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Producer organizations, politicians, states call for investigation of meat packers Pam Burke community@havredailynews.com

After years of struggling with low cattle prices that did not keep up with increases in expenses or match the price of beef sold in the grocery store, cattle producers are finally getting some backing from politicians and their states to get answers on and possible fixes for the problems. At issue is the disparity between what meat packers pay cattle producers and what they charge to retailers. While producer organizations like M o n t a n a Fa r m e r s U n i o n , M o n t a n a Stockgrowers Association and R-CALF USA have tried to bring light to the problem, and solutions, over the years — through their efforts, calls for investigation and litigation — it is a 2019 fire in a meat packing plant and the current COVID-19 pandemic that have made the problem more evident to the general public and rallied more support. After the Aug. 9 fire shut down the Tyson Foods beef packing plant in Holcomb, Kansas, the price of cattle dropped and boxed beef prices jumped sharply the five weeks after the fire. “They broke the price of beef that they were paying for cattle by three or four hundred dollars in some instances but they raised the price that the retailers were paying, making 700, 800 — some people reported as much as $1,000 — that they were making off this cattle,” Montana Stockgrowers Association President Fred Wacker of Miles City said. Montana Farmers Union president Walt Schweitzer, who farms and ranches near Geyser, said that beef slaughter didn’t slow after the fire, it just shifted to other Tyson plants, at the expense of the cattle owners who had to pay to ship the cattle farther. “Interestingly enough, nationwide there was more cattle slaughtered the week following that fire than the week before the fire,” Schweitzer said. “It really had no impact on the number slaughtered, it just had a huge impact on the price paid for cattle.” Because packers were paying less for cattle and charging more for their products, Schweitzer said, data shows packing plants made $600 to $700 per head on beef they would have made $200-300 per head beforehand. The History The current estimate is that up to 85 percent of U.S. beef is processed by four packing companies, JBS USA, Tyson Foods, Cargill Meat Solutions and National Food. All these companies are multinational corporations with plants in countries all over the world. JBS is Brazil-owned, and National is majority owned by a Brazilian corporation. This hearkens back to a century ago when 74 percent of beef processing was cont r o l l e d by f i ve l a r g e c o r p o r a t i o n s, Schweitzer said. “It was not just the slaughtering of it, but they owned the railroad cars that shipped the live animals, they owned the railroad cars that shipped the frozen beef, they owned the packing plants and they

Havre Daily News/Jack Lambert Meat Cutter Jeremiah Horn cuts excess fat off of a few pork steaks while meat cutter Mason Buck operates a burger-forming machine in the background May 20 inside the butcher shop at Gary & Leo’s Fresh Foods. Groups — including the members of Montana’s congresssional delegation, the Montana Attorney General’s Office and President Donald Trump — are calling on the U.S. Department of Justice to investigate whether the main meat packing companies are manipulating the market, paying low prices to cattle producers and charging much-higher prices to the companies that end up selling the meat.

www.havredailynews.com facility requirement add expenses that don’t make sense in a small-scale setup, but they were endorsed by larger packing plants knowing that they would be a burden to smaller businesses. U.S. Department of Agriculture data shows that the number of slaughterhouses has dropped since 1967 when the Wholesome Meat Act, mandating that slaughterhouses can only produce meat for sale if they have federal inspectors on site, from around 10,000 to about 2,800 in nationwide operation. The smaller number of meat processors in Montana means that when the only business that collected offal from processors in the state needed to quit its Montana collections a few months ago Montana processors had to find their own solutions. Emmett said that meant investing in a costly incinerator. The Pandemic Influence There is efficiency in the operation of larger facilities, Schweitzer said, but it comes at the expense of resiliency. This is seen in the current disruption of the meat supply chain, which was exacerbated when restaurants started opening up again in mid-May “COVID has put a microscope on our supply chain,” Schweitzer said, “and it’s broken.” With many meat processing plants temporarily shutting down due to COVID-19 infection among workers, beef producers and feedlots are having trouble finding a market for their cattle — and pork, poultry and lamb producers are seeing the same issues — even after President Donald Trump signed a directive requiring the packers to stay operational. Consumers are seeing higher prices in the grocery store and, in some places requests to ration the amount of meat purchased, Schweitzer said. “The last couple months, a teenager could see that they’re price gouging,” Schweitzer said of the meat packers. “The price of meat at the counter is up 30, 40 percent, and the price they pay the producers is down 30 percent, so something is happening and that’s called price gouging.” After pressure from cattle producers and Congressional leaders to investigate meat packers after the August plant fire in Holcomb, the USDA opened an investigation into the issue. Rep. Greg Gianforte said this month that he contacted the department and was told the investigation, which was expanded to include recent actions by the large meat packers, is still ongoing. In April, a letter from 23 state cattlemen’s organizations, spearheaded by the Montana Stockgrowers Association, called for an additional investigation by the U.S. Department of Justice to prompt a more thorough and speedy investigation. The cattlemen’s request was followed by a letter from Montana Attorney General Tim Fox and attorneys general of 10 other ag states. Also joining effort is Montana Sens. Tester and Steve Daines and Rep. Gianforte along with other states congressional leaders who have addressed the House and Senate, talked to Secretary of Agriculture Sonny Perdue, Trump and U.S.

