Farmer Focus: Processor collusion under the microscope
© Kandace Griffin Post Spice (the heifer) made the news in the US again.
Up until now, I thought that the British were polite people who only got into fights at football matches and on holiday at the Costa del Sol. I guess I will have to add cattle shows to the list.
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Over here there is a single news story dominating our livestock industry now – what to do about the beef packers (processor).
See also: French poultry firms fined 15m euros for collusion
Current processor profit margins a head are larger than gross receipts received for calves in the country.
Yes, the profit for owning the animal briefly is larger than the sales for the person who owns the cow, the land she lives on, the time and money invested in the calf and so on.
Processors are still blaming Covid for reduced kill capacity, but there seems to be a lot more going on.
Accusations of market collusion are starting to be made in congress. There are four companies that control over 85% of the market.
The largest livestock industry trade group in the US is called the National Cattleman’s Beef Association (NCBA). Our own ranch is a member.
This week the Brazilian meat processor JBS announced it was pulling its membership because the group is starting to ask for investigations into price manipulation and monopolistic practices.
Personally, I think JBS leaving is a good thing. I understand the desire to be a “big tent” organisation, but I fail to see how one group can represent both the buyer and seller of the market.
It’s akin to same lawyer representing an employer and the employer’s union – it just doesn’t work.
I am sure the NCBA will miss JBS’s money, but hopefully they get the political cover to hit back a little harder now.
Plus, with JBS admitting to bribing almost 2,000 Brazilian politicians, a $110m settlement over price-fixing in the US chicken market, insider trading charges, jail sentences, and so much more, it is liberating to take the other side.
I would imagine that things will get worse before they get better, and a multibillion-dollar temper tantrum will soon be thrown by the packing industry.