7/1/2009 2:55:00 PM
R-CALF: Consumers Pay Near Record Beef Prices
Billings, Mont. – While meatpacker giant Tyson Fresh Meats (Tyson) continues its legal action to seize the home of Herreid, S.D., rancher Herman Schumacher, consumers pay near record beef prices and cattle ranchers like Schumacher receive below cost-of-production prices for their cattle.
In 22 of the past 23 months, U.S. cattle ranchers like Schumacher suffered horrendous losses, which exceeded $300 per head in late 2008 and early 2009 (see Fed Cattle Returns chart below). But, while cattle ranchers reel from low cattle prices, consumers continue to pay at or near record retail prices for beef, with Choice beef prices jumping over the $4 mark in February 2007 and reaching all-time highs in late 2008 and early 2009 (see Retail Choice Beef Prices chart below).
According to U.S. Department of Agriculture (USDA) data, in the first quarter of 2009 U.S. cattle ranchers received the smallest share of the consumer's beef dollar in seven years. The price paid to U.S. cattle ranchers in May 2009 for raising a Choice beef steer from birth to about 18 months of age was approximately $1,059. Consumers, however, who purchased the Choice beef after the packer slaughtered the animal, paid about $2,168 for the meat.
"In other words, the markup on beef was more than twice the value received by the rancher after he or she had raised the animal for about a year and a half, which means the middlemen – the packers and retailers that only held the beef for a matter of days – captured unjust profits away from the rancher and exploited the consumer," pointed out R-CALF USA CEO Bill Bullard. "In May 2009, the producer received only 43 percent of the consumer's beef dollar.
"In a competitive marketplace, consumers would not pay long-term record beef prices while cattle producers suffer long-term, below cost-of-production prices," he continued. "However, the fact this is happening demonstrates that U.S. cattle producers and consumers have lost their competitive marketplace.
"Schumacher dared to do what USDA failed to do for more than a decade," emphasized Bullard. "He took Tyson to task and filed a lawsuit alleging that Tyson and other packers had taken unlawful advantage of cattle producers by violating the Packers and Stockyards Act (PSA)."
A federal jury charged with deciding the facts in the case agreed with Schumacher, finding that Tyson and other packers violated the PSA and finding that the damages were not small. The jury awarded Schumacher and other cattle producers $9.25 million. However, on appeal the jury's verdict was overturned – not because Tyson and the other packers did not damage cattle producers, but rather, because the court found that it must be proven that packers intentionally violated the PSA in order for producers to receive any protection.
"Schumacher proved, by a jury's decision – the anchor in our Constitution - that Tyson's actions in the marketplace damaged U.S. cattle ranchers, and the fact that an appellate court refused to sanction Tyson does not lesson the harmful impact on ranchers like Schumacher and on consumers," said Bullard.
Bullard said the group is calling on USDA and the U.S. Department of Justice to take immediate steps to protect U.S. family farmers and ranchers from the ongoing, anticompetitive practices that are disrupting the competitive market, both for consumers and producers.
R-CALF: Consumers Pay Near Record Beef Prices
Billings, Mont. – While meatpacker giant Tyson Fresh Meats (Tyson) continues its legal action to seize the home of Herreid, S.D., rancher Herman Schumacher, consumers pay near record beef prices and cattle ranchers like Schumacher receive below cost-of-production prices for their cattle.
In 22 of the past 23 months, U.S. cattle ranchers like Schumacher suffered horrendous losses, which exceeded $300 per head in late 2008 and early 2009 (see Fed Cattle Returns chart below). But, while cattle ranchers reel from low cattle prices, consumers continue to pay at or near record retail prices for beef, with Choice beef prices jumping over the $4 mark in February 2007 and reaching all-time highs in late 2008 and early 2009 (see Retail Choice Beef Prices chart below).
According to U.S. Department of Agriculture (USDA) data, in the first quarter of 2009 U.S. cattle ranchers received the smallest share of the consumer's beef dollar in seven years. The price paid to U.S. cattle ranchers in May 2009 for raising a Choice beef steer from birth to about 18 months of age was approximately $1,059. Consumers, however, who purchased the Choice beef after the packer slaughtered the animal, paid about $2,168 for the meat.
"In other words, the markup on beef was more than twice the value received by the rancher after he or she had raised the animal for about a year and a half, which means the middlemen – the packers and retailers that only held the beef for a matter of days – captured unjust profits away from the rancher and exploited the consumer," pointed out R-CALF USA CEO Bill Bullard. "In May 2009, the producer received only 43 percent of the consumer's beef dollar.
"In a competitive marketplace, consumers would not pay long-term record beef prices while cattle producers suffer long-term, below cost-of-production prices," he continued. "However, the fact this is happening demonstrates that U.S. cattle producers and consumers have lost their competitive marketplace.
"Schumacher dared to do what USDA failed to do for more than a decade," emphasized Bullard. "He took Tyson to task and filed a lawsuit alleging that Tyson and other packers had taken unlawful advantage of cattle producers by violating the Packers and Stockyards Act (PSA)."
A federal jury charged with deciding the facts in the case agreed with Schumacher, finding that Tyson and other packers violated the PSA and finding that the damages were not small. The jury awarded Schumacher and other cattle producers $9.25 million. However, on appeal the jury's verdict was overturned – not because Tyson and the other packers did not damage cattle producers, but rather, because the court found that it must be proven that packers intentionally violated the PSA in order for producers to receive any protection.
"Schumacher proved, by a jury's decision – the anchor in our Constitution - that Tyson's actions in the marketplace damaged U.S. cattle ranchers, and the fact that an appellate court refused to sanction Tyson does not lesson the harmful impact on ranchers like Schumacher and on consumers," said Bullard.
Bullard said the group is calling on USDA and the U.S. Department of Justice to take immediate steps to protect U.S. family farmers and ranchers from the ongoing, anticompetitive practices that are disrupting the competitive market, both for consumers and producers.
