WASHINGTON – Committees in both the House of Representatives and US Senate examined the current conditions of the US beef supply chain on July 28 including how more competitiveness can be restored to the market.
The instances cited in both hearings that influenced the cattle industry were the major Tyson Foods beef plant fire in Holcomb, Kan., during 2019, the JBS cyberattack from earlier this year and the COVID-19 pandemic.
“It is our job on this subcommittee to get to the bottom of the most complex challenges confronting agriculture and to help our farmers and ranchers overcome these challenges,” said Representative Jim Costa (D-Calif), chairman of the House Agriculture Committee. “Today we will hear from four expert witnesses, who will tell us where the vulnerabilities in our supply chain lie and share their innovative ideas for helping the beef supply chain adapt to become more resilient, so that we can use what we learn today to create positive change.”
In the House, witness testimony included Jayson Lusk, PhD, professor and head of Agricultural Economics at Purdue University and Jennifer van de Ligt, PhD, Director, Food Protection and Defense Institute, University of Minnesota.
Lusk discussed how these recent events will impact and influence what needs to be done in the beef industry in the future.
“There are long lags and ripple effects in cattle and beef markets,” Lusk said. “A producer makes a decision today to breed a cow, and it will be roughly three years till the resulting offspring is ready for market. Likewise, investors today decide to build a new packing plant. It will be years before construction is finished and the capacity is brought online. Everyone is betting on the future with information that ultimately will be two to three years old by the time outcomes are realized. Cattle inventories have already started to fall, and cattle prices have risen since last summer. My recommendation to you, as policymakers, is the following: do not overly focus on what is happening today. Consider what will be needed three to five years from now.”
Van de Ligt expressed her thoughts on what the cybersecurity risk will be like in the agriculture community and the consequences of the JBS cyberattack to the companies and consumers. She also discussed the reliance on cyber information in operating systems in order to perform normal tasks.
“The recent JBS cyberattack disrupted meat processing operations in several countries and simultaneously caused disruptions to supply chains, logistics, and transportation to customers. And it increased consumer prices,” she said. “This amplification of disruption can easily result in national security threats depending upon the scale of attack and subsequent disruption.”
Other experts in the hearing were Keri Jacobs, PhD, associate professor of Ag & Applied Economics, College of Agriculture, Food and Natural Resources, University of Missouri and Dustin Aherin, PhD, vice president and Rabo Research Animal Protein Analyst, Rabo AgriFinance.
Following the house testimony, the National Cattlemen’s Beef Association (NCBA) expressed its appreciation for attention on this issue.
"The roadblocks that are depressing profits for our cattle producers and endangering the steady supply of affordable beef have really captured the attention of lawmakers," said Ethan Lane, vice president of government affairs at the NCBA. "The continued momentum we are seeing on expanding processing capacity, both on Capitol Hill and at USDA, is a positive sign. We are grateful to Chairman Costa and Ranking Member (Dusty) Johnson for prioritizing this issue. We look forward to continuing to work with members of the House Agriculture Committee to advance solutions like the Butcher Block Act that would alleviate some of the chokepoints that are hurting our producers."
“Independent cattle producers in Iowa and across the country deserve a free and fair market,” Grassley said in his opening remarks. “The amount of cattle traded on the cash market in the early 2000s was more than 50%, but today it has dropped to only 20%. All other cattle contracts use the cash market as base price for their negotiations.”
Witnesses at that hearing included Jon Shaben, Iowa Cattlemen’s Assocation; Rob Larew, president of the National Farmers Union; Shane Miller, president of fresh meats at Tyson Foods Group; Tim Schellpeper, president of US fed beef at JBS USA; David Smith, president and chief executive officer of the Associated Wholesalers Grocers; and George Slover, senior policy council at Consumer Reports.
"To be clear, at Tyson, we welcome competition. Healthy competition not only makes us better – it also helps put affordable, higher-quality food on the tables of more Americans," said Shane Miller, president of fresh meats at Tyson Food Group in his testimony. "And the competition is intense. Customers have multiple meat suppliers from which to choose and they subject suppliers to competitive bidding processes based on terms the customers specify. Customers often work with several meat suppliers to ensure orders are filled according to their product specifications, volume requirements, and pricing terms, which adds to the constant pressure to outperform the competition."
Following both hearings, the American Farm Bureau Federation (AFBF) released a statement of appreciation to the committees for bringing up the strengths and weakness of the beef supply chain.
“We welcome the discussion held by the Judiciary Committee to restore a competitive playing field for America’s farmers and ranchers,” said Zippy Duvall, president of the AFBF. “It was also important for the House Agriculture Subcommittee on Livestock and Foreign Agriculture to explore and call attention to the difficult trajectory cattle markets have followed over the last two years. Prices at the grocery store continue to rise while ranchers receive the bare minimum prices for their livestock.”