FARM & RANCH Havre Daily News/Jack Lambert Smoke rises from a brand being pressed into the side of a calf May 24 during a Gordon Cattle Company branding outside Chinook. Complainants say the Packers and Stockyards Act of 1921 that was enacted to break up monopolies in the meat packing industry has been effectively gutted and needs to once again be enforced. Attorney General William Barr, and joined in on written requests to Barr. Schweitzer said Tester has always been a vocal advocate for the producers, but Daines, along with Gianforte and others, has come on board in the past months especially and he hopes this added support will help. Gianforte said the USDA is looking into possible violations of existing policies and programs, but the DOJ has the ability to investigate any anticompetitive practices and antitrust law violations, which are beyond the scope of USDA. May 6, Trump formally requested, as well, that the DOJ look into whether the packing plants broke antitrust laws. Solutions If the large meatpackers, who have been investigated with no findings repeatedly in the past, are found to be in violation of policies, programs or laws this time they could face fines among other actions. And while many in the ag community and Congress, including Tester and Daines, have suggested that the U.S. implement mandatory country of origin labeling laws again, despite directives from the World Trade Organization to drop the practice, Schweitzer and Gianforte both said it is unclear if new trade deals include language that will allow COOL to pass WTO scrutiny. Wacker said the Stockgrowers’ board has passed a resolution to look into a legal COOL that would pass by the WTO. And the organization is pursuing Product of the U.S. changes. Gianforte said he is looking into ways that the Product of the U.S. designation could be narrowed to only apply to meat raised, processed and packaged in the United States, rather than its current guidelines that allow meat imported from other countries and then packaged in the U.S. to display the label. He said he is also looking at making changes to the Livestock Mandatory Price Recording Act to improve transparency in the cattle market with more details on the beef origin and clarity on prices. The law doesn’t go far enough, he added. He said he would also like to allow more Montana processors to increase in-state slaughter capacity. Schweitzer, though, said that producers will just get around that by dropping the label altogether because it is just for voluntary advertising. The monopoly by the few large corporations should be regulated or broken up, he said. If the multinational corporations, which are powerful enough to undercut markets of smaller processors, are broken or controlled, the U.S. could get regionalized meat packing again. “If they just enforced the Packers and Stockyards Act, the monopolies would be broke up,” he said.

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www.havredailynews.com owned the retail outlets,” he said, “and they owned the feedlots.” The Packers and Stockyards Act broke that, he said, in the 1920s when the Federal Trade Commission pushed through the Packers Consent Decree, and 18 months later the Packers and Stockyards Act was signed. Schweitzer said that through enforcement of the Packers and Stockyards Act the five packers’ control of the beef trade was reduced to 25 percent, but a 1981 lawsuit, i n i t i a t e d by C l a r k W i l l i n g h a m , w h o Schweitzer said became the head of the m e a t p a c ke rs l o b by i n g o rg a n i z a t i o n National Cattlemen’s Beef Association, got the Packers Consent Decree overturned. The Packers and Stockyards Act is still intact, Schweitzer added, but it really has not been enforced since ’81. The administration under President Donald Trump has hobbled the last enforcement efforts by gutting the oversight agency. The Grain Inspection Stockyard Agency was moved in 2017 under the Agricultural Marketing Services which has very limited strength. R-CALF also has a lawsuit against Tyson Foods, JBS USA, Cargill and National Beef Packing Co. alleging violations of the

