Billings Gazette: Meatpacking reforms gain traction in Montana, D.C.

by Tom Lutey

There’s been little progress in trust busting the meatpacking industry over the last 20 years, but still Bill Bullard gnaws on the subject like a dentured man chewing a $2 steak.

There’s no other choice, Bullard said Wednesday. Cattle prices are so out of whack that if there isn’t reform soon, ranchers will be going out of business.

“This is the result of decades of inaction and neglect over protecting the competitiveness of the nation’s largest segment of agriculture and that’s our cattle industry,” Bullard said. “The situation is so bad now that immediate action needs to be taken.”

Driving home, he pauses in mid-thought to miss a deer, then gets back to the business of being CEO of the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America.

“What we need to do is restore the competition that has been turned from the market place due to decades of regulator inaccuracy. We have to restore the lost competition in the marketplace. That’s step one. Step two is restoring the lost competition in the grocery store, because that’s where the demand for cattle starts.”

There’s reason to be optimistic reform is coming, Bullard said. Congressional concerns about the meatpacking industry are no longer limited to farm-state lawmakers. A tight meat supply at the start of the COVID-19 pandemic brought the challenges of the beef industry to America’s supermarkets, where beef was scarce and prices increased sharply.

There are now several bills in Congress to address the challenges of the meatpacking industry in which four companies process more than 80% of the country’s beef. The latest, by U.S. Sen. Jon Tester, a Montana Democrat, creates a special investigator for competition matters at the U.S. Department of Agriculture.

Tuesday, Agriculture Secretary Tom Vilsack said he supports an investigative unit, with subpoena power, to enforce antitrust laws in the meatpacking industry.

“I think it’s a good proposal. I think it’s part of what needs to be done,” Vilsack said during a Senate budget hearing.

Tester said Wednesday that the creation of a special investigator would mark the first time in the 100 years of the Grain Inspection, Packers and Stockyards Administration, that USDA had the full power of a law enforcement agency when it comes to antitrust enforcement. He is sponsoring with Iowa Republican Sen. Chuck Grassley, S. 2036, a bill to amend the Packers and Stockyards Act, of 1921, to establish the Office of the Special Investigator for Competition Matters, and for other purposes.

“The most important thing it will do is give them subpoena power. So they can make determinations and get to the real issues of transparency,” Tester said. “I tell you what Grassley said. He said. ‘well fine, Jon, but they already have that power. Packers and Stockyards already has this.’ I said ‘no they don’t. They’re like mall cops. They’re not the kind of cops we need.'”

The goal, Tester said, is to get true competition for the cattle ranchers sell. Competition should increase what ranchers are paid. In the grocery store, where a wider selection of suppliers are competing in the refrigerated case, the price should be more favorable to customers.

Tester and Grassley introduced their bill June 11. In Montana, the legislation drew support from Joe Goggins, owner of the Public Auction Yards in Billings. Public auctions are considered critical for the price discovery, but increasingly sales are taking place privately under contract, in which case payments are settled without competition and without the disclosure that gives other ranchers an idea of what their cattle are worth.

The Montana Farmers Union backed the bill, as did the U.S. Cattlemen’s Association, both of which support the competitive bidding that livestock auction houses provide. The concern is that cattle are selling for a price that’s artificially low. Fat cattle might sell for around $1.17 a pound on the ranchers end of the deal, while choice beef butchered into wholesale cuts sold to grocers might fetch $3.29 a pound.

The pricing only becomes more unfavorable when the nation’s four large meatpackers start butchering fewer animals, as they did when JBS, hit by a ransomware attack earlier this month, shut down operations for a day and a half. A reduction in animals slaughtered means demand for cattle is less. That means cattle supply backs up all the way to the ranch and prices drop. At the same time, there’s less meat for grocers, which means consumers pay more as availability declines.

Bullard sees merit in Tester’s bill, though he wants action sooner than current legislation can provide. He’s also encouraged by 28 lawmakers asking U.S. Attorney Merrick Garland to determine whether large meatpackers were “violating antitrust laws and principles of fair competition.”

There were 16 Senators who signed the letter to Garland. Both Tester and Montana Republican Sen. Steve Daines did. So did senators from non-ranch states, like Democrat Cory Booker of New Jersey.

In the House, the letter drew support Silicon Valley Rep. Ro Khanna, a California Democrat, as well as rural conservatives like Republican Rep. Louie Gohmert of Texas.

“Right now, we’re seeing a truly bipartisan concern that has been raised about the weakness in the cattle industry and the beef supply chain,” Bullard said. “That’s bringing in new players, bringing in more interest and essentially providing some self-discipline. Congress has to wake up and realize they have dropped the ball.”

That bipartisan support should also be used to revive county of origin labeling, or COOL as it’s known, which would clearly identify U.S. beef in the supermarket refrigerated case as something different from beef from other countries including Canada and Mexico. COOL is part of the consumer-side competition R-CALF wants. It’s also something Tester has long supported.

The changes cannot come soon enough for ranchers, Bullard said.