Grassley calls for investigation into meatpackers, saying they may be using pandemic to 'gouge' farmers

Calling for a federal investigation, U.S. Sen. Chuck Grassley questioned Tuesday whether giant meatpacking companies are using the public health pandemic to "gouge" U.S. cattle producers, who have seen prices for their beef fall 3.5% over the past three weeks even as demand has surged.

"During this period of time, through no fault of their own, many farmers in Iowa have seen the prices of their products plummet, something you wouldn't expect would happen in a crisis," the Iowa Republican said Tuesday in a call with reporters.

Grassley, who plans to ask the U.S. Justice and Agriculture departments to investigate, said futures prices for live cattle are falling at the same time consumers are flooding grocery stores.

More: Panic buying — and hoarding — drive higher prices for eggs, milk and other staples

The fall in prices "may be understandable in a normal situation, but this is happening while American consumers bought 77% more meat, year-over-year, in March," Grassley said.

"The spike in grocery buying has caused higher beef values for the big four meatpackers, and a decrease in the value for Iowa farmers," he said. "It's very shameful, if the big four packing companies are using this national crisis to gouge the farmer."

Grassley's office said the senator was referring to meatpackers Tyson, National Beef, JBS and Cargill.

Earlier this month, U.S. Sen. Mike Rounds, a South Dakota Republican, asked the Justice Department to determine whether large meatpackers were using their market power to fix prices.

Liz Croston, a Tyson Foods spokeswoman, said retail demand in grocery stores has climbed, but orders from food service customers have come to "an immediate and virtual standstill."

Croston said Tyson relies on and is "concerned with the success and sustainability of our long-term independent cattle suppliers and want them to succeed." That's why the Arkansas-based company, with nine plants and 11,000 workers in Iowa, says it paid beef producers a premium for animals last week.

Minnesota-based Cargill said Tuesday it's focused on keeping processing plants running, including paying workers more per hour. Experts say a loss in production capacity hurts livestock prices.

"We know producers want fair and transparent prices," Cargill said in an email, and "our history shows we’ve been a committed participant in the cash market week in and week out, which benefits producers."

More:The latest on coronavirus in Iowa

Grassley also said prices are falling for grain producers and that he expects a third round of assistance for farmers.

That decision, he said, lies with U.S. Agriculture Secretary Sonny Perdue — “maybe with the president pushing him to do it.”

“I don’t know what’s going to happen, but with corn prices at our local elevator in New Hartford below $3, it makes you wonder if there isn't a big need for it,” said Grassley, whose family farms in north central Iowa.

The Trump administration provided two trade assistance packages — $12 billion in 2018 and $16 billion in 2019 — to offset farm losses tied to trade wars, primarily with China, Mexico and Canada.

The U.S. has reached a new trade deal with Mexico and Canada, replacing the North American Free Trade Agreement, and the first phase of an agreement with China, which was slated to buy billions of dollars in U.S. agricultural products before being hammered by COVID-19, the respiratory disease caused by the coronavirus.

More:Updated COVID-19 maps, charts track cases, data in state, across U.S.

Grassley noted that the $2 trillion stimulus package approved last week includes $14 billion to refill the coffers of the Community Credit Corp., a Depression-era entity that was tapped to provide the first two rounds of trade aid.

It includes assistance for beef producers, he said: "It opens up that money for livestock like it hasn’t been before."

The Iowa Cattlemen's Association wrote to Grassley earlier this month, asking that producers be included in the stimulus package. "With live cattle futures experiencing sharp decline — hitting 10-year lows — and boxed beef on the rise, many Iowa cattlemen find themselves questioning how long they can weather the current losses," the group wrote.

Boxed beef is large cuts of meat sold to wholesale buyers, such as retail chains. 

Asked if a new round of farm aid should be based on losses tied to the pandemic, instead of trade, Grassley said trade could still be a factor, given the global economic slowdown.

Without a turnaround, China may not be able to buy "what they’re supposed to be buying,” under the country's initial agreement with the U.S, he said.

Beijing has said it will buy $200 billion of American goods over two years, including $32 billion in farm goods.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457. 

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