n Continued from page 3 Packers and Stockyards Act and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers. Farmers Union joined the lawsuit last fall. The Problem Having so few companies in charge of meat production — this issue also extends to pork and poultry production, which is dominated by China-owned Smithfield Food, — creates a multifaceted problem, detractors say. For producers, Schweitzer said, the corporations hold the power in contract negotiation. Under the provision that packers can only own the cattle for less than 48 hours before slaughter, contracts with cattle owners, which are often signed months in advance of the sale, are based on formulas and grids that use cattle prices from the sale day’s Chicago Market Exchange. The problem, Schweitzer said, is that only 10 percent of cattle are sold in the open market, but that price governs the sale of the other 90 percent of beef sold. “So how easy is it for the packing plants to just have to manipulate the price on the 10 percent of the cattle to benefit on the 90 percent they already (contracted for)?” he said. “It’s corrupt.” But another level of the problem is that it puts 84 percent of meat production in a relatively few plants across the U.S. Small meat packers are having to operate under the same guidelines as the larger ones, this can hinder efficiency and cause extra expense that’s hard to absorb by small businesses, Montana Meat Processors Association President Jayson Emmett said. He co-owns Stillwater Packing Co. in Columbus and said that, as an example, if a steer comes into a packing plant with lump jaw, it has to be tagged as a notice to be processed with attention to the problem. At a large facility the tagged steer would be sent to a holding pen with other similarly tagged animals to be processed together. In their plant that only slaughters up to 50 head a week, though, the steer would be come in, be tagged, and slaughtered and immediately be processed with no break in contact with the steer.

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■ See Beef Page 10 Havre Daily News/Jack Lambert Calf wrestlers Aden Passon and Kaden Sullivan hold down a 2-month-old calf while Kailey Kleinjan brands it May 24 during a Gordon Cattle Company branding outside Chinook. Havre Daily News/Jack Lambert Steaks sit out on a rack waiting to get packaged up May 20 inside the butcher shop at Gary & Leo’s Fresh Foods. Groups claim that the meat packing companies that control most of the market in the U.S. are charging the companies that sell the meat much higher prices than what they pay the ranchers who raise the beef.

Literally, Emmett said, the steer is tagged, killed and then the tag is removed in succession. This is an unnecessary step for the smaller-scale processors, he said, and can more than double the time it takes to slaughter an animal. Other regulations and

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www.havredailynews.com owned the retail outlets,” he said, “and they owned the feedlots.” The Packers and Stockyards Act broke that, he said, in the 1920s when the Federal Trade Commission pushed through the Packers Consent Decree, and 18 months later the Packers and Stockyards Act was signed. Schweitzer said that through enforcement of the Packers and Stockyards Act the five packers’ control of the beef trade was reduced to 25 percent, but a 1981 lawsuit, i n i t i a t e d by C l a r k W i l l i n g h a m , w h o Schweitzer said became the head of the m e a t p a c ke rs l o b by i n g o rg a n i z a t i o n National Cattlemen’s Beef Association, got the Packers Consent Decree overturned. The Packers and Stockyards Act is still intact, Schweitzer added, but it really has not been enforced since ’81. The administration under President Donald Trump has hobbled the last enforcement efforts by gutting the oversight agency. The Grain Inspection Stockyard Agency was moved in 2017 under the Agricultural Marketing Services which has very limited strength. R-CALF also has a lawsuit against Tyson Foods, JBS USA, Cargill and National Beef Packing Co. alleging violations of the

n Continued from page 3 Packers and Stockyards Act and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers. Farmers Union joined the lawsuit last fall. The Problem Having so few companies in charge of meat production — this issue also extends to pork and poultry production, which is dominated by China-owned Smithfield Food, — creates a multifaceted problem, detractors say. For producers, Schweitzer said, the corporations hold the power in contract negotiation. Under the provision that packers can only own the cattle for less than 48 hours before slaughter, contracts with cattle owners, which are often signed months in advance of the sale, are based on formulas and grids that use cattle prices from the sale day’s Chicago Market Exchange. The problem, Schweitzer said, is that only 10 percent of cattle are sold in the open market, but that price governs the sale of the other 90 percent of beef sold. “So how easy is it for the packing plants to just have to manipulate the price on the 10 percent of the cattle to benefit on the 90 percent they already (contracted for)?” he said. “It’s corrupt.” But another level of the problem is that it puts 84 percent of meat production in a relatively few plants across the U.S. Small meat packers are having to operate under the same guidelines as the larger ones, this can hinder efficiency and cause extra expense that’s hard to absorb by small businesses, Montana Meat Processors Association President Jayson Emmett said. He co-owns Stillwater Packing Co. in Columbus and said that, as an example, if a steer comes into a packing plant with lump jaw, it has to be tagged as a notice to be processed with attention to the problem. At a large facility the tagged steer would be sent to a holding pen with other similarly tagged animals to be processed together. In their plant that only slaughters up to 50 head a week, though, the steer would be come in, be tagged, and slaughtered and immediately be processed with no break in contact with the steer.

