California Ag Network

Tag: COVID-19

  • Japan Grants Market Access To California Plums

    The United States Department of Agriculture (USDA) announced that Japan has granted market access for California plums. Eliminating the phytosanitary barriers keeping California plums out of the Japanese market required multiple rounds of technical negotiations that were somewhat hampered by the COVID-19 pandemic.

    The California Fresh Fruit Association (CFFA) would like to extend its appreciation to the USDA Animal Plant Health Inspection Service and Agricultural Research Service’s negotiators and experts, as well as the Fresno County and Tulare County Agricultural Commissioner offices for their invaluable contributions to this process.

    There will be strict packing and fumigation protocols in place but given the success of the existing California nectarine program for Japan, California stone fruit exporters have already demonstrated a commitment to meeting Japan’s requirements.

    “Trade barriers threaten the health and viability of the industry. This represents a significant opportunity for California plums, as Japanese consumers value premium fruit and recognize California fruit’s superior quality. As the global economy rebounds from the COVID-19 pandemic, expanding market access will continue to be critical to the industry’s success,” said Ian LeMay, CFFA President.

    The California Fresh Fruit Association (CFFA) is a voluntary, nonprofit agricultural trade association that represents California’s fresh fruit industry. CFFA promotes California nectarines, peaches, and plums (stone fruit) around the world by reducing trade barriers and expanding markets. The California stone fruit industry, based predominantly in the San Joaquin Valley, is dependent on opening new markets and maintaining access to approximately 50 countries around the world. 

  • Family Farmer Emergency Fund Provides Drought & Pandemic Relief

    With many small farms still reeling from the COVID-19 pandemic, and deepening impacts felt from the drought, Community Alliance with Family Farmers (CAFF) is relaunching its California Family Farmer Emergency Fund for farmers in crisis.

    The current drought is sending shock waves through California’s food system; as wells go dry, reservoirs sit empty, and the state begins shutting off access to water, thousands of farmers have begun fallowing their fields. And after more than a year of pandemic-induced market disruptions, from which many small businesses have yet to fully recover, the onset of yet another disaster has small farms questioning their future.

    “It’s not just tractors that run the risk of breaking down; many of our farms are on the brink,” said Paul Towers, Executive Director of CAFF. “The pandemic was challenging enough. With the addition of drought and the prospect of wildfires, family farmers are wondering if they’ll make it to next season. Emergency fund efforts can make the difference between whether they stay in business or not, and that impacts all of us.”

    According to the U.S. Department of Agriculture, California is already losing four farms per day on average. And despite record-high subsidies for agriculture–driven in large part by efforts to make up for recent trade wars and pandemic relief–a report by the Environmental Working Group shows that over the past few decades, the biggest 20% of farm subsidy recipients claimed over 90% of federal aid and the top 1% claimed more than a quarter. “This support,” says Towers, “is not finding its way to the folks showing up at your local farmers market.”

    To make up for this disparity, CAFF’s fund will focus on smaller operations and those not served by existing assistance efforts, with at least 50% of the funds granted to farmers of color, immigrant and undocumented farmers.

    “These funds provide temporary relief,” said Cheyenne Stone of the Big Pine Paiute Tribe and CAFF’s Policy Committee Co-Chair. “State and federal policymakers need to advance bolder policies to address the threats of climate change and invest in farm, water and fire resilience, starting with those historically underserved farmers,”

    The twin funds — for pandemic and drought relief — are part of the larger California Family Farmer Emergency Fund, which may release a third category to provide wildfire relief to farmers in the coming weeks, as it has done in previous years. In 2020, the California Family Farmer Emergency Fund provided over $650,000 in total grants to 207 farmers, farmworkers and their families impacted by the pandemic or fire.

    Diverse advisory committees are reviewing the applications on a rolling basis to get resources to the most vulnerable farmers and their families. The fund is housed at the Sacramento Region Community Foundation, and all grants, which will be $5,000, will be made through CAFF. Applications are due by August 31st, with potential additional rounds pending fundraising.

    More information about the fund is available here: https://www.caff.org/cafamilyfarmeremergencyfund/

  • Experts Agree: Livestock Markets Not Broken; Affected by Supply & Demand

    With cattle futures reaching new multi-year highs this week, The North American Meat Institute today submitted testimony to the Senate Judiciary Committee underscoring the supply and demand fundamentals of beef and livestock markets and opposing further government intervention that will result in unintended consequences.

    “Industry experts, market participants and economists testifying before three different congressional committees in the past two months have found that beef and cattle markets have behaved predictably given supply and demand pressures,” said Julie Anna Potts, President and CEO of the North American Meat Institute. “These witnesses join the Meat Institute in maintaining the beef and cattle markets are dynamic, with recent challenges being due to labor shortages and the COVID pandemic rather than market structure.”

    The Meat Institute submitted written testimony to the Senate Judiciary Committee’s hearing called, “Beefing up Competition: Examining America’s Food Supply Chain.” Senate testimony may be found here.

