Rumours abound about feedlot price fixing

Rumours of price fixing within the feedlot industry have intensified, but a Competition Commission enquiry doesn’t appear to be on the cards.

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Weaner calf prices have come down by between 29% and 33%, but pork and chicken prices have stagnated, said Willie Clack, chairperson of the Red Meat Producers’ Organisation. Acknowledging there is no proof of feedlot price fixing, he pointed out that “prices paid to the producer have decreased, but not the prices which consumers pay. So the question is: Who is pocketing the money?”

Comments from farmers on social media sites point to a widespread belief that feedlots are controlling beef prices. One farmer claimed feedlots say the high maize price is the reason why weaner prices have declined. However, the price of poultry and pork, livestock more dependent on maize than beef, has remained the same since January. Another farmer, who wished to remain anonymous, told Farmer’s Weekly that feedlots have allegedly been fixing prices for years.

“Phone a few different feedlots for quotes; you’ll find the weaner price differs by only a few cents,” he said. But Prof André Jooste, senior manager of the National Agricultural Marketing Council’s market and economic research centre, said the rumours have no foundation in fact, and it’s unlikely the Competition Commission will be investigating the industry.

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“Feedlots won’t put themselves at risk of being probed by the Competition Commission because they will be closed down if they are found guilty. The risk of losing is just too high,” said Jooste. He explained that market forces are more likely to be responsible for lower weaner prices than meddling by feedlots. “Consumer demand for beef has declined as consumers move towards cheaper sources of protein. Feedlots are also subjected to lower producer prices as demand for beef drops.”