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Tag: North American Meat Institute

  • Meat Institute Partners with IT-ISAC to Improve Cybersecurity with New Food & Ag ISAC

    The North American Meat Institute (Meat Institute) today announced a new partnership with the Information Technology-Information Sharing and Analysis Center (IT-ISAC) on the launch of a Food and Agriculture ISAC to enhance cybersecurity for the meat and poultry industry.

    “We are grateful for the leadership of several of our members who helped found the Food and Agriculture ISAC to better prepare the industry to fight against the increasing threat of cyber attacks on our nation’s critical food infrastructure,” said Meat Institute President and CEO Julie Anna Potts. “As a partner, the Meat Institute will support the Food and Ag ISAC and will promote its value among our membership. It is important to collaborate across all of agriculture because we all make significant contributions to each of production in the food value chain.”

    An ISAC is a non-profit established by critical infrastructure owners and operators to foster information sharing and best practices about physical and cyber threats and mitigation. These member-lead organizations collaborate with each other, partners such as the Meat Institute, other sector ISACs, the Department of Homeland Security, academics and other stakeholders.

    The Food and Ag-ISAC provides threat intelligence, analysis, and effective security practices that help food and agriculture companies detect attacks, respond to incidents, and share indicators so they can better protect themselves and manage risks to their companies and the sector.

    Food and Agriculture industry companies may apply to join the Food and Ag-ISAC and those who are already members of the IT-ISAC can join the newly launched center for no additional cost. Founding Board members of the Food and Ag-ISAC are Bunge Limited, Inc., Cargill, Conagra Brands, Corteva Agriscience, Inc. PepsiCo, and Tyson Foods.

    For more background on ISAC’s, go here.

    In 2021, the Meat Institute’s Executive Board voted for cybersecurity to be a noncompetitive subject and established a Cybersecurity Committee.

    About North American Meat Institute
    The Meat Institute is the United States’ oldest and largest trade association representing packers and processors of beef, pork, lamb, veal, turkey, and processed meat products. NAMI members include over 350 meat packing and processing companies, the majority of which have fewer than 100 employees, and account for over 95 percent of the United States’ output of meat and 70 percent of turkey production.

  • Supreme Court Upholding California’s Proposition 12 Sets Dangerous Precedent

    Today, the Animal Agriculture Alliance and the North American Meat Institute expressed disappointment and serious concern for the U.S. Supreme Court’s ruling on California’s Proposition 12.

    “Prop 12 remains a costly burden to producers and provides no benefit to animals or consumers,” said Julie Anna Potts, President and CEO of the North American Meat Institute. “We are disappointed in the Court’s decision and will carefully study the ruling to determine next steps.”

    The Animal Agriculture Alliance shared the following:

    “Animal rights extremist organizations have been pushing for state-level legislation banning frequently-used animal care practices, such as gestation stalls for pregnant sows or cages for laying hens, for years. The true motive of these changes is to make it less efficient and more expensive for farmers to raise animals for food, driving up the cost of meat, dairy, poultry, and eggs for consumers, forcing them to make tough choices about what they can afford to feed their families and forcing farmers to make costly changes that may make it impossible to keep their business afloat.

    “Today’s Supreme Court decision on California’s Proposition 12 sets a dangerous precedent for animal rights extremist groups to target other states with similar ballot initiatives. The Humane Society of the United States is a prime example of a group that focuses efforts on states that will be minimally impacted by the legislation, knowing they will receive less resistance within the state while setting a precedent. In California, specifically, farmers in the state raise less than 1% of pigs in the U.S. yet consume 13% of the pork.  This means that a significant majority of California’s pork is produced in other states, who will now be expected to comply with regulations passed by voters outside of their own state.