    In addition to debunking claims about market concentration, the testimony includes important new analysis which shows that the beef market is rebounding:

    “Beef demand remains high: the total volume of beef sales in 2021 from January through mid-June remained more than 4 percent higher than the pre-pandemic levels over the same period in 2019. This increase in beef demand in 2020 happened while the packing sector’s ability to process cattle was experiencing operational constraints, and has continued into this year while labor availability has similarly affected the packing industry’s ability to operate at full capacity. Meanwhile, the supply of fed cattle remained large. In short, COVID-19 created a significant “kink in the chain” that took time to straighten.

    “Early in the pandemic the National Cattlemen’s Beef Association (NCBA) commissioned the Oklahoma Cooperative Extension Service and several distinguished agricultural economists to examine the impact COVID-19 was having and was expected to have on the beef cattle industry. That paper warned ‘the timeline for market recovery from COVID-19 is unknown, and cow-calf losses could expand into 2021 when the summer and fall 2020 calf crops would be marketed.’

    “The market is rebounding. This week Feeder Cattle futures reached contract highs for the August through March 2022 contracts. On Monday, July 26, the Feeder Cattle contract closed at its highest since March 2016. Live Cattle futures prices so far in July have averaged higher than the same month in 2017, 2018, and 2019, all pre-pandemic. This reflects a smaller supply of cattle, which according to USDA’s mid-year cattle inventory report released last week, is down 1 percent from last year. Also, it reflects the recovery in cattle processing capacity.”

    In the testimony, the Meat Institute also offers a primer on market fundamentals at all stages of production:

    “From ranch to the slaughter plant rail, live cattle typically change ownership two to three times. Cow-calf producers market their cattle to feeders, or to backgrounders who in turn move those cattle to feeders, who then market to packers. The price for cattle at any of those three most common points of transactions is a function of how many cattle are in each respective market segment. In other words, the price is determined by supply of cattle to sell from one segment and the demand for buying cattle by the next segment. That explains why each segment can experience different margins and why there is a futures contract for two types of cattle: feeder cattle and fed cattle. When any of those segments are out of balance, prices move, and the moves can be dramatic, as witnessed by the COVID-spurred retail beef demand, which represents the final segment of the entire pasture to plate value chain, and the COVID-imposed imbalance within various segments of the cattle sector.”

    In response to calls for more “transparency,” The Meat Institute’s testimony provides more information about mandatory price reporting and other requirements for packers to be transparent with industry data:

    “There is robust price discovery in the cattle and beef markets. Congress established and USDA administers the Livestock Mandatory Reporting Act (LMR) program to facilitate open, transparent price discovery and provide all market participants, both large and small, with comparable levels of market information for slaughter cattle and beef, as well as other species.

    “Under LMR, packers must report to AMS daily the prices they pay to procure cattle, as well as other information, including slaughter data for cattle harvested during a specified time period and with net prices, actual weights, dressing percentages, percent of beef grading Choice, and price ranges, and then AMS publishes the anonymized data.

    “AMS publishes 24 daily and 20 weekly cattle reports each week. Weekly reports start Monday afternoon and end the next Monday morning. These reports cover time periods, regions, and activities and the data include actual cattle prices.

    “Further, packers report all original sale beef transactions in both volume and price through the Daily Boxed Beef Report. This data is reported twice daily, at 11:00 a.m. and at 3:00 p.m. Central Time. The morning report covers market activity since 1:30 p.m. of the prior business day until 9:30 a.m. of the current business day. The afternoon report is cumulative, including all market activity in the morning plus all additional transactions between 9:30 a.m. and 1:30 p.m., and is on the USDA DataMart website. The boxed beef report covers both individual beef item sales and beef cutout values and current volumes, both of which are derived from the individual beef item sales data.

    “Stepping back for a moment, it is unimaginable in virtually any other industry participants in a free market would be required to report such data on an on-going, daily basis, and that the data would then be published by the government for competitors and other market participants to view, analyze, and use as a basis for strategic decisions. And yet, despite all of the onerous, mandated reporting requirements already in place, some people claim there is no market transparency and there needs to be more price discovery. Where does it end?”

    For additional information about beef markets see the Meat Institute’s Facts about Common Meat Market Myths and the Meat Institute’s comments submitted earlier this week in response to U.S. Secretary of Agriculture Tom Vilsack’s request for comments on efforts to improve supply chains for the production of agricultural commodities and food products. The Meat Institute has several resources about beef markets here. And for more on the pandemic and its effect on the meat and poultry industry, go here.

    About North American Meat Institute

    The North American Meat Institute is a leading voice for the meat and poultry industry. The Meat Institute’s members process the vast majority of U.S. beef, pork, lamb, and poultry, as well as manufactures the equipment and ingredients needed to produce safe, high quality meat and poultry products.

  • UPL North America Employees Raise $20,000 in Relief for Pandemic-Stricken India

    Across the globe, COVID-19 has devastated countries, presenting unthinkable challenges to friends, family and communities. In particular, recent waves of infection in India have created a dire situation within the country, affecting many fellow UPL employees and their families. Because of this, UPL is proud to announce a recent donation of $20,000 in funds raised by North America employees to provide direct relief to local communities in India.

