Vilsack Frets Over Meat Prices; Announces Feed Transportation Cost Aid to Drought-Impacted Ranchers
White House: Meatpacker consolidation raising grocery bills
USDA Sec. Tom Vilsack said he is concerned about the effect of drought on meat prices that are already rising. Vilsack at the White House said that meat prices are already on the rise and could go higher due to a prolonged drought in western states. That is why USDA is expanding its help for producers in drought-stricken areas to cover feed transportation costs for livestock that rely on grazing. USDA is updating its Emergency Assistance for Livestock Honey Bees and Farm-raised fish Program (ELAP) to cover those costs for drought impacted ranchers. Vilsack said the move should provide some relief soon as ranchers make their herd management decisions for fall and winter. Producers will be able to apply for the feed transportation assistance later this month through their local Farm Service Agency offices. https://fsa.usda.gov/elap
“USDA is currently determining how our disaster assistance programs can best help alleviate the significant economic, physical and emotional strain agriculture producers are experiencing due to drought conditions,” said Vilsack. “The duration and intensity of current drought conditions are merciless, and the impacts of this summer’s drought will be felt by producers for months to come. Today’s announcement is to provide relief as ranchers make fall and winter herd management decisions.”
ELAP provides financial assistance to eligible producers of livestock, honeybees and farm-raised fish for losses due to disease, certain adverse weather events or loss conditions as determined by the secretary of agriculture.
ELAP already covers the cost of hauling water during drought, and this change will expand the program beginning in 2021 to cover feed transportation costs where grazing and hay resources have been depleted. This includes places where:
• Drought intensity is D2 for eight consecutive weeks as indicated by the U.S. Drought Monitor;
• Drought intensity is D3 or greater; or
• USDA has determined a shortage of local or regional feed availability.
Cost share assistance will also be made available to cover eligible cost of treating hay or feed to prevent the spread of invasive pests like fire ants.
Under the revised policy for feed transportation cost assistance, eligible ranchers will be reimbursed 60% of feed transportation costs above what would have been incurred in a normal year. Producers qualifying as underserved (socially disadvantaged, limited resource, beginning or military veteran) will be reimbursed for 90% of the feed transportation cost above what would have been incurred in a normal year.
A national cost formula, as established by USDA, will be used to determine reimbursement costs which will not include the first 25 miles and distances exceeding 1,000 transportation miles. The calculation will also exclude the normal cost to transport hay or feed if the producer normally purchases some feed. For 2021, the initial cost formula of $6.60 per mile will be used (before the percentage is applied) but may be adjusted on a state or regional basis.
To be eligible for ELAP assistance, livestock must be intended for grazing and producers must have incurred feed transportation costs on or after Jan. 1, 2021. Although producers will self-certify losses and expenses to FSA, producers are encouraged to maintain good records and retain receipts and related documentation in the event these documents are requested for review by the local FSA County Committee. The deadline to file an application for payment for the 2021 program year is Jan. 31, 2022.
White House: Meatpacker consolidation raising grocery bills.
The Biden administration is taking clear aim at major meat packers, saying they’ve squeezed consumers and farmers while recording record profits. In a blog post published Wednesday (link), three senior economic aides to President Joe Biden said consolidation in beef, pork, and poultry processing has raised prices and hurt consumers. “The meat-processors are generating record profits during the pandemic, at the expense of consumers, farmers, and ranchers,” the blog authors, including National Economic Council Director Brian Deese. “Absent this corporate consolidation, prices would be lower for consumers and fairer for farmers and ranchers.”
Price increases for those meats make up half of the rise in food prices since late 2020, they said, fueling inflation that has generated political pressure on Biden. The administration is pressing Congress to make cattle markets more transparent.
The Justice Department is investigating big meatpacking companies to determine whether they are violating antitrust laws. The probe started in the last year of the Trump administration, and the Biden administration is pushing forward, with plans to issue additional civil investigative demands, according to a person familiar with the matter.
Separately, the department is conducting a criminal investigation of price-fixing by chicken producers. The investigation has led to criminal charges against companies and executives, including Pilgrim’s Pride Corp. and its former chief executive officer. Tyson Foods Inc. has said it’s cooperating in the probe.
Vilsack earlier this year announced plans to propose new regulations to provide livestock and poultry producers greater protection in their dealings with meatpackers. Two bills have been introduced in Congress to require more transparency in pricing and terms of cattle purchases, in the hope it will give producers more leverage in transactions.
Beefpackers, meanwhile, have been earning record profits. Tyson, the largest U.S. meat company by sales, said its beef segment had a record profit margin of 16% during the first nine months of its fiscal 2021.