    “Other states should prepare for similar initiatives, particularly those that allow for legislation to be passed via ballot measures. Ballot initiatives allow these extremist groups to bypass the traditional legislative process to go straight to voters on issues that the general public typically has little knowledge of and that tend to be oversimplified in ballot measure wording. This is particularly effective when it comes to emotional issues such as animal welfare. It’s extremely costly for the animal agriculture community to push back against ballot initiative campaigns, as the target audience is the state’s entire population rather than a limited number of state legislators. We need to be proactive in communicating and building trust with the public to reduce the effectiveness of these animal rights extremist-led campaigns that attempt to capitalize on misinformation.

    “Animal care is too important of a topic to be dictated by oversimplified legislation based on emotion. Rather, it needs to be based in science and research.

    About the Animal Agriculture Alliance

    The Animal Agriculture Alliance safeguards the future of animal agriculture and its value to society by bridging the communication gap between the farm and food communities. We connect key food industry stakeholders to arm them with responses to emerging issues. We engage food chain influencers and promote consumer choice by helping them better understand modern animal agriculture. We protect by exposing those who threaten our nation’s food security with damaging misinformation.

    About North American Meat Institute

    The Meat Institute is the United States’ oldest and largest trade association representing packers and processors of beef, pork, lamb, veal, turkey, and processed meat products. NAMI members include more than 350 meat packing and processing companies, the majority of which have fewer than 100 employees, and account for more than 95 percent of the United States’ output of meat and 70 percent of turkey production.

  • North American Meat Institute Recognizes Environmental Achievement Award Winners

    The North American Meat Institute (NAMI) recognized more than 200 meat and poultry plants at the 2023 Environmental, Labor and Safety+ Conference in Carlsbad, California for their positive environmental impact achievements. Fifteen additional establishments that went above and beyond were granted Environmental Achievement Awards for their progress with emissions reduction, energy conservation, packaging/food waste reduction, technological innovation, and water conservation.

    “NAMI congratulates these companies and their leadership for ensuring their products contribute to a sustainable food system,” said NAMI President and CEO Julie Anna Potts. “Their hard work and innovation will ensure the meat and poultry industry continues to employ the highest standards and latest technology to produce wholesome, safe, nutritious products that consumers can be proud to put on their plates.”

    The NAMI Environmental Achievement Awards are given to NAMI member companies that go beyond environmental compliance by designing and successfully implementing an innovative plant upgrade or environmental program. The Environmental Achievement Award winners represent establishments operated by JBS, Pilgrim’s, Smithfield and SugarCreek. The winners are as follows:

    Category
    1st Place
    2nd Place
    3rd Place
    Emissions Reduction
    JBS – Tolleson
    Smithfield – Sioux Falls
    Pilgrim’s – Canton Complex
    Energy Conservation
    JBS – Green Bay
    JBS USA Hyrum Beef
    SugarCreek Packing Co. – Cambridge City
    Packaging and/or Food Waste Reduction
    Smithfield Packaged Meat – Kinston
    JBS USA Grand Island Beef
    Smithfield – Des Moines
    Technological Innovation
    JBS – Plainwell
    Pilgrim’s – Talmo Hatchery
    SugarCreek Packing Co. – Washington Court House
    Water Conservation
    Pilgrim’s – Arcadia
    Smithfield Packaged Meats – Carroll
    Smithfield – Milan

    The Environmental Recognition Awards honor a company’s dedication to continuous environmental improvement, as witnessed by the development and implementation of Environmental Management Systems. The Environmental Recognition Award winners include establishments throughout North America operated by: American Foods Group, Caviness Beef Packers, CS Beef Packers, Clemens Food Group, FPL Foods, Golden State Foods, JBS, Land O’ Frost, Maple Leaf Foods, OSI Group, Pilgrim’s, Smithfield Foods, SugarCreek Packing, Triumph Foods and West Liberty Foods.

    Companies that earned these awards also reported data in 2022 for The Protein PACT, which is uniting the largest-ever industry effort to strengthen animal protein’s contributions to healthy people, healthy animals, healthy communities, and a healthy environment.