    UPL’s story began in India, which continues to be a hub of innovation for agriculture advancements. Seeing a need, UPL employees set out to provide relief by collecting funds and donating them to an organization that provides ambulances to local communities in India, with UPL North America matching the amount raised.

    “OpenHearts is an integral part of UPL’s OpenAg purpose. As part of that mission, we’re committed to providing support for local communities to help overcome human challenges and improve the human condition,” said Craig Brekkas, Head of North America for UPL. “When our employees in the United States and Canada saw an opportunity to provide assistance to do their part to help provide some support for citizens in India, they took action. The funds along with the best wishes for overcoming the challenges of the pandemic were recently sent from our North America team to India.”

    The donated funds went to Ashirwad Sewa Samiti Trust, an organization that provides directly to local communities. The trust will support the monthly expenses of running the ambulance (driver salary and maintenance). The trust has also done significant social work in the community, such as providing meals to people in need.

    “As part of our mission to power new levels of sustainable growth, we are also committed to generating a deeper impact on society,” Brekkas says. “Through UPL’s OpenHearts platform, we are committed to helping our friends and neighbours through sustainable solutions when none previously existed. This is one opportunity where we can do exactly that.”

    UPL is headquartered in India, with manufacturing facilities in 48 locations worldwide and a global workforce which includes 75 different nationalities. To learn more about UPL or these relief efforts, visit the UPL U.S. or Canada sites.

    ABOUT UPL

    UPL Ltd. (NSE: UPL & BSE: 512070) is a global provider of sustainable agriculture products and solutions, with annual revenue exceeding $5 billion. As one of the top 5 agriculture solutions companies worldwide, our robust portfolio consists of biologicals and traditional crop protection solutions with more than 13,600 registrations. With a presence in more than 130 countries and more than 10,000 colleagues globally, we reach more than 90% of the world’s food basket. For more information about our integrated portfolio of solutions across the food value chain including seeds, post-harvest products, as well as physical and digital services, please visit upl-ltd.com.

  • Early Months Suggest Bright 2021 for US Ag Exports

    U.S. agricultural exports in the first four months (January – April) of 2021 were a record $59 billion, exceeding the previous record set in 2014 by nearly $5 billion. Robust global demand, high commodity prices, and increased U.S. competitiveness have led to record exports of corn, sorghum, beef, food preparations, and other products. Others including soybeans, soybean meal, wheat, and dairy have also seen large increases during recent years and have contributed significantly to early-year export levels. At the current pace, there is a strong possibility of a record-breaking year for U.S. agricultural exports surpassing the 2014 mark of $154.5 billion.

    The agriculture, food, and related industries are vital parts of the U.S. economy, contributing an estimated $1.109 trillion to the U.S. gross domestic product and providing employment for 22.2 million people in the United States in 2019, according to the USDA’s Economic Research Service. Agricultural exports have grown significantly within the past decades, becoming an increasingly important component of the agriculture industry. From 2000 to 2020, U.S. agricultural exports grew from $56 billion to $150 billion. It is estimated that U.S. agricultural exports supported nearly 1.1 million full-time jobs in 2019. In 2020, exports increased by nearly $9 billion during 2019. A record in 2021 would drive this total even higher, likely supporting more U.S. jobs and making a larger positive impact on the U.S. economy.

    Coming out of a strong year in 2020, the United States appears to be well-positioned for an even stronger 2021. An August 2020 World Trade Organization report examining the impact of COVID-19 on agricultural trade described the resilience of the sector as a whole, and highlighted the essential nature of food as a main factor. U.S. agricultural exports during the pandemic reinforce this idea. While the export value of a few products like tree nuts, beef, and cotton declined in 2020, total exports were up significantly. Record harvests causing low prices were the main drivers for the decline in tree nut export value (despite volume increases), but declines for beef and cotton could be partially attributed to COVID-19 due to reduced hotel, restaurant, and institutional sector demand and a slowdown of global apparel consumption. All other top export products performed as well as or better than 2019. In the first four months of 2021, exports of top products have met, exceeded, or in some cases greatly exceeded exports from the same period in 2020, contributing to an overall increase of more than $12 billion.

    Many upward trends from 2020 have continued into the new year. Global demand is rising, driven in part due to record purchases by China as it rebuilds its swine herd from African Swine Fever and demand for animal feed surges. The early 2020 signing of the Phase One agreement between the United States and China created a pathway for U.S. producers to step in and fill both the demand for pork, beef, and poultry products as well as the rising demand for animal feed. Production shortfalls reduced competition from feed exporters in South America, which also had an important effect on trade in the early months of 2021. The combination of increased global demand and reduced supply has led to price increases in the past year that look to benefit U.S. exporters. For more information on driving factors for U.S. bulk product and livestock product exports in early 2021, see additional commodity trade reports.

