Concentration and Globalization Are the Core Problems Causing Crisis in Cattle Markets Says R-CALF USAThu, 24 Jun 2021 09:09:34 CDT
In comments submitted yesterday to the U.S. Department of Agriculture (USDA), R-CALF USA identified concentration of the beef packing sector and globalization of input supply chains as the core structural problems causing today’s crisis in the U.S. cattle industry. In April, the USDA called for public comments to help the Administration transform America’s food system by increasing durability and resilience within U.S. food supply chains.
The group’s comments assert these core structural problems result from misguided public policies that pandered to corporate agribusiness self-interests to allow the forces of competition to be purged from both the cattle and beef supply chains. This occurred, according to R-CALF USA, because policy makers used “biased economic modeling that predicted largeness of scale would create marketplace efficiencies, which in turn would increase consumer welfare by affording consumers more and lower-cost food.”
But charts contained in the comments show consumers have not received either more, or lower-cost food. Instead, they show ever-rising consumer beef prices, falling cattle prices paid to America’s cattle farmers and ranchers, and a chronic inability for the United States cattle industry to produce enough beef to satisfy domestic beef consumption.
The comments state that four multinational beef packers control 85% of the fed cattle market and 80% of the boxed beef market, and that they have now consolidated their control “over both the supply side (live cattle input side) and demand side (beef and beef product output side) of the packing industry.”
The comments also explain that the globalization of input supply chains - both cattle and beef supply chains - has caused significant harm to the domestic cattle industry. The comments state this is because resultant trade policies encourage lower-cost, undifferentiated imports of both cattle and beef, which are direct substitutes for domestic-produced cattle and beef. As such, the group states, they are a major cause of both the domestic cattle industry’s underproduction and contraction.
To address this, R-CALF USA’s first recommendation for reversing the harmful effects of globalization is to require all beef sold in America to be labeled with a country-of-origin label so consumers can begin making purchasing choices between foreign beef and domestic beef.
R-CALF USA’s comments lead the reader on a trail that explains how the concentrated beef packers successfully purged competitive market forces from nearly every transaction point and industry segment along the supply chains for both the supply-side and demand-side of the packing industry. They then do the same for globalization, by identifying the precise areas where the purged competitive market forces must now be reinserted by either the Administration and/or Congress.
Along those trails, the comments make no less than 28 recommendations on how to strengthen the domestic cattle and beef supply chains, to make them more resilient, and to positively transform America’s food system.
In its final recommendation, R-CALF USA urges the Administration to reverse the decision to introduce the live foot-and-mouth disease (FMD) virus into the National Bio- and Agro-Defense Facility (NBAF) now under construction in the heart of the beef belt - in Manhattan, Kans.
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