WASHINGTON – A major beef producer decided to release their testimony ahead of the upcoming hearing on the beef industry.
Tyson Foods’ president and chief executive officer Donnie King shared his testimony for the House Agriculture Committee as it examines ongoing issues in cattle markets.
Chairman David Scott (D-Ga.) previously shared that getting perspective from CEOs at major companies like Tyson is important to get the full picture of why prices have gone up for consumers.
King explained in his released testimony that like nearly every product, basic market forces are driving beef prices at the moment.
“Tyson does not set the prices for either the cattle we buy or the beef our customers purchase,” he stated. “These prices are set by straightforward market forces, namely available supply and demand.”
Next, King plans to say that labor shortages from the COVID-19 pandemic constrained beef production with consumer demand remaining high.
“We just didn’t have enough people to fully staff our plants, which resulted in a ‘sudden and swift rise’ in the oversupply of cattle and a corresponding drop in cattle prices,” King said. “At the same time, the price for finished beef — the beef that consumers buy at grocery stores — was rising, driven by skyrocketing consumer demand and basic economics holds that when demand is high and supply is low, prices will rise, which is precisely what they did.”
Geopolitical issues have also impacted the situation, according to King, which is resulting in higher costs. He pointed to higher prices in livestock feed, corn and soybeans along with freight transportation costs and shipping container rates.
Another point King made is that concentration and industry consolidation does not have anything to do with high prices.
“Concentration in the beef processing industry has remained virtually unchanged over the last 30 years,” he added. “During that time, data shows that ranchers more-often-than-not achieve higher profit margins than beef processors. In fact, in several years, ranchers made historic profits on live cattle while beef processors either lost money or barely broke even.”
The hearing on April 27 is intended to deal with possible anti-competitive behavior in the meat industry.
Seven hearings have been held regarding the meat and poultry markets, including House Agriculture, House Judiciary, Senate Judiciary, and Senate Agriculture Committees.