April 8, 2020 / 10:13 PM / 3 months ago

U.S. to probe surging beef prices, falling cattle prices during coronavirus pandemic

CHICAGO (Reuters) - The U.S. Agriculture Department will investigate why a surge in beef prices because of coronavirus hoarding did not translate into higher cattle prices for farmers, Agriculture Secretary Sonny Perdue said on Wednesday.

FILE PHOTO: Steak is pictured in New York March 11, 2015. REUTERS/Lucas Jackson

The investigation adds scrutiny on the small group of meat companies like Tyson Foods Inc and Cargill Inc [CARG.UL] that dominate U.S. beef processing.

“This is a good decision to address potentially unfair practices,” Republican U.S. Senator Deb Fischer of Nebraska said on Twitter.

The investigation will expand a probe the USDA launched into the beef market in August after a fire that shut a Tyson Foods plant in Holcomb, Kansas, sent beef prices soaring and tanked cattle prices. The agency has not released the results of the investigation that began last year.

Tyson Foods said it would cooperate with the USDA.

“During the current pandemic and following the fire at our Holcomb, Kansas, facility last August, we have taken steps to minimize the impact each situation had on our producers, production volume and our ability to cover customer needs,” the company said in an emailed statement.

Cargill did not immediately respond to a request for comment. The company said previously it had been a committed buyer in the cash market for cattle, to the benefit of farmers.

U.S. senators asked the Justice Department last month to investigate whether beef processors engaged in price-fixing during the coronavirus pandemic.

The National Cattlemen’s Beef Association, an industry group, separately called for the USDA to work with the Justice Department to investigate whether “inappropriate influence occurred in the markets.” The association also asked the U.S. Commodity Futures Trading Commission to assess speculation in CME Group Inc’s cattle futures to determine whether they “remain a useful risk-management tool” for farmers.

“USDA’s Packers and Stockyards Division will be extending our oversight to determine the causes of divergence between box and live beef prices, beginning with the Holcomb Fire in KS last summer and now with COVID-19,” Perdue said on Twitter.

Reporting by Tom Polansek; Editing by Bill Berkrot and Peter Cooney

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