    About the 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.

  • Congress Blocks Industry Input on Cattle Contract Library Pilot Program

    The North American Meat Institute (Meat Institute) said the Fiscal Year 2022 Omnibus Appropriations Bill creates a Cattle Contract Library pilot program requiring beef packers to report private business information to the government that will then be published, but blocks public comment on the Biden Administration’s proposed rules for the program.

    “Congress and the Administration say they value transparency in the beef and cattle market yet they burry this rider without debate in a giant spending bill and direct USDA to create the pilot program without any feedback from beef companies or cattle producers,” said Meat Institute President and CEO Julie Anna Potts. “There will be no opportunity for companies to provide valuable perspective on what information should be included or how it should be reported.”

    Under the pilot, Meat Institute members who purchase beef cattle with an Alternative Marketing Arrangement will be legally obligated to report proprietary and sensitive data to the government for publication.

    The law is vague and provides no guardrails for the type or amount of data and leaves program development up to the U.S. Department of Agriculture’s (USDA) Agriculture Marketing Service. (AMS)

    Finally, the law contains a provision that allows AMS to promulgate the rules without a comment period as normally required by law.

    “The Congress directs the Administration to create another onerous USDA program with the sole purpose of collecting private business information and making it public without any input from the regulated industry,” said Potts. “This is not transparent or responsible.”

    Background on Transparency in Beef and Cattle Markets

    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, and 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 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.

    About North American Meat Institute

    The Meat Institute is the United States’ oldest and largest trade association representing packers and processors of beef, pork, lamb, veal, turkey, and processed meat products. NAMI members include over 350 meat packing and processing companies, the majority of which have fewer than 100 employees, and account for over 95 percent of the United States’ output of meat and 70 percent of turkey production.

  • New York Times Misses Mark on Beef Market

    North American Meat Institute (Meat Institute) — The New York Times’ The Daily podcast’s examination of the beef and cattle markets is simply wrong.

    The beef and cattle industry is a complex marvel of American ingenuity with innovations that have allowed the US beef industry to produce more meat with fewer cattle, while improving sustainability, food safety, affordability, worker safety and beef quality.

    There are many steps in the beef value chain: cow calf operators, feeders, packers, processors, wholesalers, retailers, and food service entities. To suggest only packers have a role in determining prices is misleading.

    The Times narrowed its focus to the struggles of one moment in a global pandemic and ignored that since the summer of 2021, prices for cattle producers have rebounded.

    In fact, cattle producers are earning the highest prices for their animals since 2014, which was the previous highest year on record. Multiple agricultural economists have predicted in congressional testimony, op-eds, and reports that, given a black swan event such as the COVID-19 pandemic, the markets have behaved predictably. They also predict that the cattle herd in America will shrink over the next two to three years, drawing down supply.

    The laws of supply and demand apply to packers as well as producers. While we cannot predict the future, we can learn from the past.

    In 2014, the last year of record profit margins for cattle producers, due to drought and other market conditions, there was a shortage of cattle and beef packers lost money. This led some of them to close packing facilities or to go out of business.

    The podcast leads the listener to believe that beef industry consolidation is increasing when it has had the same four firm ratio for nearly 30 years.

    If The Daily’s listeners would like to learn more about beef packing and processing, they can go to the U.S. Department of Agriculture’s economists for the facts.

    Supply and demand:

    Packers do not always profit:

    Beef prices rising at retail:

    Packer share of consumer dollar is the lowest:

    About North American Meat Institute

    The Meat Institute is the United States’ oldest and largest trade association representing packers and processors of beef, pork, lamb, veal, turkey, and processed meat products. NAMI members include more than 350 meat packing and processing companies, the majority of which have fewer than 100 employees, and account for more than 95 percent of the United States’ output of meat and 70 percent of turkey production.

