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USDA Report Says Meat Packing Industry Structure Has Not Significantly Impacted Beef Prices

Monday, May 17, 1999

A new report released by the USDA’s Economic Research Service (ERS) shows what many reports have shown previously: that the changing structure of the meat packing industry has not significantly impacted cattle prices. The report found no evidence that packers are exercising market power and in fact shows that as packer concentration has increased, the packer’s share of the consumers dollar spent on beef is only slightly larger than its lowest level of the past 30

The report, “U.S. Beef Industry: Cattle Cycles, Price Spreads, and Packer Concentration,” which studied the relationships among cattle cycles, price spreads and market concentration, was completed three years ago but only recently released by USDA. The report echoes findings of previous government investigations.

“The USDA report certainly helps clarify any misperceptions that beef industry structure adversely affected cattle prices in the 1990s,” said J. Patrick Boyle, AMI President and CEO. “It is time we all worked together to market beef more effectively and
stop pointing fingers at each other about the causes of low prices.”

Examining the cattle cycle of 1991-96, the report compares the recent cycle to previous cattle cycles and concludes in “The 1970’s cattle cycle was worse for ranchers than the current one, and that farm prices in the current cycle may actually be better than one might expect.”

Exacerbating the perceived problem in the early 1990s, the report states, was “An atmosphere in which some producers and members of Congress questioned whether the cattle industry was adversely affected by high packer concentration and market power.” However, the report concludes that “price levels during the cattle cycle of the 1990’s were better . . . than they could have been.”

A copy of the 44 page report can be found at http://www.econ.ad.gov/epubs/pdf/tb1874.

AMI represents the interests of packers and processors of beef, pork, lamb, veal and turkey products and their suppliers throughout North America. Headquartered in Washington, DC, the Institute provides legislative, regulatory and public relations services, conducts scientific and economic research, offers marketing and technical assistance and sponsors education programs.

For more information contact:
Janet Riley
Vice President, Public Affairs
James Ratchford
Manager, Public Affairs

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