Commissioner talks uncertainty in the beef industry

Sid Miller

 

 

 

Although much was made of coronavirus cases reported in the Amarillo area in mid-May, in an exclusive interview with the Avalanche, Texas Agriculture Commissioner Sid Miller wanted to assure ranchers that Texas packing plants are open and functioning.

But there are complications.

Miller said ranchers might not be able to sell their cattle like they normally do because the animals are going for record low prices. Feedlots may or may not take them because they might be full, and ranchers may have to let them run on grass over the summer to get through.

The Commissioner further noted that 80% of the packing houses in the U.S. were controlled by four companies, and those packing houses also own cattle. About half the cattle they slaughter are their own. That forces ranchers to take the prices the packing houses demand.

“The average cowman is losing $300-500 a head, and the packer is making $2,000-2,500 a head, so there’s a big swing from the rancher to the packer,” said Miller. “Ranchers are receiving record low prices for their beef, and the consumer is paying record high prices at the same time.”

He added, “The packers are ripping consumers off. It’s not the grocery stores.”

In early May, Miller sent a letter to U.S. Attorney General William Barr, President Donald Trump, and Texas Attorney General Ken Paxton calling for a full investigation by the Department of Justice and full prosecution of the packing industry for collusion and price fixing. The move was to protect Texas ranchers and farmers financially.

In his letter, Miller pointed out the cost of feed and fuel were down, which should translate to lower production and retail prices. Yet retail beef prices remained high, and the nation’s cattle producers were not sharing in the profits.

He said the Department of Justice would mount a full investigation, “and hopefully Congress will bust up the monopoly, and make it where they can’t own half the cattle in the feedlots.”

Miller asked that ranchers and consumers contact their congressmen and U.S. senators, and demand a full investigation and legislation that would rectify the problem.

And according to Miller, it gets worse. Of the four major packers in the U.S., each of whom owns multiple plants, two of those packers are Brazilian owned, one by two brothers who were released from prison in Brazil last week for fraud in the meat industry.

The Commissioner did acknowledge the coronavirus was causing some supply problems and some delays in packing because of workforce issues.

“But still, it should not be happening this way,” he said.

Local rancher Chris Lacy is maintaining some optimism, but thinks it’s too early to tell how it will play out. He’s heard from Texas Southwestern Cattle Raisers and other cattle organizations that think the situation may resolve by August or September.

“Hopefully we can have some kind of normal market this summer or early fall, or even later on in the fall,” said Lacy. “We’re trying to accommodate that by saving some pastures we’re not using a lot right now just in case it does go later.”

He did send some cattle to producers in San Angelo the last two or three weeks.

“The market wasn’t too bad,” said Lacy. “It wasn’t as good as I like to see it, but it wasn’t where they didn’t bring anything.”

Trae Dutchover, regional manager of Porter’s grocery, said the stores were facing shortages with every delivery, but he expects the situation will improve over the next few weeks. He explained the packing houses were working with smaller workforces because of social distancing after COVID-19 swept through some of those facilities.

“There’s no shortage of beef,” said Dutchover, “But beef prices are the highest I’ve ever seen them, and I’ve been in the business 30 years. We’re taking smaller margins just trying to keep it at a lower price point.”

 

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