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August 29, 2019

USDA launches probe into beef prices following Tyson Foods plant fire

The US Secretary of Agriculture has ordered a probe into possible manipulation of beef prices after a plant fire caused a disparity between supply and demand.

By Dean Best

The US Secretary of Agriculture has ordered a probe into possible manipulation of beef prices following a recent fire at meat giant Tyson Foods’ Kansas plant.

Tyson’s site in Holcombe was hit by a fire on 9 August that partly destroyed the facility and brought production to a halt. At the time, the firm said it was looking into moving production to other company plants, which total six in the city of Kansas.

Secretary Sonny Perdue said in a statement yesterday (28 August) that he had instructed the US Department of Agriculture (USDA) to launch an investigation into beef pricing margins.

Reuters reported an anomaly had arisen between supply and demand as the price paid to beef cattle farmers dropped while prices at the customer level rose, including retailers and foodservice outlets. 

The news agency cited the Denver-based livestock marketing advisory service HedgersEdge.com as saying profit margins for the packers are above US$400 per head of cattle slaughtered, up from around $150 before the fire and well above the previous record of $308.

Perdue said in a statement: “As part of our continued efforts to monitor the impact of the fire at the beef processing facility in Holcomb, I have directed USDA’s Packers and Stockyards Division to launch an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices. 

“If any unfair practices are detected, we will take quick enforcement action. USDA remains in close communication with plant management and other stakeholders to understand the fire’s impact to industry.”

Tyson officials had said plans were already in place to rebuild the facility. Steve Stouffer, the group president for Tyson Fresh Meats, said at the time of the fire: “Tyson Foods has built in some redundancy to handle situations like these and we will use other plants within our network to help keep our supply chain full.” 

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