Senate Ag Committee holds hearing on cattle markets, transparency, prices

The Senate Committee on Agriculture, Nutrition, and Forestry heard comments during its Examining Markets, Transparency and Prices from Cattle Producer to Consumer hearing June 23.

Witnesses for the hearing included Justin Tupper, vice president, United States Cattlemen’s Association, St. Onge, South Dakota; Mark Gardiner, partner, Gardiner Angus Ranch, Ashland, Kansas; Glynn T. Tonsor, professor, Department of Agricultural Economics, Kansas State University, Manhattan, Kansas; Dustin Aherin, vice president, RaboResearch Animal Protein Analyst, Rabobank, Chesterfield, Missouri; and Mary K. Hendrickson, associate professor, Division of Applied Social Sciences, University of Missouri, Columbia, Missouri.

Sen. Debbie Stabenow, D-MI, chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, said she and many of her constituents have heard from producers concerned about the lack of transparency and competition in cattle markets.

“These farmers and ranchers also raise concerns with concentration in the packing industry, potential market manipulation, lack of access to small- and mid-size plants, and a range of other issues,” she said.

The conversation is an important one as the committee considers reauthorizing the Livestock Mandatory Reporting Act, and as it oversees implementation of $4 billion in funding to strengthen the food supply chain.


Tupper is a producer as well as an auctioneer and affiliated with the St. Onge Livestock Auction. He said the issue with pricing is definitely a producer issue, not a partisan one.

“This hearing is critical because there is a crisis in rural America,” he said. “We are losing our producers at an alarming rate, all the while watching big corporate feeders and packers make record profits with the threat of vertical integration hanging over our head.”

Many cattle producers don’t receive the price their animals are worth simply because of the market, he said.

“In my years as an auctioneer and operating St. Onge Livestock, I’ve learned the most important participant in true price discovery is the second bidder,” he said. “In most cases in the fat cattle trade today, we don’t have a second bidder, there’s simply not enough market participants.”

Cattle producers have seen huge losses in equity while a packer reaps all the rewards—despite having the least amount of risk and owning the product the shortest time—all while exploiting producers and, ultimately, the consumer.

“American cattle producers don’t want, nor are we looking for a handout,” Tupper said. “We just want a fair and equitable playing field, staffed by a referee, with a whistle and a flag. Producers cannot be sustainable or generational without being profitable.”

One way to level the playing field with the packers is to work to eliminate the occurrence of anticompetitive practices and market manipulation in the meatpacking sector.

“We can break them up so they cannot have as much influence or ownership in the market. We don’t take these challenges lightly, we believe these are critical times,” he said. “The United States Cattlemen Association, of who I am testifying on behalf of today, is fighting to secure our food supply system, our rural communities, and our members and our members livelihoods.”

Southwest Kansas rancher Mark Gardiner says markets are a very important topic for the beef industry, and the fifth generation rancher sees how complicated the topic really is.

“A processing plant fire, a pandemic and a ransomware attack caused extraordinary disruption in processing, resulting in a dramatic drop of the processed beef supply and a bulging oversupply of live cattle,” he said. “This caused an unprecedented drop in cattle prices, while simultaneously leading to a record rise in beef prices, all driven by pure economic market principles.”

There are too many cattle in too little processing capacity, according to Gardiner.

“We have a volatile marketplace created by outside unavoidable factors, not any one market player,” he said. “We have observed similar market disruptions in lumber, automobiles and other goods.”

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The solution for this is very complicated, he said. Even though processors are adding capacity because of demand for high quality beef, this is a lengthy process. Looking back at history, this will reach a point where the ample processing will compete for limited cattle numbers.

“When this happens, the marketplace will shift, and the producer will have more leverage,” Gardiner said. “But the question for us in the meantime becomes how much damage will regulations do to the marketplace by artificially manipulating the pricing mechanisms.”


Tonsor called the U.S. beef industry arguably the country’s most important agricultural sector.

“The sheer size and importance of the industry must be appreciated before implementing any proposed policy change as the potential exists to impact many members of our society,” he said. “It’s not surprising the industry’s markets are complex. I often describe the industry operating as a Rubik’s Cube.”