    Two additional major trade agreements were also implemented in 2020. The U.S.-Japan Trade Agreement entered into force at the beginning of the year, providing tariff reductions for a wide range of agricultural products including beef, pork, and dairy, as well as preferential market access provisions for others including wheat and wheat products. While tariffs on many products were eliminated immediately, others will be gradually reduced in the coming years. The U.S.- Mexico-Canada Agreement (USMCA) entered into force in mid-2020, containing provisions to expand market access for U.S. exporters of dairy, poultry, eggs, and others while strengthening science-based trade rules and other processes. These agreements and the Phase One agreement with China serve to facilitate trade with four of the United States’ top trading partners and will have lasting positive benefits for agricultural producers in 2021 and beyond.

    Excellent agricultural export performance to date is not limited to bulk and meat products. For the period from January to April, 16 product groups reached record export levels in 2021:

    U.S. processed product exports are strongly represented on the list of high performers in early 2021. Food preparations, the largest processed product group which contains various ingredients for food manufacturing as well as some consumer-ready packaged and canned foods, had a notable increase of $125 million above the previous January – April record set in 2019. Other processed product groups like condiments & sauces, dog & cat food, and beer have also been high performers. The strongest markets for U.S. processed products are USMCA partners Canada and Mexico, but other markets have been growing in recent years. Countries with rapidly increasing numbers of middle-class households tend to show the most consumption growth for these products. For more information on consumption trends and opportunities for U.S. processed products, see recently published International Agricultural Trade Reports focused on snack foods, confectionery, baked goods, and pet food in various markets.

    Another notable achievement is that not only are year-to-date exports up across product groups, they are also up across nearly all major U.S. partners. For each of the top 10 markets for U.S. products in 2020 (China, Canada, Mexico, Japan, the European Union, South Korea, Vietnam, Taiwan, the Philippines, Colombia), total exports are higher in January – April 2021 compared to the same period in 2020. For 9 of these 10 markets (excluding the European Union), this sets a 4- month export record. This diversity of potential markets is a source of strength and stability and is an indicator of high overall competitiveness of U.S. products in 2021. This performance is reinforced by trade agreements with many of these top partners, including the recent agreements with Canada, Mexico, Japan, and China, as well as with South Korea and Colombia.

    Based on current performance, U.S. producers should look forward to a bright 2021 for agricultural exports. Global demand is high, and consumption habits for products that were affected by COVID-19 will continue to normalize. If U.S. exports continue to be as competitive as they have been in the early months of the year, 2021 has a great chance at becoming a record year, paving the way for more records to come. As income worldwide increases and more customers emerge, U.S. farmers, ranchers, and those employed in the industries driving agricultural trade should expect a large part of global demand to be met by the United States, fulfilling its role as one of the world’s largest suppliers of food and agricultural products. — USDA Foreign Agricultural Service

  • Executive Order Expedits Cal/OSHA’s New Revised COVID-19 Regulations

    Following the vote by the Occupational Safety and Health Standards Board to adopt revised COVID-19 Prevention Emergency Temporary Standards that reflect the state’s latest COVID-19 public health order, Governor Gavin Newsom today signed an executive order enabling the revisions to take effect without the normal 10-day review period by the Office of Administrative Law – providing clarity and consistency for employers and employees as California fully reopens its economy.

    Among other updates, Cal/OSHA’s revisions align with the latest guidance from the California Department of Public Health – based on guidelines issued by the Centers for Disease Control and Prevention – on face coverings and eliminate physical distancing requirements, except for certain employees during outbreaks. Unless they show symptoms, fully vaccinated employees do not need to be offered testing or be excluded from work after close contact with a COVID-19-positive person.

    Ensuring workplaces throughout the state have consistent guidance as California officially moves Beyond the Blueprint, the Governor’s order waives the 10-day review process by the Office of Administrative Law. The emergency regulations will take effect upon their filing with the Secretary of State. With over 40 million vaccines administered and amongst the lowest case rates and transmission rates in the nation, the state fully reopened on June 15, eliminating pandemic-related restrictions that have been in place over the past year.

    Initially implemented last November, the COVID-19 Emergency Temporary Standards remain an important component of the state’s ongoing response, providing balanced worker protections that support California’s continued progress in recovering from the pandemic.

    Businesses seeking assistance to provide N95 respirators for unvaccinated employees as required by the revised Emergency Temporary Standards can find distribution locations for state-provided N95 respirators here.

    The full text of today’s executive order can be found here.

    More information on the revised COVID-19 Prevention Emergency Temporary Standards can be found here.

  • USDA to Invest More Than $4 Billion to Strengthen Food System

    Citing lessons learned from the COVID-19 pandemic and recent supply chain disruptions, the U.S. Department of Agriculture (USDA) today announced plans to invest more than $4 billion to strengthen critical supply chains through the Build Back Better initiative. The new effort will strengthen the food system, create new market opportunities, tackle the climate crisis, help communities that have been left behind, and support good-paying jobs throughout the supply chain. Today’s announcement supports the Biden Administration’s broader work on strengthening the resilience of critical supply chains as directed by Executive Order 14017 America’s Supply Chains. Funding is provided by the American Rescue Plan Act and earlier pandemic assistance such as the Consolidated Appropriations Act of 2021.