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■ See Beef Page 10 Havre Daily News/Jack Lambert Calf wrestlers Aden Passon and Kaden Sullivan hold down a 2-month-old calf while Kailey Kleinjan brands it May 24 during a Gordon Cattle Company branding outside Chinook. Havre Daily News/Jack Lambert Steaks sit out on a rack waiting to get packaged up May 20 inside the butcher shop at Gary & Leo’s Fresh Foods. Groups claim that the meat packing companies that control most of the market in the U.S. are charging the companies that sell the meat much higher prices than what they pay the ranchers who raise the beef.

Literally, Emmett said, the steer is tagged, killed and then the tag is removed in succession. This is an unnecessary step for the smaller-scale processors, he said, and can more than double the time it takes to slaughter an animal. Other regulations and

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Producer organizations, politicians, states call for investigation of meat packers Pam Burke community@havredailynews.com

After years of struggling with low cattle prices that did not keep up with increases in expenses or match the price of beef sold in the grocery store, cattle producers are finally getting some backing from politicians and their states to get answers on and possible fixes for the problems. At issue is the disparity between what meat packers pay cattle producers and what they charge to retailers. While producer organizations like M o n t a n a Fa r m e r s U n i o n , M o n t a n a Stockgrowers Association and R-CALF USA have tried to bring light to the problem, and solutions, over the years — through their efforts, calls for investigation and litigation — it is a 2019 fire in a meat packing plant and the current COVID-19 pandemic that have made the problem more evident to the general public and rallied more support. After the Aug. 9 fire shut down the Tyson Foods beef packing plant in Holcomb, Kansas, the price of cattle dropped and boxed beef prices jumped sharply the five weeks after the fire. “They broke the price of beef that they were paying for cattle by three or four hundred dollars in some instances but they raised the price that the retailers were paying, making 700, 800 — some people reported as much as $1,000 — that they were making off this cattle,” Montana Stockgrowers Association President Fred Wacker of Miles City said. Montana Farmers Union president Walt Schweitzer, who farms and ranches near Geyser, said that beef slaughter didn’t slow after the fire, it just shifted to other Tyson plants, at the expense of the cattle owners who had to pay to ship the cattle farther. “Interestingly enough, nationwide there was more cattle slaughtered the week following that fire than the week before the fire,” Schweitzer said. “It really had no impact on the number slaughtered, it just had a huge impact on the price paid for cattle.” Because packers were paying less for cattle and charging more for their products, Schweitzer said, data shows packing plants made $600 to $700 per head on beef they would have made $200-300 per head beforehand. The History The current estimate is that up to 85 percent of U.S. beef is processed by four packing companies, JBS USA, Tyson Foods, Cargill Meat Solutions and National Food. All these companies are multinational corporations with plants in countries all over the world. JBS is Brazil-owned, and National is majority owned by a Brazilian corporation. This hearkens back to a century ago when 74 percent of beef processing was cont r o l l e d by f i ve l a r g e c o r p o r a t i o n s, Schweitzer said. “It was not just the slaughtering of it, but they owned the railroad cars that shipped the live animals, they owned the railroad cars that shipped the frozen beef, they owned the packing plants and they

Havre Daily News/Jack Lambert Meat Cutter Jeremiah Horn cuts excess fat off of a few pork steaks while meat cutter Mason Buck operates a burger-forming machine in the background May 20 inside the butcher shop at Gary & Leo’s Fresh Foods. Groups — including the members of Montana’s congresssional delegation, the Montana Attorney General’s Office and President Donald Trump — are calling on the U.S. Department of Justice to investigate whether the main meat packing companies are manipulating the market, paying low prices to cattle producers and charging much-higher prices to the companies that end up selling the meat.

