WASHINGTON – Members of the US Senate Committee on the Judiciary requested the Government Accountability Office launch an investigation into a sudden drop in cattle prices during the latter half of 2015. A group representing independent cattle feeders applauded the move.
In January, cattle market stakeholders requested a formal investigation into the volatility in live cattle futures. R-CALF United Stockgrowers said the market saw a sudden 15 percent drop in cattle prices in the third and fourth quarters of 2015.
R-CALF explained that market fundamentals supported historically high cattle and beef prices in 2014 and the first half of 2015. Those fundamentals didn’t change, but cattle prices collapsed and no one can explain the phenomenon.
In response to industry concerns, the committee leadership sent a letter to Gene Dodaro, Comptroller General of the United States, asking for a formal investigation. In the letter, the lawmakers explained that committee staff members spoke with various stakehloders in the fed cattle industry in search of possible explanations for the price drop. But the committee concluded that “a more robust analysis of the market forces associated with this price drop” was warranted.
“Since the drop in fed cattle prices presents significant implications for consumers, producers and businesses, we request the US Government Accountability Office conduct an assessment of the cause of the 2015 price drop, including a review of the structure of the market and of any possible anticompetitive conduct.”
Bill Bullard, CEO of R-CALF, said the investigation represented the industry’s best chance at stopping “chickenization” of the cattle industry, referring to the vertically integrated structure of the poultry industry.“We are pleased the Judiciary Committee agrees that the evidence we provided regarding the dysfunctionality of our fed cattle market warrants a careful investigation into the current structure of our industry and our industry’s susceptibility to anticompetitive practices,” Bullard said. He added “We don’t want our cattle industry to follow the chicken industry’s path and the only way to reverse our present trajectory towards it is to defend and protect competition in our cattle markets.”