    Secretary Vilsack was also named co-chair of the Administration’s new Supply Chain Disruptions Task Force. The Task Force will provide a whole of government response to address near-term supply chain challenges to the economic recovery. The Task Force will convene stakeholders to diagnose problems and surface solutions—large and small, public or private—that could help alleviate bottlenecks and supply constraints related to the economy’s reopening after the Administration’s historic vaccination and economic relief efforts.

    USDA will invest more than $4 billion to strengthen the food system, support food production, improved processing, investments in distribution and aggregation, and market opportunities. Through the Build Back Better initiative, USDA will help to ensure the food system of the future is fair, competitive, distributed, and resilient; supports health with access to healthy, affordable food; ensures growers and workers receive a greater share of the food dollar; and advances equity as well as climate resilience and mitigation. While the Build Back Better initiative addresses near- and long-term issues, recent events have exposed the immediate need for action. With attention to competition and investments in additional small- and medium-sized meat processing capacity, the Build Back Better initiative will spur economic opportunity while increasing resilience and certainty for producers and consumers alike.

    “The COVID-19 pandemic led to massive disruption for growers and food workers. It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else,” said Agriculture Secretary Tom Vilsack. “The Build Back Better initiative will make meaningful investments to build a food system that is more resilient against shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds. I am confident USDA’s investments will spur billions more in leveraged funding from the private sector and others as this initiative gains traction across the country. I look forward to getting to work as co-chair of the new Supply Chain Disruptions Task Force and help to mobilize a whole-of-government effort to address the short-term supply challenges our country faces as it recovers.”

    The Build Back Better Initiative will strengthen and transform critical parts of the U.S. food system. As it makes investments through this initiative, USDA will also seek to increase transparency and competition with attention to how certain types of conduct in the livestock markets and the meat processing sector have resulted in thinly-traded markets and unfair treatment of some farmers, ranchers and small processors. Among other investments in the food system and food supply chain, Build Back Better will specifically address the shortage of small meat processing facilities across the country as well as the necessary local and regional food system infrastructure needed to support them.

    Funding announcements under the Build Back Better initiative will include a mix of grants, loans, and innovative financing mechanisms for the following priorities, each of which includes mechanisms to tackle the climate crisis and help communities that have been left behind, including:

    1. Food Production: Food production relies on growers, including farmers and ranchers, workers, and critical inputs. But a diminishing share of the food dollar goes to these essential workers. USDA will invest in the current and future generation of food producers and workers throughout the food system with direct assistance, grants, training and technical assistance, and more.
    2. Food Processing: The pandemic highlighted challenges with consolidated processing capacity. It created supply bottlenecks, which led to a drop in effective plant and slaughter capacity. Small and midsize farmers often struggled to compete for processing access. USDA will make investments to support new and expanded regional processing capacity.
    3. Food Distribution & Aggregation: Food aggregation and distribution relies on people working together throughout the food system and having the right infrastructure to gather, move and hold the food where and when it is needed. This system was stressed during the pandemic due to long shipping distances and lack of investment in local and regional capacity. USDA will make investments in food system infrastructure that can remain resilient, flexible and responsive.
    4. Markets & Consumers: The U.S. spends more on health care and less on food than any other high-income nation; yet the U.S. has higher rates of diet-related illness and a lower life expectancy than those nations. At the same time, many socially disadvantaged and small and mid-sized producers do not have equitable access to markets. USDA will support new and expanded access to markets for a diversity of growers while helping eaters access healthy foods.

    USDA will continue to make announcements through the Build Back Better initiative in the months to come. Today’s announcement is in addition to the $1 billion announced last week to purchase healthy food for food insecure Americans and build food bank capacity, putting the total announced thus far at more than $5 billion.

  • Facts on Common Beef Market Myths

    The North American Meat Institute (Meat Institute) today released the following document to clarify common misunderstandings about the complex and competitive beef market in the United States.

    “The members of the Meat Institute and their livestock suppliers benefit from a fair and competitive market,” said Meat Institute Vice President of Communications Sarah Little. “This document uses public sources to give an accurate picture of the dynamic beef market, especially given the COVID pandemic.

    “In July 2020, USDA analyzed the effects of the 2019 Holcomb facility fire and the pandemic, finding no wrong-doing and confirming the disruption in the beef markets was due to devastating and unprecedented events.

    “Despite the pandemic’s challenges the market is competitive and growing.  Since October 2020, there have been several announcements of investments to build new packing facilities or expand capacity at existing plants that would increase cattle slaughter capacity by about four percent, including new independent, local, and regional packers.

    “Meat and poultry companies are utilizing capacity to the best of their abilities with COVID protocol constraints still in place and despite significant labor challenges that existed prior to – and have been exacerbated by – COVID.  In fact, Saturday slaughter for the year was 51 percent above last year and 65 percent over 2019. 