  • 2022 Annual Meat Conference Cancelled

    The North American Meat Institute (NAMI) and FMI – The Food Industry Association (FMI) today made the difficult decision to cancel the 2022 Annual Meat Conference (AMC) out of respect for the health of our communities and due to the attention and consideration our respective members are putting into their operations.

    “The purpose of AMC is to bring together retailers and the meat and poultry industry,” said NAMI President and CEO Julie Anna Potts. “Like the meat and poultry industry, many of our partners in retail are experiencing significant operational and supply chain challenges. At this time, attending an in-person conference is difficult which diminishes the value of the event for all participants.”

    FMI President and CEO Leslie G. Sarasin commented, “Our community is prioritizing the health of its people and operations so that we will be able to continue to serve the shopper, but we are committed to sharing additional category insights with our audiences throughout the year.”

    A full refund will be issued to all attendees, exhibitors and sponsors, and event coordinators will cancel hotel reservations on behalf of registered attendees. 

    While the in-person event is canceled, NAMI and FMI, in partnership with Sealed Air, will host a virtual discussion series regarding The Power of Meat analysis. The kickoff to this three-part series will be hosted beginning February 7. Registration information will be available via the conference website and in a follow-up communication to previously registered attendees. The analysis will also be available for free to members of our respective organizations and previously registered attendees.

    About the 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 manufacturing the equipment and ingredients needed to produce safe, high quality meat and poultry products. www.meatinstitute.org

    About FMI:

    As the food industry association, FMI works with and on behalf of the entire industry to advance a safer, healthier and more efficient consumer food supply chain. FMI brings together a wide range of members across the value chain — from retailers that sell to consumers, to producers that supply food and other products, as well as the wide variety of companies providing critical services — to amplify the collective work of the industry. www.fmi.org

  • Government Intervention in Markets Will Not Help Consumers or Producers

    The North American Meat Institute, the nation’s trade association for meat and poultry packers and processors of all sizes, released the following statement regarding the “The Biden-Harris Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.”

    “For the third time in six months, President Joe Biden and his Administration announced the same plans to spend $1 billion to fund government intervention in the market in an attempt to increase prices livestock producers receive while blaming inflation on private industry,” said Julie Anna Potts, President and CEO of the North American Meat Institute. “The Biden Administration continues to ignore the number one challenge to meat and poultry production: labor shortages. This tired approach is not surprising because they have refused to engage with the packing and processing sector they attack, going so far as to hold a roundtable on meat packing without a single beef or pork packer present.

    “Press conferences and using taxpayer dollars to establish government-sponsored packing and processing plants will not do anything to address the lack of labor at meat and poultry plants and spiking inflation across the economy,” said Potts. “The Administration wants the American people to believe that the meat and poultry industry is unique and not experiencing the same problems causing inflation across the economy, like increased input costs, increased energy costs, labor shortages and transportation challenges. Consumers know better.”

    “As economists predicted, producers are seeing higher prices for their cattle because packers have processed the backlog of animals in the system.”

    The Biden Administration has claimed industry structure is keeping down prices cattle producers receive for their animals, conveniently ignoring the fact the beef industry has changed little for almost 30 years.  Prices reflect supply and demand in a healthy market.

    On December 26, 2021, Larry Summers, Secretary of the Treasury for President Clinton, the Director of the National Economic Council for President Obama and Charles W. Eliot Professor and President Emeritus at Harvard University took to Twitter agreeing with leading agricultural economists highly critical of the Biden Administration’s analysis. He tweeted:

    “The emerging claim that antitrust can combat inflation reflects ‘science denial’. There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.”

    Summers also said on Twitter, “Monopoly may lead to high prices but there is no reason to expect it to lead to rising prices unless it is increasing. There is no basis whatsoever thinking that monopoly power has increased during the past year in which inflation has greatly accelerated.

    “Rising demand, with capacity and labor constraints, are fully sufficient to account for what we observe in meat packing — Administration claims notwithstanding,” tweeted Summers.

