The Senate Agriculture Committee held a hearing Wednesday to examine the state of the U.S. meatpacking industry, issues associated with price transparency and a disconnect between boxed beef and fed cattle prices.

American Farm Bureau Federation President Zippy Duvall praised the Ag Committee’s efforts to investigate the ongoing issues plaguing cattle farmers and called on Congress to increase efforts and take action.

AFBF’s top priorities on the issue include a regional mandatory minimum negotiated trade, the need for a beef library to compare all contracts in the market and reauthorization of Livestock Mandatory Reporting. It also continues to call on the Department of Justice to release results of its investigation of the livestock markets.

The recommendations are in response to price disparity in the market, as boxed beef prices rose to historic highs in recent years while cattle prices remain stagnant, along with ongoing concerns about market concentration.

Four companies control more than 80% of packing plant capacity while research suggests the beef sector currently is short about 5,700 hooks nationwide, according to the National Cattlemen’s Beef Association (NCBA).

“Concentration and consolidation clearly play a large role in many issues affecting the industry,” Sen. Debbie Stabenow, chair of the Senate Ag Committee, said in her opening statement. “There is a widening gap between those giant players and the small and medium-sized processors that many local farmers and ranchers rely on.”

One of NCBA’s long-term goals focuses on increasing cattle packing capacity by 7%.

Issues in the cattle market were exacerbated in recent years starting with a fire at a Tyson processing facility in 2019, followed by the COVID pandemic in 2020 that temporarily reduced capacity and backed animals up at feedlots, and then a cyberattack that briefly brought cattle processing at 13 JBS plants in the U.S. to a halt this month.

Other suggestions made by witnesses at the hearing include investment in local and regional food systems, more funding for small and local meat processors and meaningful reforms to the Packers and Stockyards Act.

May feedlot placements decline

USDA Friday released its monthly cattle feed report, which showed placements in feedlots during May dipped 7% from a year ago to 1.91 million head.

“This was lower than trade estimates and should start, in our viewpoint, two to three months of slightly lower numbers,” said Rich Nelson, director of research at Allendale Inc.

Cattle and calves on feed for the slaughter market totaled 11.69 million head as of June 1, up 28,000 head from a year ago. Marketings of fed cattle increased 23% to 1.87 million head last month.

“In the grand scheme, we’re still seeing liquidation, especially in the Northern Plains,” said Nelson, who believes congressional interaction in the cattle market makes future price action harder to predict. “We’ll probably stay in the $122-$125 (per hundredweight) range the next few weeks. We agree with the futures curve up to $130 by the fourth quarter.”

Live cattle futures prices totaled $128 for October and $132 for December as of Friday.