    “Those calling for government intervention in the market never address labor. Labor is, and is likely to remain, a significant factor that affects utilization of production; and is also a factor that will challenge new small and medium sized facilities entering the market.

    “The Meat Institute will continue to work with livestock producer organizations to ensure proposed changes to the beef markets do not have unintended consequences for producers and consumers.”


    Common Beef Market Myths and Facts

    MYTH: Four large meat packing companies control over 80% of the processing market.

    FACT: The top four beef packers in the U.S. account for the purchase and slaughter of about 85 percent of all fed cattle in the U.S., according to the most recent report from USDA’s Agricultural Marketing Service’s (AMS) Packer and Stockyards Division (P&S). Fed cattle, however, make up 79 percent of the Federally Inspected cattle slaughter in the U.S. The other 21 percent is made up of cows, both dairy and beef, and some bulls.

    Thus, the “Big 4” beef packers, factoring in the non-fed slaughter plants they own, comprise about 70 percent of total U.S. beef production.

    Fed cattle are steers and heifers that packers purchase from feedlots after being brought to market weight on a diet of grain to produce boxed beef, i.e. primarily the muscle cuts that consumers demand as steaks, ribs, and roasts. Cows and other non-fed cattle, on the other hand, are primarily slaughtered to be made into hamburger. The lean meat from these animals is a necessary ingredient to be made into America’s supply of hamburger produced in combination with the less demanded muscle cuts from the fed cattle.

    Why is that important? About 50 percent of all beef in the U.S. is consumed as hamburger.

     

    MYTH: There is no growth in the packing industry.

    FACT: Despite the pandemic’s challenges the market is competitive and growing. Since last year there have been several announcements about building new packing facilities or expanding capacity at existing plants that would increase cattle slaughter capacity by more than four percent, including new independent, local, and regional packers.

    Plant
    Capacity/Day
    Location
    Announced
    Online
    True West
    500
    ID
    July 2020
    TBD
    FPL (phase 1 of 2)
    500
    GA
    October 2020
    Q42021
    Iowa Premium
    1,250
    IA
    March 2021
    Q42022
    Sustainable Beef
    1,400
    NE
    March 2021
    TBD
    Missouri Prime
    500
    MO
    March 2021
    March 2021
    TOTAL
    4,150
     
     

    Meat and poultry companies are utilizing capacity to the best of their abilities with COVID protocol constraints still in place and despite significant labor challenges that existed before – and have been exacerbated by – COVID. For example, Saturday slaughter as of May 22, 2021, for the year was 52 percent above last year and 67 percent over 2019 for the same period.

    But labor is likely to remain a significant factor that affects utilization of production capacity; and is also a factor that will challenge new small and medium sized facilities entering the market. Brownfield News reports that Missouri Prime, one of the new smaller facilities to come online, is facing labor shortages, “Missouri Prime Beef started processing in March and is up to 150 head a day five days a week with a goal of 500 head a day in five years. But are looking for more cattle in addition to more workers. He says the labor shortage is largely why they are only operating five days a week.”

     

    MYTH: Lax oversight has allowed packer industry concentration.

    FACT: The beef packing industry has been and is one of the most highly scrutinized industries for antitrust issues. The packer concentration ratio in beef packing is monitored every year by the P&S. Not only does P&S monitor the industry, any potential merger or acquisition that regulators believe threatens “too much market power” that could “yield less competition” and be “ripe for market abuse” is subject to review by the Justice Department or the Federal Trade Commission. 

    FACT: The last proposed merger of two the “big four” was in 2008 – and it was blocked by the Department of Justice. In fact, the four-firm concentration ratio in fed cattle beef packing has not changed meaningfully in more than 25 years.

    Image

    FACT: In July 2020, USDA analyzed the effects of the 2019 Holcomb facility fire and the pandemic, finding no wrong-doing and confirming the disruption in the beef markets was due to devastating and unprecedented events.

     

    MYTH: Cattle prices are not being driven by the market.

    FACT: Cattle prices are where they are because they follow supply and demand. 

    Image

    And to be clear, the beef Choice cutout in 2020 (even with COVID and its challenges) averaged $237.67/cwt, … which is lower than in 2014 when it averaged $239.07/cwt.

     

    MYTH: Packers are able to control prices and defy expectations of market fundamentals.

    FACT: The cattle market works just as economists would have predicted given the current conditions: when supplies of cattle increase, prices decrease – and vice versa. The chart above is a text-book example of supply and demand fundamentals.

    FACT: If packers are “able to control prices” why has that profitability not attracted more investors into the market?

    Rabobank said this on that topic.

    Several considerable hurdles must be addressed by both incumbents and new entrants …. First, the upfront cost of a new plant is extremely expensive … $USD 100 million to $120 million for every 1,000 head of daily capacity.

    … the capital depth and longevity required to build and maintain a new plant through its first cattle cycle precludes most would-be investors from considering such a project.   … That’s not a recipe for thin capital or weak hearts.

     

    MYTH: Large price disparities are leading independent cattle producers to go broke.

