While beef prices are skyrocketing, ranchers on the western slope are not seeing the benefits

While beef prices are skyrocketing, ranchers on the western slope are not seeing the benefits

Cattle driven by ranches Kacey Green endures a snowy winter. The beef cattle will eventually be sold to feed companies, which then sell to packers at prices set by the oligopolistic industry, which sells beef for more than ever, but does not pay nearly as much to ranches and feed companies.
Courtesy / Kacey Green

Kacey Green, a rancher in Moffat County, does not buy her beef at the grocery store.

When she does her shopping, she will sometimes look past the beef department and she will be appalled by the high prices some of her neighbors pay for co-products. Despite the lucrative business that beef production has recently become, Green, whose children will be the fourth generation to raise cattle in the Yampa Valley, says local ranchers do not see part of the beef boom.

“It’s definitely going somewhere else,” Green said. “We do not see that profit.”

The problem of packing

Americans eat record amounts of beef, and the money it costs them has also reached record highs. The average price of a pound of minced beef in November 2021 (the latest available data from the U.S. Department of Labor Statistics) was up to $ 5.26. Just a year earlier, it was $ 4.59 – a jump of 14.5% over the course of a year.

The question of why beef prices in the grocery store have risen is a complicated question, Green said. With rising costs across the board due to supply chain problems, labor shortages due to COVID-19 or higher prices set by processors, it is difficult to pinpoint a single reason why consumers pay more for meat.

The four most important and largest livestock breeders are Tyson Foods, Cargill, National Beef Packing Company and JBS.

Decades earlier, according to a New York Times report, the four best meat packers in the country accounted for about 36% of all processing in the beef industry. But these meat packers are now highly consolidated – processing up to 80% of the industry.

“My husband has a really good analogy. He said, ‘You know, they can either sell a pound for $ 5 or five pounds for $ 1,’ Green said.” They’re going to get their share. They will get their profits no matter what. Just in the last quarter, I read that the turnover of the large packing plants increased by 32% over the last year. And ranchers may have traveled 30% in the last 20 years. “

Mike Camblin, who serves as Northwest Representative for the Colorado Cattlemen’s Association, said having few packers controlling that part of the market creates a “bottleneck” situation – especially in the last few years. His wife is a fourth-generation rancher, and he said the family business is changing its business model significantly. Instead of relying on beef, the Camblin family ranch will now rely on grass instead.

“The reason the bottleneck is there is, firstly, that we only have four (processors) when there need to be more,” Camblin said. “Several great things have happened over the last three years: COVID is one. They lost the ability to continue their production. People were sick at home or they were shut down.”

Camblin also pointed to a fire in a Tyson packing plant and a cyber attack on JBS as unique, damaging incidents that caused an overall impact on the industry as a whole due to the bottleneck.

Rising beef prices are affecting not only the economy of the local consumer but also that of the ranchers. Green said she has friends who have decided to leave the ranch business after the economic roller coaster ride caused by rising prices coupled with severe drought conditions last summer. Hay prices rose exponentially during the drought, and many ranchers had to haul water to their herds, adding extra cost to a business that was already becoming more expensive.

“It has driven a lot of people out of the market – especially in tough years like this year,” Green said. ‘It was like the perfect storm of rising prices, drought and not big cattle prices when they sold this autumn. It’s actually a bit of a scary time to be in the cattle industry. “It’s really hard when you go to the store and we see those prices and you think, ‘Wow, I do not know who can afford to eat beef at those prices.'”

Some of Kacey Green’s cattle walk through the snow-covered landscape in a line.
Courtesy / Kacey Green

Beef supply chain

Many ranchers on the western slope are cow-calf producers. In industries such as pork or poultry, it is common for livestock to be raised by the same company that harvests them. With beef there are segments: cow-calf, feeders and packers.

In a cow-calf operation, a cow gets her first calf when she is about two years old, Green said. After nine months of gestation, the cow will be bred by that rancher until she is weaned – usually when the calf is about nine months old. It is then sold to a feeder, which feeds the cattle with grass or grain for about three to four months before the cattle are slaughtered between 12 and 20 months old. Cow-calf producers do not normally deal with the large packing plants (it is further down the line), but any additional costs incurred by the feeders will eventually come back to the producers – and so will the emptied price levels which the packers have set.

