Iowa senator says processors ‘monopolizing’ beef industry
SIOUX CITY (KTIV) - Iowa Sen. Chuck Grassley, along with some cattle producers, say there are too few beef processing plants, and the industry operates like a monopoly, with smaller cattle producers left out of long-term contracts.
On Wednesday, Grassley spoke with reporters about a new piece of legislation - the Cattle Price Discovery and Transparency Act.
The biggest beef processors say the current system provides a stable long-term market, benefiting the farmers they work with, and consumers. But Grassley, a grain farmer himself, says the current system needs to change. Because on the back end, smaller cattle producers, like the ones we have in Iowa, largely don’t have access to the nation’s top meat processors.
Grassley says most small cattle producers don’t even have the chance for a long-term contract with the “big four” meat processors. That’s Tyson, Cargill, JBS and National Beef.
“But I want to say that when you have four big producers monopolizing the market by 85%, of the slaughter, and the cozy, cozy relationships that they have, with the big feedlots in Texas, Kansas and Colorado, the marketplace is not working,” said Grassley.
Instead of dealing cattle like we typically think of: a producer approaches a processor and set a cash price available to the public, many of the largest meat processors only use long-term, private contracts.
Think of it this way: An official in Sen. Grassley’s office says 75-80% of cattle is sold through formula contracts. That’s sold to places like Tyson Foods and those contracts aren’t disclosed publicly.
“These are mostly family farm deals that they just want a fair shot to raise a couple 1,000 cattle and get a fair price for them. And, you know, we just want to that group, my group, we just want a fair opportunity to be competitive,” said Brad Kooima.
Grassley’s bill, which has both Democratic and Republican senators as co-sponsors, would force meat processors to do a certain percentage of their sales in cash.
The theory? This will open up large meat processors to smaller, independent farms. The bill would also require meat processors to disclose the terms of these private contracts, giving the industry and public greater price transparency.
The North American Meat Institute, an organization that represents meat processors, calls the Grassley bill a “government mandate.”
“Supply and demand has already driven the cattle markets back into balance without the radical government interference and convoluted mandates called for in the latest draft of the Grassley-Fischer bill,” said Meat Institute President and CEO Julie Anna Potts in a news release.
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