In response to a request from Congress and USDA, the Texas A&M University (TAMU) Agricultural and Food Policy Center (AFPC) has completed an extensive report on the U.S. cattle market. The 180-plus page report, titled “The U.S. Beef Supply Chain: Issues and Challenges,” is the result of proceedings from an AFPC-hosted workshop on cattle markets held June 3-4 in Kansas City.
The report puts into context a variety of disruptions in the cattle market, including the 2019 fire at the Tyson plant in Holcomb and the COVID-19 pandemic’s effect on packing plants and the supply chain. It is presented in 10 chapters that range in topics from price discovery to the use of alternative marketing arrangements to market transparency to the implications of fed cattle pricing changes on the cow-calf sector to packing capacity issues.
“In our discussions among cattle industry stakeholders, the viewpoints on solutions to current concerns about cattle markets were highly diverse,” said David Anderson, TAMU agricultural economist and report contributor.
He noted there was general agreement that price discovery is important to the functioning of cattle markets. However, Anderson said “agreement on any related policy changes remains an open question, and there is also concern about the unintended negative consequences of otherwise well-intentioned policy changes.”
Some findings from the evaluation of cattle market concentration included confirming and validating the link between fed cattle pricing and packer capacity. The report did state, “With respect to fed cattle pricing, research shows alternative marketing arrangements do not create market power because they do not change underlying supply and demand fundamentals.” In addition, it showed general agreement among cattle market economists consulted that price discovery in fed cattle markets still is robust. However, it was noted that additional transparency in general would be good as it could help build confidence in the market. Click here to see more...