No matter what prices packers set, this is what most ranchers have to accept. Green said they are at the mercy of the market and what people are willing to pay for the cattle they raise. She added that the price of beef has doubled in the last 20 years, but the increase in what the rancher gets has only increased by about 30% in the same period.

“We like to say we’re award winners, not price takers,” Green said. “We really have to accept the price we are offered. We probably do not have the luxury of sticking to our product until a better offer comes – because a better offer may not come.”

A bleak future

Camblin said change is a constant in the ranch industry, but in recent years has taken a toll on many local ranchers. Although profits in 2014 were high, the situation quickly changed to be more serious. He said that seven years ago it was possible to receive $ 3.40 per pound, but now the same share goes to $ 1.50 per pound. Camblin said it is common to have a “it’s getting better next year” mindset, but it is not sustainable.

“It really varies from year to year,” Camblin said. “Here for the last many years, it’s been common to go in balance or be in negative. Most ranches rely on state aid to survive because they do not earn enough money to do what they do. Typically, I think, (my wife) and I for the last couple of years, we want to earn a few hundred dollars per so it is not very profitable. ”

He added that without support, several lengthy ranch operations could shut down.

“You can not make money in the industry without water and grass, and we have a shortage of both,” Camblin said. “I think one of the main reasons is also our calf prices. If we can not get our calf prices up, many of these guys just will not have the opportunity to continue. They are shut down. I’m not saying prices should be high in the market or in any grocery store. I think we just need to figure out this bottleneck. ”

A large number of cattle travel together over snow-covered land.
Courtesy / Kacey Green

Washington takes note

Some elected officials in Washington have recently taken an interest in ensuring that ranchers get their share. In a speech on January 3, President Joe Biden spoke about his own concerns about the lack of competition in corporate meat packaging. In his remarks, Biden cited the packaging industry’s position as an “intermediary” for both ranchers and retailers as a significant contributing factor to why prices have risen for consumers – along with problems with the country’s supply chain.

“Without meaningful competition, farmers and ranchers cannot choose who they sell to,” Biden said. “Or put another way, our farmers and ranchers have to pay whatever these four big companies say they have to pay, pretty much. But that’s only half of it. These companies can use their position as intermediaries to overload. grocery stores and ultimately families. “

In June 2021, a two-part letter signed by 28 members of Congress was sent to the Ministry of Justice and ask the Ministry to investigate the control of the four best packers. Specifically, the 19 Republicans, eight Democrats and one Independent hope the DOJ will investigate whether the meatpackers’ control of the beef processing market violates U.S. antitrust laws.

The local opportunity

Green said it’s easier to go the traditional route when it comes to selling its livestock – even with rising costs on the back. She holds over a few – her children show bull in 4H – but she said there is no way her family’s surgery would be able to hold on and feed them all, especially with the 2021s drought. Although she and her husband could decide to keep their cattle and continue feeding them until it is time for slaughter, due to increased costs in areas like shipping food and towing water, it would just create a larger deficit. The choice to cut out the feeders and raise cattle for slaughter is becoming more popular, Green said, but the choice is risky.

However, there are ways in which local ranchers can still benefit from community resources.

“I think it’s often overlooked, but we have two USDA-inspected packing plants in Craig,” Green said. “It’s a huge asset to our community. Many communities do not have the small plants that we have. We are able to do that if we have three or four heads that we sell. We can take them down and get them treated. ”

Camblin also said he noted the increasing popularity of non-ranchers to contact beef producers directly with orders for meat. Customers would primarily buy in quarters, halves and whole, which includes cuts that are not traditionally used by the average customer – such as beef tongues. Packers also have the advantage in that area. They can easily export to other countries and have the resources to distribute all parts of a cow more easily. Either way, the opportunity for hyperlocal sales is frequently used on social media because buyers are becoming more concerned about where their meat comes from and how it is being produced.

“There’s a lot of direct marketing going on,” Camblin said. “We take an animal and grass fattens it and takes it into the packing house and then sells it that way. It becomes very popular when the consumer wants to know where their meat comes from. ”

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