The report contains a commitment to balance food safety with the growing consumer trend of purchasing meat directly from producers, according to Forbes. Expanding local processing capacity should mitigate price volatility and lessen the probability of supply disruptions in the future.

"The current pandemic has also created a resurgence in demand for services provided by these small and very small processors, and for consumers who are interested in buying their meat more directly from the farm and ranch where it was raised. We understand the addition of direct-to- consumer options for beef producers, small processors, retailers, and others must be done in a way that does not compromise federal food safety standards or create disruption with our trading partners. USDA is committed to working with stakeholders to balance food safety with these growing consumer preferences and growing e-commerce platforms," the report reads.

Legislation introduced by Sens. Jerry Moran, R-Kansas, and Amy Klobuchar, D-Minnesota, would provide grants to meat processors to make improvements to become federally inspected, The Morning Sun reported.

Sen. Jon Tester, D-Montana, said the report shows the need to take action on spot pricing legislation he introduced with Sen. Chuck Grassley, R-Iowa. The bill would require large-scale meat packers to increase the proportion of negotiable transactions that are cash, or ‘spot,’ to 50% of their total cattle purchases. This would improve accuracy of formula pricing — which currently accounts for a significant portion of transactions — and increase transparency for producers and feeders, according to the Havre Daily News.

“The investigation so far clearly shows that Congress needs to take action in order to make sure the market is working and that consumers and folks working in production ag are protected,” he said.

The report says that investigation into potential violations under the Packers and Stockyards Act continues, according to American Farm Bureau.

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