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Beef investigation underway

Steven Rains - August 28, 2019 5:48 pm

U.S. Agriculture Secretary Sonny Purdue said Wednesday his department has launched an investigation to determine whether there have been unfair beef pricing practices after the fire at the Tyson slaughterhouse in Kansas.

“As part of our continued efforts to monitor the impact of the fire at the beef processing facility in Holcomb, Kan., I have directed USDA’s Packers and Stockyards Division to launch an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices,” Perdue said in a statement..

If any unfair practices are detected, the department will take “quick enforcement action,” he added.

Industry experts say the price of live cattle has fallen since the fire, while wholesale beef prices have risen. The Holcomb plant processed about 6,000 cattle a day, about 6% of all the cattle processed in the United States.

Tyson officials have said a spark from welding during maintenance is the likely cause of a fire, which caused extensive damage. No one was injured. The fire damaged a small area but affected critical operating systems. The company has said it plans to reopen the facility .

The impact on retail beef prices for consumers since the Aug. 9 fire is not yet known because those figures are only reported monthly, said Glynn Tonsor, an agricultural economics professor at Kansas State University.

In the days after the fire, fed cattle prices fell by $5 per hundredweight to about $105 per hundredweight, Tonsor said. That amounts to about $70 per head for a 1,400-pound animal.

At the same time, choice wholesale boxed beef was up $22 per hundredweight in the days following the fire. Those were the largest daily gains for wholesale meat prices on record since market reporting began in 2001, Tonsor said.

At the Kansas Livestock Association, spokesman Todd Domer said its members are frustrated with what is going on in the marketplace. He said an investigation is “probably justified.”

 

 

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