USDA rolled out a package of measures Monday aimed at supporting domestic producers. A fresh insurance product will offset the expense of retaining a breeding heifer during a two-year policy term, compensating producers if at any time in that window the cull value surpasses the value of keeping her as breeding stock.
Under the Ranchers First Initiative, USDA plans a guaranteed loan program to grow regional meat-processing capacity and will prioritize buying locally processed beef for federal and state institutions, including prisons and hospitals. The agency also said last month it could commit as much as $500 million to keep midsize meatpackers afloat.
A severe US cattle shortage has squeezed beef processing margins, leading to plant closures even among the largest companies. USDA said recent shutdowns by major packers mean nearly 20% of processing capacity will be available as the herd expands, calling it "a tremendous opportunity to shift this capacity toward American-owned independent small, midsize, and new co-ops."
The administration has moved to cool elevated beef prices by lowering tariffs on as much as 300,000 tons of imports. That move quickly provoked criticism from ranchers and Republican legislators representing rural states, who argue the additional supply undermines the US market and efforts to rebuild the cattle herd.
On Friday, Donald Trump hinted at the USDA's plans, claiming he had signed legal paperwork that would let farmers and ranchers handle food processing on their own. "Ranchers and Farmers have always been a number one priority for me," he said, acknowledging concerns about consolidation as the number of US ranchers has declined over time.
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The administration has sharpened its focus on concentration in the industry, which includes an ongoing Justice Department investigation. Tyson Foods Inc., Cargill Inc., JBS NV and National Beef Packing Co. dominate the beef market.
Both the National Cattlemen's Beef Association and The Meat Institute said last week that any new rule changes should not weaken food safety. The cattlemen's group urged the administration to "focus on reducing legitimate regulatory burdens" such as fuel and fertilizer prices and to safeguard the herd against animal disease.
Agriculture Secretary Brooke Rollins dismissed inspection worries as "scare tactics from some little shadier smoke-and-mirrors front groups." She told Glenn Beck, "At the end of the day, this is the most impressive, most robust food inspection safety system in the world and none of that will be compromised."
Producers contending with drought, high costs and uncertain markets have been culling animals for meat rather than breeding, leaving the US cattle herd at one of its lowest mid-year levels in roughly five decades. USDA's new insurance and financing tools are aimed at making herd rebuilding more feasible.
Ranchers are still uneasy about the USDA's choice to restart live cattle imports from Mexico while the New World screwworm remains present. Since it was detected nearly three months ago, the parasite has spread only limitedly in US livestock. Texas currently has two active cases.
USDA said Monday it removed two Texas zones from New World screwworm-infested status, allowing producers there to move livestock without additional inspections. The areas cover portions of La Salle, Webb, Gillespie, Kerr and Kimble counties and are the first to be cleared since the parasite was found in Texas in early June. Mexico still has nearly 2,000 active cases.