    FACT: The market suffered through COVID, and the effects are lingering, but Congress provided producers a safety net through CFAP to get through the impact of a once-in-a-century event.

    Image

    Sources: Meat Animals Production, Disposition, and Income 2020 Summary 04/29/2021 (cornell.edu)  
    Meat Animals: Value of Production by Year, US (usda.gov)

    CFAP 1 – accessed January 2021  Coronavirus Food Assistance Program 1 Data | Farmers.gov

    CFAP 2 – accessed January 2021  Coronavirus Food Assistance Program 2 Data | Farmers.gov

     

    MYTH: “Captive supply” practices such as forward contracting and formula-based sales, allow meatpackers to exert more control, limit competition and depress sales in the live cash market.

    FACT: Forward contracts and formula-based sales provide an effective way for producers to hedge their risk and lock in prices. They also often pay premiums for quality. This allows packers and producers and feeders to predict needs in advance, which is a good thing.

    In its 2018 report to Congress, AMS reported, “Stakeholders were in general agreement that formula-based purchases provide greater benefits, in terms of operational efficiency, for both packers and feedlots.”

    FACT: From 2002 to 2019, according to USDA data compiled by economist and industry expert Dr. Nevil Speer, while the number of cattle sold on a cash market basis has declined 55 percent, beef grading at the top two quality grades – Choice and Prime – has increased 39 percent and consumer per capita expenditures on beef have increased 56 percent.

     

    MYTH: Legalizing the sale of state inspected meat in interstate commerce has been thwarted, forcing local producers to bottleneck their beef processing at major U.S. meat packing facilities to get the federal stamp of approval.

    FACT: Selling state inspected meat over state lines is a food safety issue — plain and simple, which is why multiple consumer advocacy groups have long opposed the concept. Moreover, USDA has a program that allows state inspected plants to ship product in interstate commerce, so long as the plants meet federal standards. 

    FACT: Additionally, Congress has provided $60 million to USDA to fund a program that will assist state-inspected plants become federally-inspected plants, which would give them the ability to market out of state and even internationally. Bottomline, there is no “thwarting” involved. The federal-inspection-is-a-barrier-for-small-plants argument is a red-herring. 

    FACT: There are more than 5,000 small federally inspected plants. 

     

    Myth: Meat imports hurt domestic cattle producers.

    FACT: Most of the beef imported into the U.S. is lean, grass fed trim and lower value cuts, which go into processed meat and ground beef. Because of this balance, steaks, loins and higher value cuts are not forced into such lower value products. This balance from imports supports U.S. beef exports at higher values. According to the U.S. Meat Export Federation, the per pound price of U.S. beef exports has averaged a 68-cent premium over the price of imports that go into lower value beef products.

     

    Myth: Cattle prices were higher when Mandatory Country of Origin Labeling (COOL) was in effect.

    FACT: In four rulings, each of which the U.S. lost, the WTO concluded that COOL was discriminatory and illegal under WTO rules, and if left in place would have triggered $1 billion in retaliatory tariffs, which is why Congress repealed COOL for beef and pork in 2015.

    Despite COOL being in place, the fastest, largest growth in beef imports was in 2014 – which was the year the size of the U.S. cattle herd was at its lowest, as would be expected based on supply and demand fundamentals.

     

    MYTH: If beef markets are not reformed, consumers will pay more for lower quality beef.

    FACT: Since 2010, beef quality has increased. The percent of beef grading at Choice or Prime has grown from 68 percent to about 85 percent, … cattle producers and meat companies are serving consumers well. This increase in quality has been driven by alternative marketing arrangements, which allow cattlemen to recover the value of their investments in genetics, feeding strategies, animal care, natural and other qualities desired by consumers.

  • Nuts, Tree Fruit, Legumes Included in New USDA Food Assistance Purchases

    The U.S. Department of Agriculture (USDA) today announced it will purchase up to $159.4 million in domestically produced seafood, fruits, legumes, and nuts for distribution to a variety of domestic food assistance programs, including charitable institutions. These purchases are being made utilizing funds under the authority of Section 32 of the Agricultural Adjustment Act (Pub. L. 74-320), as amended (Section 32). This is one of many actions USDA is taking to address the disruptions in the food system supply chain and worsened food insecurity resulting from the COVID-19 pandemic.

    “The impacts of COVID-19 reverberated from our farms to our oceans,” said Agriculture Secretary Tom Vilsack. “U.S. fisheries and the American seafood industry were dealt a heavy blow. Today, USDA is pleased to make the largest single seafood purchase in the Department’s history. These healthy, nutritious food purchases will benefit food banks and non-profits helping those struggling with food hardship as the Biden Administration works to get the economy back on track for American families.”

    Selected commodities include: Alaska pollock, apricots (canned, dried, and frozen), chickpeas, dry peas, Gulf of Mexico and South Atlantic wild-caught shrimp, lentils, navy beans, Pacific pink shrimp, Pacific rockfish fillets, Pacific whiting fillets, pistachios, prepared peaches, and sockeye (red) salmon. The inventories of these commodities are in high oversupply due to a decrease in demand because of the COVID-19 pandemic and disruption in the supply chain, as restaurants and other outlets closed during the pandemic. This is the largest purchase of U.S. raised seafood by the USDA to date.

