WASHINGTON, DC — United States Representative Dusty Johnson recently urged President Donald Trump to oversee a comprehensive, multi-agency investigation following continuous cattle market volatility.
In 2019, Johnson urged the United States Department of Agriculture to provide a thorough investigation to producers following cattle market volatility after the August 2019 Holcomb, Kansas Tyson beef processing plant and the continued instability currently caused by the COVID-19 outbreak.
“We need to get to the bottom of exactly what is going on, and why,” said Johnson in a letter sent to Trump. “A comprehensive approach is the only one that makes sense, one that includes the Department of Justice, the Commodities Futures Trading Commission, USDA Packers and Stockyards and congressional hearings. As I said in the wake of the Holcomb fire, whatever investigation is done needs to be ‘for real,’ rather than ‘for show.’”
A major fire in August at Tyson beef processing plant in Holcomb destroyed a facility that processed 6,000 head per day before the fire. That processing capacity accounts for 6 percent of the total United State fed cattle capacity and the impact of the fire is still being felt. Along with the uncertainty generated with the spread of COVID-19, the two factors are affecting cattle markets around the country.
Cattle markets in the United States were affected by the fire, according to a report from the United States Department of Agriculture, as the demand for beef was expected to drop in the short term. When the stock market is doing well, consumers feel confident and are willing to spend more disposable income on luxuries like eating out, and beef is often part of that experience.
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That uncertainty has continued in the stock market with the spread of the COVID-19 virus around the world, concern was high almost immediately. The Dow Jones saw a high of above 29,500 just several weeks ago but closed around 23,000 recently, with quadruple digit losses resulting from concerns over the disease.
Jodi Anderson, executive director of the South Dakota Cattlemen's Association, said Johnson's call for a closer look at the cattle market as well as a recent request from Sen. John Thune to United States Attorney General William Barr are prudent steps.
"They are both making that ask to my knowledge, and that is something the industry is glad to see. We want to make sure the market is functioning as transparently as possible," Anderson said.
Investigations and hearings could reveal answers, but Anderson said most people in the industry expect the volatility in the market will remain in the short term due to the difficulty of forecasting how the worldwide pandemic will play out.
"There's a lot of uncertainty surrounding COVID-19 and the markets are sort of responding in kind," Anderson said. "I haven talked to anyone who anticipates that that's going to change, at least until there is more certainty."
Anderson said there are some bright spots within the industry. She said packers are still operating and supply chains are currently intact and getting product to the places it needs to be. She also said the industry was well-suited to adjust to certain changes due to COVID-19, but it is still navigating uncharted territory.
"This pandemic has really caused problems that nobody could have really anticipated. We have been sort of lucky as the beef industry was better-positioned to pivot our supplies from food services to retail than some of the other retail markets, but that also takes time, but we're seeing that happen, so that's good," Anderson said.
Anderson said everyone in the beef industry is dealing with unusual circumstances, but hopefully things will gradually stabilize. Until then, she urged producers to stay the course and contact the SDCA with concerns.
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"I encourage everyone to remember that these are unprecedented times, and we are all doing our best to get through this," Anderson said. "If they need to talk to somebody, reach out. We want to make sure people get through this in a way that moves the industry forward."
Johnson’s full letter to Trump follows below:
“Mr. President,
Things are bad in cattle country...really bad.
As we’ve discussed before, market conditions for the cattle producer have been lousy for quite awhile. With COVID-19, they’ve only gotten worse.
We need to get to the bottom of exactly what is going on, and why,” said Johnson in a letter sent to Trump. “A comprehensive approach is the only one that makes sense, one that includes the Department of Justice, the Commodities Futures Trading Commission, USDA Packers and Stockyards and congressional hearings. As I said in the wake of the Holcomb fire, whatever investigation is done needs to be “for real,” rather than “for show.”
You have wide-ranging powers, sir, and Rural America will be grateful for your efforts to ensure a rigorous investigation by the right people on a rapid timeline.
Sincerely, Dusty Johnson, South Dakota”
