South Dakota cattle producer testifies before Congress about need for 'second bidder' in livestock market
The hearing in the Senate Agriculture, Nutrition, and Forestry examined the tough sport for ranchers in the cattle market and was cheered by South Dakota's senators.
WASHINGTON, D.C. — A Senate agriculture committee hearing got a South Dakota sale barn kickoff on Wednesday, June 23, when St. Onge auctioneer Justin Tupper started off the bidding at "one-twenty" for a "fat steer."
The demonstration — spurred by Sen. John Thune — drew a laugh from the chairwoman, Sen. Debbie Stabenow, D-Mich., who noted her own background in 4-H barns. But then the committee got down to business, focusing on allegations of an oligopoly among the four packing companies — allegations that have drawn the ire of cattlemen and women, particularly in western states, and only flared during the pandemic.
Tupper, who answered questions with his black cowboy hat on the dais, told the committee he's learned in the sale barn that "true price discovery" comes through a "second-bidder."
"Today, we don't have that second bidder," said Tupper, also a cattle producer and the Vice President of the U.S. Cattlemen's Association .
Senator after senator on Wednesday laid out a seeming competitive disadvantage for cow-calf operators. Sen. Cory Booker, D-N.J., noted that over 80% of the cattle raised in the U.S. is processed at facilities owned by four packers , Tyson, JBS, Cargill and National Beef.
While allegations of price-fixing among the four aren't new, the pandemic — and record prices in beef — has awoken the public to industry tensions.
Wednesday's hearing comes after weeks in a concerted push from South Dakota's senators.
Last week, Thune, a Republican, claimed the committee on which he sits opted to hold the meeting after he'd issued a letter calling for them to investigate "potential manipulation by meatpackers."
On Tuesday, the eve of the hearing, Republican Sen. Mike Rounds posted a photo to social media eating steak in a Washington, D.C. area restaurant with Tupper, saying they had "beef" with packers.
Earlier this month, Rounds and Democratic Minnesota Sen. Tina Smith argued in a letter to Attorney General Merrick Garland that the cattle market was in the grip of four leading packers.
Close observers say one obstacle preventing closer congressional inspection in the past has been removed.
James Halverson, the executive director of the South Dakota Stock Growers Association , told Forum News Service last week that such a hearing would've "never been brought up by the committee" under the the former Republican chair of the agriculture committee Sen. Pat Roberts , who heralded from a state with a sizable packinghouse lobby and retired earlier this year.
"They're not going to fix the markets overnight," said Halverson. "But we see movement."
The cow-calf operators were but one voice during Wednesday's hearing. Glynn T. Tonsor, an economist from Kansas State University, argued in written testimony that "evolutions" in the $66 billion beef and cattle industry often resembled a Rubik's cube, and that producers' inventories of fed cattle "have often exceeded operational capacity to process them."
Invocation of a supply-and-demand drew questions from Thune, who asked Tupper if the slim margins his members faced were "simply a function of supply and demand."
"I think it really boils down to competition," said Tupper. "When they don't have to compete... they can control the chain speed. They can control the price out the back door."
On Wednesday, Sen. Amy Klobuchar, D-Minn., promised a separate hearing on price irregularities in the Senate Judiciary committee "soon."