    Within a few days of approval, USDA’s Food and Nutrition Service will offer these commodities to their networks. Orders should be received during the first week of June with solicitations being issued mid-June and awards occurring near the end of the month. Deliveries should start to occur by mid-August.

    Solicitations will be available electronically through the Web-Based Supply Chain Management (WBSCM) system and on the Agricultural Marketing Service’s website at www.ams.usda.gov/selling-food. To be eligible to submit offers, potential contractors must meet the AMS vendor qualification requirements and be domestic operations.

    The purchase amounts are as follows:

    USDA also announced today a policy change that makes food fish and other aquatic species eligible for the Emergency Assistance for Livestock, Honey Bees and Farm-raised Fish Program (ELAP) under the USDA Farm Service Agency (FSA). Previously, only farm-raised game and bait fish were eligible for death loss ELAP benefits. Beginning June 1, eligible aquaculture producers can request ELAP assistance for 2021 losses. This policy change is for the 2021 and subsequent program years. You can learn more here.

  • USDA Invests Over $90 Million in Grants for Food Producers Affected by Pandemic

    The U.S. Department of Agriculture (USDA) has announced the availability of $92.2 million in competitive grant funding under the 2018 Farm Bill’s Local Agriculture Market Program (LAMP). The LAMP grants announced today are funded through the Farmers Market program as part of USDA’s Pandemic Assistance for Producers Initiative. USDA launched this initiative in March to address shortfalls and disparities in how assistance was distributed in previous COVID-19 assistance packages, with a specific focus on strengthening outreach to underserved producers and communities and small and medium agricultural operations. These grants support the development, coordination and expansion of direct producer-to-consumer marketing, local and regional food markets and enterprises and value-added agricultural products.

    “We have an opportunity to transform our nation’s food system with a greater focus on resilient, local and regional food systems,” said Agriculture Secretary Tom Vilsack. “These grants will help maximize opportunities for economic growth and ingenuity in local and regional food systems to kickstart this transformation. LAMP grants have a history of generating new income sources for small, beginning, veteran and socially disadvantaged farmers and creating new market opportunities for value-added and niche products.”

    USDA encourages projects that assist underserved local and regional agricultural businesses, producer networks and associations, and local and tribal government in responding to COVID-19 disruptions and impacts. Funding is not contingent upon applicants directly addressing these issues.

    The Biden-Harris Administration is committed to ensuring equity across the Department, removing barriers to access, and building inclusive programs for the agricultural sector. For grants intending to serve smaller farms and ranches, new and beginning farmers and ranchers, socially disadvantaged producers, veteran producers, and/or underserved communities, USDA encourages applicants engage and involve those beneficiaries when developing projects.

    Increasing Local Food Access Through Direct and Intermediary Producer-to-Consumer Markets

    USDA will award $76.9 million ($22.5 million in the 2018 Farm Bill, $47 million provided as emergency funding through the Consolidated Appropriations Act of 2021 and $7.4 in annual appropriations) to FMLFPP. Projects under the Farmers Market Promotion Program support direct-to-consumer markets like farmers markets and CSAs. Projects under the Local Food Promotion Program supports indirect-to-consumer markets like food hubs and value-added product incubators.

    Building Robust and Resilient Local and Regional Food Economies

    USDA will award $15.3 million ($5 million in the 2018 Farm Bill and $10.3 provided as emergency funding through the Consolidated Appropriations Act of 2021) to RFSP to fund public-private partnerships that build and strengthen viability and resilience of local or regional food economies. Projects focus on increase the availability of locally and regionally produced agricultural products and alleviating unnecessary administrative and technical barriers. Projects can cover the planning and design of a local and regional food economy as well as implementing or expanding an existing one.

    Application and Grant Eligibility

    Applications undergo external expert peer review and the process is highly competitive. All grants require matching funds from community partners or stakeholders. The amounts and match amounts vary by program and are specified in the RFAs.

    Applications must be submitted electronically through www.grants.gov by 11:59 p.m. Eastern Time on the due dates established in the respective Request for Applications (RFA’s). Any grant application submitted after the due date will not be considered unless the applicant provides documentation of an extenuating circumstance that prevented their timely submission of the grant application. Read more in AMS Late and Non-Responsive Application Policy (PDF, 431 KB).

    For more information about grant eligibility and previously funded projects, visit the FMPP webpage, LFPP webpage or RFSP webpage or contact us at USDAFMPPQuestions@usda.gov, USDALFPPQuestions@usda.gov,orIPPGrants@usda.gov.

    Technical Assistance

    AMS offers RFA webinars for new applicants to help walk them through the RFA while also providing helpful hints on what has made past recipients successful. Additionally, Frequently Asked Questions are posted on the AMS Grants website, and grants management specialists are standing by to answer any incoming questions and emails during regular business hours.