Rounds Unveils Three-Pronged Approach to Address Cattle Market Crisis

WASHINGTON—U.S. Sen. Mike Rounds (R-S.D.) today announced a number of steps he is taking to address the ongoing cattle market crisis, which has been magnified during the recent outbreak of COVID-19 and could lead to producer bankruptcies.

“In recent years, cattle producers have suffered from an undervalued product and low market prices—despite a consistent and growing demand for U.S. beef,” said Rounds. “This has only intensified in recent months following a fire at a meatpacking facility, and now, the spread of COVID-19. We’re at the point where many South Dakota ranching families are on the brink of going under. This is unacceptable. However, there are steps we can take to reverse this trend, if we act now.

“Today, I’ve taken a number of steps that I believe would provide much-needed assistance for our cattle producers. This includes providing immediate relief for cattle producers who are being unfairly harmed due to COVID-19 market disruption, supporting efforts to reinstate Mandatory Country of Origin Labeling (MCOOL), and urging a federal investigation into multiple allegations of anti-trust violations by meatpackers.

“Our producers are on the frontlines of our food supply chain. We cannot allow unjustified, unfair and unwise practices to put them at a disadvantage –or worse – force them out of business altogether.”

Regarding his letter to the Department of Justice, Rounds said:

“Today, we are asking the Department of Justice to investigate continued allegations of price fixing within the cattle market. Just last summer, we saw the most recent allegation that resulted in the Department of Agriculture investigating the packers.  That investigation is still under review. Additionally, we are asking the Department of Justice to definitively answer whether a packer oligopoly exists within the cattle market and inherently creates an anti-competitive market place that unfairly disadvantages the cattle producer and consumer.

“Cattle producers are seeing record losses and bankruptcies. Meanwhile, the shelf price of meat is at record highs, and boxed beef prices are increasing as well. These margins don’t make any sense. The reality is that there is an inverse correlation between the producer’s price and the consumer’s price. We want to know why. If the Department of Justice finds that there are no violations, then we must reconsider the statutory environment of this industry, because the status quo isn’t working.

“We need these answers quickly and decisively to protect the integrity of the industry, and every stakeholder, including consumers who are footing the bill.

Steps Rounds has Taken to Address the Cattle Market Crisis:

1. Urging a federal investigation into whether the nation’s top meat packers have engaged in anti-competitive activity by abusing their concentration of market power and have engaged in an unlawful price fixing scheme. In a letter to the Department of Justice, Rounds urged the agency to examine the current structure of the beef meatpacking industry and determine whether it complies with U.S. Antitrust law.  Text of the letter can be found HERE.

2. Urging President Trump to support trade negotiations to allow mandatory country-of-origin labeling (MCOOL) in the United States. In a letter to President Trump, Rounds offered his support for South Dakota Concurrent Resolution 601, which “urgently requests the President of the United States and the United States Trade Representative to negotiate and execute agreements, with Canada and Mexico, which will remove trade barriers to MCOOL.” MCOOL requires labeling to include where the product is sourced. MCOOL was repealed in 2015. Since then, American producers of beef and pork have been at a disadvantage when marketing their products. Additionally, consumers are unable to differentiate between domestic and foreign products when choosing which meat to purchase at the store. Without reinstating MCOOL, and because of existing loopholes within USDA regulations, foreign beef can currently be labeled as a product of the U.S.A. Text of the letter can be found HERE.

3. Submitting Legislation to Help Offset Loss by Cattle Producers This week, Rounds submitted legislation to Senate leadership to include in a COVID-19 response bill that would direct the Secretary of Agriculture to use Commodity Credit Corporation (CCC) funds to offset losses cattle producers take in the live and feeder cattle markets. The legislation would use USDA Economic Research Service projections for 2020 as a baseline for market losses. Producers would report to their local Farm Service Agency (FSA) office the month or months in which they sold their cattle and the amount they sold. USDA would then use the reported average sales prices compared to the indexed feeder or live cattle average to determine the COVID-19 market disruption. Text of the legislation can be found HERE.

• For example, USDA projected that in 2020 feeder cattle would sell at an average of $150 per hundred weight. If a producer sold cattle in April, USDA would calculate the average sales price for that month and pay the producer the difference based on the amount/weight of cattle sold. Therefore, if the average sale for the month of April was $130 per hundred weight, each producer (regardless of their individual sale price) would qualify for a $20 per hundred weight market correction—for 2020 only (all months). The same goes for live cattle sales, meaning it would apply to cattle being sold for slaughter as well as cattle being sold to a feedlot. Conversely, if the market rebounds and the average sale for the month or months reaches the USDA 2020 projected price, then no payment is necessary.
• Rounds intends to introduce this as standalone legislation on Friday, March 20, 2020.

Rounds previously introduced the U.S. Beef Integrity Act, which would outlaw foreign beef from being labeled as a “Product of the U.S.A.” and make certain that label only goes on beef and beef products exclusively derived from animals born, raised and slaughtered here in the United States.  Currently, the USDA’s Food Safety and Inspection Service (FSIS) does not require that beef be born, raised and slaughtered in the U.S. in order to carry a “Product of the U.S.A.” label. This loophole allows beef from livestock born and raised in foreign countries to be labeled “Product of the U.S.A.” as long as the beef undergoes additional processing at a processing plant in the U.S.

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