    “Breaking up meatpacking would in the short run lead to reduced supply which would further increases prices. In general, when government goes to war with industries it discourages investment and subsequent capacity.”

    The chart below shows that since 1994, profit margins have varied between all sectors of the fed cattle market with no one sector benefiting consistently at the expense of another.

    And, according to USDA Data, fed cattle prices are rising on their own, without government intervention. Fourth quarter 2021 fed cattle prices are the highest in five years (even as wholesale beef prices have followed seasonal demand and decreased steadily since Labor Day, the end of the traditional annual high demand period).

    The “new” announcement raises several questions that need to be answered, including:

    • How much extra packing plant capacity does the administration think is needed? 
    • How high should cattle prices be right now? 
    • How long will the government sponsored processors receive government money? 
    • How much will the government sponsored processors be required to pay employees? 
    • There are many small and medium sized packers in the market today that have never received government support – how will they be affected by the influx of government-sponsored competition? 
    • When will these new plants come on-line? 2024-2025?  What impact will that have now?
    • Where are the target areas these plants are needed?
    • Will the new plants have sufficient labor?

    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.

  • North American Meat Institute to CDFA: Modified Prop 12 Rules Remain Flawed; More Time Needed

    In comments submitted to the California Department of Food and Agriculture (CDFA), The North American Meat Institute (NAMI) said, despite modification to proposed rules for Proposition 12 (Prop 12 or the law), the proposed rules remain flawed and more time is needed for compliance.

    “Until CDFA publishes final rules, no one can adequately prepare to comply with a law with criminal sanctions and that authorizes civil litigation,” said Mark Dopp, General Counsel and Chief Operating Officer at NAMI. “Rather than apply ‘band aids’ to address some challenges, NAMI suggests CDFA go further and afford everyone in the supply chain, from hog producers all the way to foodservice and retail entities, the 28-month preparation time the law, and the voters, contemplated before enforcing any aspect of Prop 12 or its regulations.”

    For the text of the comments, go here.

    Although CDFA modified the proposed rules and are to be applauded because they account for complexities in the supply chain or they bring the proposal more in line with the law, unfortunately, many parts of the May 2021 proposed rules remain intact and flawed. NAMI identified these flaws in its July comments and during the August public hearing.

    Prop 12 directed CDFA to promulgate regulations implementing the law by September 1, 2019. The rules are yet to be finalized even though some provisions take effect January 1, 2022.

    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.

  • Government Interference in Beef & Cattle Markets has Unintended Consequences

    In response to a bipartisan request from the House Agriculture Committee, Texas A&M University has completed a comprehensive report on the U.S. cattle and beef markets written by leading economists across the country. Among its key findings is that proposals increasing government intervention and mandates will cost livestock producers billions of dollars.

    “Thursday the House Agriculture Committee will hold the fourth Congressional hearing this year on beef and cattle markets. It is no surprise that the Texas A&M analysis reflects the expert testimony at each hearing: supply and demand have the most influence on the price of cattle and goods for consumers,” said Meat Institute President and CEO, Julie Anna Potts.

    The analysis is a 180 page book called “The U.S. Beef Supply Chain: Issues and Challenges,” and is the result of a collaboration with Texas A&M’s Agricultural and Food Policy Center, national experts and the U.S. Department of Agriculture.

    “The Texas A&M book went one step further and examined current legislative proposals and found these proposals’ unintended consequences will harm those they are meant to protect: cattle producers,” Potts said. “This book should be required reading for Members of Congress who want to help livestock producers and consumers.”

