While Beef Prices Rise at Stores, Cattle Prices Drop – Why?

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USDA officials and federal prosecutors are probing the wide gap between what consumers pay for beef at the grocery store (the highest in decades) and the painfully low prices that livestock producers are paid for their cattle.

By the numbers: The average retail price for fresh beef in April was $6.22 per pound, or 26 cents higher per pound than the previous month, according to the Bureau of Labor Statistics. But the average price for a steer at the end of April was less than $100 per hundred pounds. The five-year average for that same week was about $135 per hundred pounds, according to USDA’s weekly summary.

According to meatpackers, beef prices are up during the pandemic because processing plants have scaled back operations as workers fall ill, meaning less meat is making its way to grocery store shelves. The reduced capacity also means less demand for live cattle from farmers and ranchers, pushing livestock prices lower.

But farmers and lawmakers think there’s more afoot than simple supply-and-demand shifts in an industry that has been a focus of federal antitrust efforts for more than a century. One hundred years ago, the five largest meatpackers accounted for 82 percent of the beef market, before agreeing to antitrust measures. Today, four companies control about 85 percent of the market: Tyson Foods, JBS, National Beef and Cargill.

“It’s evidence that something isn’t right in the industry,” said Sen. Chuck Grassley (R-Iowa). He’s one of 20 senators and nearly a dozen state attorneys general who have asked the Trump administration to take a closer look at the beef market.

USDA has been investigating potential price-fixing since last August, and the Justice Department is now reviewing the so-called Big Four beef processors, according to a person with knowledge of the probe.

A group of ranchers is also suing the four companies for allegedly colluding to depress cattle prices since 2015, a case that is pending in Minneapolis federal court. The four meatpackers did not respond to requests for comment on the federal probes.

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