Beef price gouging? Kansas attorney general joins others in raising the question

Kansas Attorney General Derek Schmidt has joined the fight with 11 other state attorneys general asking the federal government to investigate price manipulations of beef.

This week, Schmidt wrote to U.S. Attorney General Bill Barr that he had concerns about why the price of cattle is dropping while consumers are paying more in the grocery store. State law restricts Schmidt from investigating the issue himself, so he joined the ranks of 11 other state attorneys general who asked Barr on May 5 to have the U.S. Department of Justice investigate.

“There have been tremendous disruptions in beef and cattle markets related to COVID-19,” Schmidt said in a news release. “The underlying frustration of many cattle producers and feeders boils down to this: Why are they being paid significantly less for live cattle when consumers are paying more for beef on the grocer’s shelf? It is a reasonable question that deserves a review and fully-informed answer.”

The May 5 letter signed by 11 state attorneys general, including Missouri’s, alleges an oligopoly of beef processors possibly colluding to offer lower prices to farmers and ranchers and higher prices to consumers. The letter points out that the four largest beef processors control 80% of U.S. beef being processed.

The letter says the concerns in the cattle market are nothing new, existing “long before the COVID-19 pandemic” and will persist after.

“In short, with such high concentration and the threat of increasing consolidation, we have concerns that beef processors are well positioned to coordinate their behavior and create a bottleneck in the cattle industry to the detriment of ranchers and consumers alike,” the letter says. “During an economic downturn, such as that caused by the current pandemic, firms ability to harm American consumers through market manipulation and coordinated behavior exacts a greater toll, providing an additional reason for conducting a careful inquiry into this industry.”

This story was originally published May 29, 2020 at 11:55 AM.