States Want Probe Into Price-Fixing

States Want Probe Into Price-Fixing

( – Consumers are starting to feel the brunt of meat plant closures as grocery stores ration meat, meat packaging plants produce less, and farmers are forced to dwindle their livestock numbers. Over the last few weeks, Tysons Foods and Smithfield Foods say they closed plants over COVID-19 safety issues and to deep clean their facilities. This is drastically affecting the supply of meat to the marketplace.

However, 11 state attorneys general and an influential US Senator think there is more to it than that. AGs from Arizona, Colorado, Idaho, Iowa, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, and Wyoming wrote a letter to US Attorney General William Barr expressing their concerns. They believe plant closures due to COVID-19 are not the reason for price increases and rations.

Instead, they think something far more nefarious is happening. According to the state AG’s, four companies control 80% of US beef processing, which gives them unprecedented control over the supply and demand. It’s the second time in a year that allegations of collusion have been made against the titan meatpacking companies.

Price-Fixing Allegations

In April, US Sen. John Thune (R-SD) expressed deep concern that price-fixing was at the heart of the issue, not COVID-19, and that answers were needed. He isn’t alone. Cattle producers are also asking questions as they are forced to euthanize their animals and take significant losses. They claim beef processors are making record profits while ranchers are losing money.

State AG’s agree, saying “In short, with such high concentration and the threat of increasing consolidation, we have concerns that beef processors are well-positioned to coordinate their behavior and create a bottleneck in the cattle industry—to the detriment of ranchers and consumers alike.”

Department of Justice Involvement

The state AGs’ claim that the low cost of cattle and the high prices for consumers is a sign that something is very wrong. They want to work with each other and the DOJ to closely examine the competitive dynamics of the meat industry. A competitive industry that offers higher quality products and lower prices to consumers is something that all of these AGs want to see.

In April, Thune said that the industry was anti-competitive and bordered on “monopolistic.” While he felt the DOJ should get involved, he also said Congress could do more, but offered no specifics. The senator also wanted to see first what the DOJ does and how an investigation of price-fixing allegations against Tyson by the United States Department of Agriculture (USDA) plays out.

The USDA is investigating Tyson’s profit margins after a plant fire in August 2019. US Agriculture Secretary Sonny Perdue said that significant disparity exists between meat packer’s profits and cattle prices. He is evaluating the creation of a task force to look into the issue.

As for the AGs, if an investigation results in no enforcement, they say regulatory strategies should be pursued to promote competition, end market manipulation, and protect consumers.

By Don Purdum, Freelance Contributor

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