    One of the most significant findings was regarding government mandates included in proposed legislation by Members of Congress (called the 50/14 or 30/14 proposals) to require minimum negotiated cash market purchases. Dr. Stephen R. Koontz, Professor in the Department of Agricultural and Resource Economics at Colorado State University found:

    “The short-term impact for a policy most like that being considered is a $2.5 billion negative impact in the first year and a cumulative negative impact of $16 billion over 10 years, inflated to 2021 dollars. This cost is leveled mainly on cattle producers,” said Koontz. “The 50/14 proposal would have these negative impacts and the 30/14 would have similar negative impacts albeit approximately halved.” (Page 104)

    Similar to the experts and economists who have testified before Congress, the book’s introduction contains this warning:

    “In the meantime, we would urge extreme caution in making changes to a system that has grown organically over time to reward high-quality beef production in a way that acknowledges regional differences throughout the country.” (emphasis added) Page ix

    The book contains the following critical arguments:

    Regarding Concentration
    “While not necessarily a popular position, most economic research confirms that the benefits to cattle producers due to economies of size in packing largely offset the costs associated with any market power exerted by packers. Research indicates that there is market power, but its effect has been small.” Page x

    Fed Cattle Pricing:
    “Innovation via AMAs (alternative marketing arrangements) originated with feeders who were attempting to capture value associated with improved quality. There has been tremendous variability in the adoption of AMAs, with the Texas-Oklahoma-New Mexico region by far being the largest users of AMAs.” Page x

    “Reliance on formula pricing significantly reduced transaction costs associated with negotiation and induced predictability in the supply chain.” Page x

    Regarding Price Discovery:
    “Among the cattle market economists consulted, there was general agreement that price discovery in fed cattle markets is still robust despite the fact that less than 30% of the transactions are negotiated (or cash).” Page x

    In Chapter 2 of the Study, John D. Anderson, Professor and Head of the Department of Agricultural Economics and Agribusiness at the University of Arkansas, Andrew M. McKenzie, Professor and Associate Director of the Fryar Price Risk Management Center of Excellence in the Department of Agricultural Economics and Agribusiness at the University of Arkansas, and James L. Mitchell, Assistant Professor in the Department of Agricultural Economics and Agribusiness at the University of Arkansas and an Extension Livestock Economist with the University of Arkansas System Division of Agriculture wrote: “The reliance of formula prices on negotiated prices is reason enough to pay particular attention to the manner in which prices are established in the market. Negotiated prices not only reveal information about supply and demand fundamentals in the fed cattle market; they also contribute substantially to formula prices that control two-thirds or more of fed cattle trades. For both of these reasons, negotiated trades in the fed cattle market have some characteristics of a public good; therefore, market participants have a strong interest in ensuring that negotiated trades occur in sufficient quantity to fulfill this public good role (Koontz and Purcell, 1997).  Theory and empirical work, as reviewed in this volume, suggest that the figure may be quite small – smaller than market participants (at least on the selling side) are apparently comfortable with.” Page 61

    Requiring Minimum Cash Transactions:
    “While some argue that imposing mandatory minimums on negotiated (or cash) transactions would improve price discovery in the fed cattle markets – accruing benefits to the cow/calf producer in the process – authors in this book argue it could have the opposite effect, potentially imposing huge costs that are passed down to cattle producers in the form of lower prices.” Page xi

    Regarding Capacity
    “The experts consulted in this study repeatedly stressed the cyclical nature of the cattle business. While cattle supplies have outpaced available packing capacity, that will not always be the case. As a result, anyone who decides to build additional capacity must understand those market dynamics and be aware that packer margins can plummet with that cycle. The decline in packing capacity has occurred over several decades; it is not just a recent event.” Page xi

    For more information from the Meat Institute on beef and cattle markets see the following:

    They Said It: Economists, Academics, Industry Agree: Supply, Demand, Labor, Economies of Scale Drive Beef and Cattle Markets

    On Inflation: North American Meat Institute to Secretary Vilsack: Scapegoating Industry Does Not Help Consumer

    On Market Structure and Capacity: Meat Institute’s Public Comments in Response to Secretary Vilsack’s Request for Information on Investments and Opportunities for Meat and Poultry Processing Infrastructure

    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.

  • 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.