www.havredailynews.com facility requirement add expenses that don’t make sense in a small-scale setup, but they were endorsed by larger packing plants knowing that they would be a burden to smaller businesses. U.S. Department of Agriculture data shows that the number of slaughterhouses has dropped since 1967 when the Wholesome Meat Act, mandating that slaughterhouses can only produce meat for sale if they have federal inspectors on site, from around 10,000 to about 2,800 in nationwide operation. The smaller number of meat processors in Montana means that when the only business that collected offal from processors in the state needed to quit its Montana collections a few months ago Montana processors had to find their own solutions. Emmett said that meant investing in a costly incinerator. The Pandemic Influence There is efficiency in the operation of larger facilities, Schweitzer said, but it comes at the expense of resiliency. This is seen in the current disruption of the meat supply chain, which was exacerbated when restaurants started opening up again in mid-May “COVID has put a microscope on our supply chain,” Schweitzer said, “and it’s broken.” With many meat processing plants temporarily shutting down due to COVID-19 infection among workers, beef producers and feedlots are having trouble finding a market for their cattle — and pork, poultry and lamb producers are seeing the same issues — even after President Donald Trump signed a directive requiring the packers to stay operational. Consumers are seeing higher prices in the grocery store and, in some places requests to ration the amount of meat purchased, Schweitzer said. “The last couple months, a teenager could see that they’re price gouging,” Schweitzer said of the meat packers. “The price of meat at the counter is up 30, 40 percent, and the price they pay the producers is down 30 percent, so something is happening and that’s called price gouging.” After pressure from cattle producers and Congressional leaders to investigate meat packers after the August plant fire in Holcomb, the USDA opened an investigation into the issue. Rep. Greg Gianforte said this month that he contacted the department and was told the investigation, which was expanded to include recent actions by the large meat packers, is still ongoing. In April, a letter from 23 state cattlemen’s organizations, spearheaded by the Montana Stockgrowers Association, called for an additional investigation by the U.S. Department of Justice to prompt a more thorough and speedy investigation. The cattlemen’s request was followed by a letter from Montana Attorney General Tim Fox and attorneys general of 10 other ag states. Also joining effort is Montana Sens. Tester and Steve Daines and Rep. Gianforte along with other states congressional leaders who have addressed the House and Senate, talked to Secretary of Agriculture Sonny Perdue, Trump and U.S.

FARM & RANCH Havre Daily News/Jack Lambert Smoke rises from a brand being pressed into the side of a calf May 24 during a Gordon Cattle Company branding outside Chinook. Complainants say the Packers and Stockyards Act of 1921 that was enacted to break up monopolies in the meat packing industry has been effectively gutted and needs to once again be enforced. Attorney General William Barr, and joined in on written requests to Barr. Schweitzer said Tester has always been a vocal advocate for the producers, but Daines, along with Gianforte and others, has come on board in the past months especially and he hopes this added support will help. Gianforte said the USDA is looking into possible violations of existing policies and programs, but the DOJ has the ability to investigate any anticompetitive practices and antitrust law violations, which are beyond the scope of USDA. May 6, Trump formally requested, as well, that the DOJ look into whether the packing plants broke antitrust laws. Solutions If the large meatpackers, who have been investigated with no findings repeatedly in the past, are found to be in violation of policies, programs or laws this time they could face fines among other actions. And while many in the ag community and Congress, including Tester and Daines, have suggested that the U.S. implement mandatory country of origin labeling laws again, despite directives from the World Trade Organization to drop the practice, Schweitzer and Gianforte both said it is unclear if new trade deals include language that will allow COOL to pass WTO scrutiny. Wacker said the Stockgrowers’ board has passed a resolution to look into a legal COOL that would pass by the WTO. And the organization is pursuing Product of the U.S. changes. Gianforte said he is looking into ways that the Product of the U.S. designation could be narrowed to only apply to meat raised, processed and packaged in the United States, rather than its current guidelines that allow meat imported from other countries and then packaged in the U.S. to display the label. He said he is also looking at making changes to the Livestock Mandatory Price Recording Act to improve transparency in the cattle market with more details on the beef origin and clarity on prices. The law doesn’t go far enough, he added. He said he would also like to allow more Montana processors to increase in-state slaughter capacity. Schweitzer, though, said that producers will just get around that by dropping the label altogether because it is just for voluntary advertising. The monopoly by the few large corporations should be regulated or broken up, he said. If the multinational corporations, which are powerful enough to undercut markets of smaller processors, are broken or controlled, the U.S. could get regionalized meat packing again. “If they just enforced the Packers and Stockyards Act, the monopolies would be broke up,” he said.

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