The U.S. beef industry is set to lose $13.6 billion as a result of COVID-19, according to estimates from a study released April 15.
Live and feeder prices have been especially volatile since the spread of coronavirus picked up pace across the country. Live cattle prices on NASDAQ dropped from $108.45 to $83.82 in a span of 12 days.
The cow-calf sector is expected to be hardest hit, according to the report, which was prepared by Oklahoma State University Extension and funded by the National Cattlemen’s Beef Association.
“Cow-calf producers are left highly exposed to the downward spiral of cattle prices in the wake of the expanding COVID-19 health emergency,” analysts wrote.
As they watch the markets, producers have been calling out the discrepancies in the price meat packing companies are paying for cattle and the price of boxed beef. It’s prompted several industry organizations and delegates in Washington, D.C., to push for an investigation into possible market manipulation.
Packers were already under scrutiny for the swing in cattle prices that occurred last summer following a fire that shut down a large packing plant in Holcomb, Kansas. The U.S. Department of Agriculture announced April 8 that the Packers and Stockyards Division would be expanding its investigation to include coronavirus impacts on the market.
It’s a concern that four large packing companies process more than 80% of U.S. beef, said Sen. John Thune, R-S.D. He sent a letter April 9 to the U.S. Department of Justice urging the Antitrust Division investigate anticompetitive activities in the beef industry.
“The integrity of the cattle market is in question, and we want to see what’s going on,” Thune said.
He’s also pushed for USDA to release a report from the Holcomb fire investigation. He’s been told they will have a report out on it, he said in an April 10 phone interview, but there were no details as to how soon.
He said he’d like to see a mathematical explanation of the price disparity and feels it’s time for agencies to question what the concentration of market power is doing to competition in the marketplace.
“It’s up to the Department of Justice to make sure we have fair, equitable markets,” Thune said.
The Nebraska Farm Bureau urged for the same in an April 14 letter to U.S. Attorney General William Barr.
“We cannot afford to lose confidence in the integrity of the futures market nor the price discovery efforts in cash markets, on top of the many other market disruptions and stresses farmers and ranchers are facing today,” Nebraska Farm Bureau President Steve Nelson said in a news release.
“In these uncertain times, it’s important our nation’s food producers know that our laws are being properly followed and enforced,” he added.
With restaurants closed, panic buying and packing plants shutting down, COVID-19 has had a large impact on the nation’s food system. That’s part of the urgency in moving these investigations forward, according to Thune.
It also makes getting funding to farmers a “top priority,” he said. He and South Dakota’s other delegates pushed for livestock producers to be mentioned specifically in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
U.S. Department of Agriculture Secretary Sonny Perdue announced an aid package the evening of April 17 that includes $16 billion in direct payments to farmers and a government purchase of $3 billion worth of produce, meat and dairy products for food banks. Payments should be coming in June, and they will be based on actual losses where prices and market supply chains were affected by COVID-19. Each producer will be eligible for up to $250,000.
The announcement came a day after safety net funding through the CARES Act ran out.
In the first weeks of applications, First Dakota National Bank in Yankton, South Dakota helped fund $110 million in loans through the Paycheck Protection Program for small businesses and farms.
“That’s a huge number for us,” First Dakota President and Chief Operating Officer Rob Stephenson said, adding that the loans make up about 10% of all loans the bank has done since its founding.
With the government paying back 80% of the loan, Stephenson said it’s an important tool to help the local economy, make payroll and avoid laying off employees.
“It’s a grant,” he said.
Applications opened April 3 for small businesses, and the program opened to farmers and sole proprietorships April 10. Funds ran dry by April 16, but producers are encouraged to keep alert of new rounds of funding.
Janelle Atyeo can be reached at email@example.com.