Beef Price Fixing -US Department Of Agriculture (USDA) Launches Investigations Into Price Fixing following Tyson Fire
Sonny Perdue The Secretary of the USDA announced on Wednesday that he is launching a probe into beef prices. Questions are being raised about beef price manipulation after a fire at a Tyson Slaughterhouse in Holcomb, Kansas earlier this month.
The slaughterhouse was responsible for 5% off all the beef supply in the United States. The facility in Finley County, Kansas has been completely closed since the fire. Close to 6000 people worked at the plant,some have been transferred to other Tyson facilities While others are only receiving reduced paychecks, until further notice.
Perdue released a statement, “as part of our continued efforts to monitor the impact of the Tyson fire at a beef packing facility.” Perdue said the USDA’s Packers and Stockyards Division will be in charge of the investigation.
Perdue said he has received reports that price fixing, collusion and restriction of competition are at play now”. These are very serious allegations, if proven can result in fines and jail time for those responsible.
Sonny Purdue Said If Any Wrong Doing Is Discovered Swift Action Will Be Taken
The fire has certainly affected beef prices in the markets. Beef industry experts said, the price of live cattle has actually fallen since the fire. On the other side of the equation the prices whole beef have risen substantially since the fire.
Those figures are at the core of the USDA investigation say industry insiders. A Tyson official said this week that the fire was sparked from a piece of welding equipment. The fire caused extensive damage to the facility, although the damage wasn’t in a large part of the facility. The damage affected the operating systems, that is why it had to be completely closed.
Tyson does plan to reopen the faculty, although there is no known date when it will open. Glynn Tonsor, a Kansas State University economics professor said the impact to consumers is not know yet. Tonsor explained that the consumer figures are generated monthly, the fire occurred on August 9th. He believes the full impact of the fire to consumer prices will be known sometime in September.
Beef Price Fixing- In The Days Immediately After The Fire Cattle Prices Fell $5.00 Per Hundredweight
August 10th to 12th the price of fed cattle prices fell $5 per hundredweight to $105 per hundredweight. Tonsor explained that, that comes out to about $70 per animal with a weight of 1400 pounds.
During that same time period, choice wholesale boxed beef rose to $22 per hundredweight right after the fire. Experts at the time said, those hikes in beef prices was the largest gain since 2001. Perdue and the USDA were alerted that something ‘wasn’t adding up, with that type of price hike’.
Tonsor said that wholesale beef became much more expensive but cattle got cheaper, due to the fire. It raised eyebrows, experts said, it just didn’t add up, and needed to be looked into.
That is how the investigation that Purdue just launched took flight. The prices for live cattle has rebounded somewhat in the last few days. However they are not at the levels they were before the August 9th fire.