Record-High Cattle Prices in Australia from Last Spring Keep Getting Higher
Last spring was one of the few times Australian fed cattle reached U.S. fed cattle prices, and prices have continued to increase with plenty of monthly reports showing record-high cull cow prices, bred cow prices and feeder and grass prices. All of this was going on while in the U.S, fed cattle prices from late June through November saw the lowest prices since 2010 against record- and near-record-high boxed beef and retail prices.
Granted, cattle supplies are low in Australia and packer margins are negative after some pretty favorable margins in 2018 and 2019. But the big driver of cattle prices is competition. While the U.S. has four major beef packers which process 85 percent of the slaughter cattle, Australia has multiple packing plants – some only running seasonally – with the five major packers controlling only 52 percent of the slaughter.
Big difference. Especially when the four major packers in the U.S. have been found to be pretty good at collusion and price-fixing in the pork, chicken and turkey industries here in the U.S. class action lawsuits have come from wholesalers, retailers, poultry producers and even the Department of Justice.
Throughout 2021, major packers have started to settle some of the litigation involving price fixing for both pork and poultry, reported the Meat and Poultry website. Unfortunately, it appears fines and settlements may be less than what they profited from such actions, making it good business for them.
But do you really think these same folks, many of them operated by the four major U.S. beef packers, have not adopted the same corrupt policies in the beef/cattle industry? Of course they have. Character does not change when one walks from one room to the other.
The price gouging and reckless profit taking, I believe, started in 2016 and has only grown since the repeal of the Country of Origin Labeling (COOL) law in 2015. In fact, I believe it empowered these packers, similar to what happened as a result of the Tyson Fresh Meats packing plant fire in Holcomb, Kan. in August of 2019. As a result, packers crashed cattle prices, while boxed beef and weekly slaughter numbers went up the next week.
The industry has had a lot of packing plant fires in the U.S., some of them at major packing plants. As a result, producers saw an increase in fed cattle prices the following week.
COVID-19 and the failure of the Department of Justice to step in for price gouging following President Trump’s declaring a National Emergency has only empowered the big four major packing plants.
Let us hope President Biden’s new commission with the Department of Justice and the Packers and Stockyards Act is given subpoena power and the ability to hire outside anti-trust legal counsel. Without this, the cattle industry can’t expect a lot to come of it outside of a little hand-slapping. The industry needs stronger collusion laws and predatory pricing laws if new plants are going to survive. It’s long overdue.
The last time I figured it, the packers were taking an additional $1 billion every two to three weeks out of the U.S. cattle industry on just their increased margins above their historic margins. This is a nation built on the foundation of protecting property rights and insuring opportunity.
Instead, over the last several years, the industry has had two major beef packers – JBS and Marfig (National Beef) – who are both Brazilian-owned with not one member of their family who ever fought or helped build this country, exploiting and plundering U.S. ag families who are at the heartland of this great country.
This is a sad state of affairs, and far from what agency bureaucrats and academics prophesized would happen with increased consolidation.
In fact, their false ideologies stating large corporations would be more efficient, and through those efficiencies pay producers more and charge consumers less, has proven to be just the opposite in the livestock business. Really it should be no surprise to anyone, as history is full of the negative results of such folks.
Leo McDonnell is a rancher based in Columbus, Mont.