Harkin Calls for Cattle Contract Probe

April 1, 2002

Senate Agriculture Committee Chairman Tom Harkin (D-IA) has called on Attorney General John Ashcroft to investigate any connection that may exist between sharp declines in the live cattle and live cattle futures markets and a report that foot and mouth disease had been found on a Kansas farm. Although the rumor proved false the next day, Harkin says, and many analysts suggested the fundamental market conditions did not dictate the negative trend, the market continued a downturn for nearly two weeks.

Harkin called on Ashcroft to conduct an investigation into the source of the rumors and the reason for the continued decline in prices. "We need answers whether this two week downturn was all the result of a false rumor that lasted less than 24 hours and what the source of the rumor was. Furthermore, some in the cattle futures industry have alleged that the decrease in the markets was caused by illegal activity. Because of these uncertainties we must have answers," said Harkin. "America's livestock producers have lost millions over the past two weeks and we must know what caused it."

Harkin called on Ashcroft to conduct a full investigation into the matter immediately. He urged the Department of Justice to utilize resources and experience at investigating potentially illegal activities affecting the integrity of markets. According to Harkin, action by Justice would strengthen the efforts of other agencies looking into this incident.

Since the rumor first circulated, the USDA and the Commodity Futures Trading Commission (CFTC) have begun looking into the matter. They are investigating allegations of price manipulation and market distorting practices, and the possibility of violations of the Packers and Stockyards Act and the Commodity Exchange Act.

"We must get to the bottom of what has happened and Department of Justice involvement is a necessary part of this effort. If there is illegal activity in the livestock and livestock futures market that has led to the events of the past week we must find it and root it out," said Harkin. "Farmers must have confidence in the market place, and I hope Department of Justice will help ensure that they have just that."