WASHINGTON – House Agriculture Chairman David Scott of Georgia delivered the following statement at today’s hearing “An Examination of Price Discrepancies, Transparency, and Alleged Unfair Practices in Cattle Markets”
[As prepared for delivery]
Good morning. I’d like to thank our House Agriculture Committee members for joining us and our witnesses for appearing before the Committee today. We are holding this critical hearing to discuss cattle markets, concentration in the meatpacking industry, and allegations that the big four meatpackers have partaken in unfair practices that have driven down prices for cattle producers and led to distorted markets.
One point I want to make up front is that I am coming into this hearing with an open mind—and I hope my colleagues are too. Hearings provide us with opportunities to facilitate open discourse and get public answers to difficult questions.
I do not have any forgone conclusions on the subject of today’s hearing, but I am alarmed at the serious allegations out there and concerning stories about what has been happening in the packing industry. My goal for this hearing is to get answers to those questions and have the packers speak about those allegations.
Since the 1980s we have seen a steady increase in concentration in the packing industry. This consolidation has coincided with a steady decrease in the number of ranchers over that same period. In one analysis that I read, the authors noted that over half a million ranchers have gone out of business since the 80s, that averages out to about seventeen thousand cattle operations a year. This statistic is highly worrisome.
The family farmer is an essential part of this country and its food system. This hearing was inspired by what has been happening to those family farms and the purpose of the hearing is so that we can hear what those farmers have to say. In that light, I would like to enter into the record an article from the New York Times that described the circumstances that our ranchers are facing. I also hope to hear from the CEOs today on what they believe has led to so many small farms shutting down and how we can turn that around.
In the early 20th century, the country saw what concentration did to small business and how it hurt the everyday American. In 1921, Congress passed the Packers and Stockyards Act because of concern around concentration in the packing industry and anticompetitive practices.
I am concerned that in the last forty years this country has lost its grip on the “free market” component of capitalism. Fair and competitive markets should engender opportunities for many, and not just benefit a few at the top. We created antitrust laws for a reason, and unfortunately, we have gotten away from enforcing anticompetitive practices, and we have moved toward a system that prioritizes efficiency at all costs.
I was glad to see the Biden Administration reprioritize enforcement of competition laws through their executive order on promoting competition in the American economy and I hope that is a sign of action to come. As we move through this hearing and examine this issue, I think we should keep in mind the idea of how competition in markets increases equity and fairness.
Another issue with consolidated industry is that it can create less resilient supply chains. We saw this directly during the Holcomb fire in 2019 and then the COVID-19 pandemic. When a small number of companies control an entire link in the supply chain it makes us more susceptible to shocks and less resilient when black swan events occur. In that vein, consolidation doesn’t just hurt ranchers, it also hurts consumers, who face supply bottlenecks, higher prices, and limited choices.
Today’s witnesses bring together many years of experience in the cattle industry and different perspectives. And I thank all of our witnesses for being here. Unfortunately, we were supposed to have a fourth witness on our producer panel but, due to intimidation and threats to this person’s livelihood and reputation they chose not to participate.
Witness intimidation is unacceptable, and it is not conduct befitting this institution. I never want to hear about a witness choosing not to come before our Committee because of fear again. I am saddened and disappointed that we reached that point, and I will be following up on the incident.
I expect today that there will be differences of opinions and even disagreement – but I also expect civil discourse from everyone involved in this discussion. I look forward to hearing our witnesses’ testimony and leveraging the insights and solutions they offer to work toward a better future for an industry we all care about.