(Bloomberg) -- U.S. ranchers are looking forward to the results of an investigation into market manipulation as low livestock prices threaten their survival, an industry leader said.
Farmers “are becoming unhinged” as livestock gluts -- exacerbated by a wave of slaughterhouse disruptions -- are coinciding with record-high wholesale beef prices, American Farm Bureau President Zippy Duvall said Friday.
He spoke at a round-table that included Iowa Senators Joni Ernst and Chuck Grassley, Vice President Mike Pence and senior meatpacker executives. While the senators echoed calls to close the cattle-beef pricing gap, Pence congratulated meatpackers including Tyson Foods Inc. and Smithfield Foods Inc. for their “miraculous effort” in maintaining supplies during the pandemic.
The U.S. Justice Department is investigating meatpacking companies for possible antitrust violations, according to a person familiar with the matter, as the industry comes under scrutiny over the plant shutdowns that have disrupted supply. Packer margins have surged in the last month as beef prices rose and cattle prices stayed low.
“We do have serious concerns about the potential market manipulation,” Duvall said. Ranchers are “frustrated by this disparity between the rock-bottom prices that we’re receiving and some of the sky-high wholesale prices that we’re seeing being charge.”
Earlier this week, Duvall urged authorities to do more to help farmers as bankruptcies in the industry accelerate.
Ernst said the coronavirus disruptions are prompting “a great awakening” as to where Americans’ food comes from. Grassley said hog farmers are stressed economically and emotionally from having to cull animals. Farmers ask why they’re losing hundreds on each of their cattle while prices for consumers are going up, he said.
The Justice Department’s antitrust probe is in the early stages and began before the coronavirus outbreak, said the person, who declined to be named. Meatpacking is highly consolidated, which has sparked longstanding concerns about companies’ pricing power over livestock suppliers.
President Donald Trump on Wednesday said he would ask the Justice Department to investigate. His remark came after attorneys general from 11 states called for the Justice Department to investigate the industry for possible antitrust infractions and said they were ready to work with federal enforcers.
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