No relationship is more relevant currently than the relationship of fed cattle inventories to processor capacity. Since 2016, the relationship has changed, exceeding operational processing capacity in the beef industry. The Holcomb plant fire in 2019 and developments during the pandemic occurred in this time period as well, Tonsor said.

Tonsor said all the revenue available to beef industry participants ultimately starts at the consumer level. This shows how alignment between the industry and the consumer is essential.

“Fortunately, the U.S. beef cattle industry is the envy of many others, for several reasons,” he said. “Compared to the vantage of the industry it includes being a global leader in the production of high quality, grain finished beef desired by consumers around the world.”


Like Tonsor said, Aherin believes there have been major disruptions in the beef supply chain during the last two years, sending the cattle and beef market into uncharted but explainable territory.

“The imbalance of excess market-ready cattle supplies in the face of reduced operational packing capacity has put downward pressure on cattle prices,” he said.

More recently restaurant re-openings and export demand have combined with elevated processing costs have increased the spread between beef and cattle prices.

The beef packing industry has historically been a low-margin business. For example, in 2000, the total cattle population was 98 million head, and fed slaughter was around 30 million head. By 2015 it was below 90 million with about 23 million slaughtered. During this time period, drought forced beef cowherd reduction and inefficient packing plants were driven out of business—driving cattle prices to record highs.

“Even before the extremes of 2020 recent margin suggests that there is opportunity to add packing capacity,” he said. “However, that opportunity does not come without significant risk.”

Those risks include cost, regulatory requirements, labor, and cash on hand to absorb losses, among others. The upfront cost of new or plant expansion is costly. Aherin said industry sources estimate cost of $100 to $120 million for every 1,000 head increase of daily capacity.

Aherin cautions, there’s a point where industry expansion can go too far and won’t withstand tight cattle supplies through the long term. For success, drought risks, market fundamentals and technology considerations need to be thoughtfully weighed. Many packers have recently returned their focus to technology development as a means to manage labor challenges, manage cost and reduce product waste.

Aherin said the shocks to the beef industry over the last couple of years have given the entire beef supply chain an enormous challenge.

“The resulting price movements have been frustrating to say the least,” he said. Those same movements and disruptions have accelerated investment in new technologies and strategies to keep the beef industry evolving.


Hendrickson is most concerned about the impact the markets have on people and their communities. Her concern centers around the relationships and impacts market organizations have on farmers, consumers and their communities.

Competitive markets exist when no one seller or no one buyer can influence the market place. No actor has the power to define choices, prices or ways of participating in the market place. They encourage a diversity of organizational forms, as well as encourage multiple linkages across actors, according to Hendrickson. They can also decentralize decision making over food.

“So, the power to make decisions about what food is produced, how, where, by whom and who gets to eat it has become increasingly concentrated in the hands of a few people that are located in transnational agrifood companies,” she said.

What is the impact of consolidation in the cattle industry as well as the larger food and agricultural sector, Hendrickson asked?

“It means fewer choices for farmers about where they market their animals,” she said.

Fewer market options limits and inhibits decisions of farmers. Sometimes they make choices they might not have otherwise made. Hendrickson and her colleagues have argued there should be basic agrifood liberties such as the freedom to negotiate and dictate terms of contracts, or the freedom to know what’s going to be constrained when agrifood markets are consolidated.

Rural sociologists conducting analysis of the relationship between agriculture structure and community found detrimental effects in 82% of the 50 studies they reviewed. Consolidated agriculture without people has depopulated western Kansas, according to anthropologists at the University of Kansas, according to Hendrickson, and helped collapse social relationships.

“Researchers in Europe have shown that less concentration of agricultural production enhances social cohesion, and that is the glue that allows groups and communities to accomplish their goals and dreams,” she said. “This pandemic has shown us a number of flaws in our food system.”

There are ecological concerns about animal welfare and wasting natural resources with food animal production as well. But how are the effects of market consolidation or limited markets going to be fixed for producers?

“I don’t believe that there’s any one approach at any given scale that will prove effective,” Hendrickson said. “Instead, we need a combination of actions strategies and policies at multiple levels that are ecological, democratic and equitable within and across populations generations and species, and this is the way we’re going to build redundancy and provide fallbacks when some organizations or networks fail.”

Kylene Scott can be reached at 620-227-1804 or [email protected].