4-Conglomerates Control, the Nations Supply, and Cattlemen are Paying the Price
Industry Overview – In the 1970s, there were hundreds of small slaughterhouse operations in the U.S. During the past 50-years, all of these independent and small operations have been liquidated, merged, gone bankrupt, or just closed their doors because the competition was just too great.
Four Mega Processors – Fast forward to today, and you see a much different landscape, more than 81% of all of the meat processing in this country is controlled by 1 of these four companies: Cargill, a global food corporation based in Minnesota, JBS Foods is the largest of the four, and a wholly-owned subsidiary of a Brazilian parent company, Tyson foods based in Arkansas is the second-largest, and the last is National Beef Packing, a limited liability company based in Kansas City.
These multi-national companies operate 24 plants scattered around the U.S. and have been in the news recently in less than flattering ways. From COVID 19 outbreaks and plant closures to the recent cyber attack on JBS and being held hostage until $11-million ransom was paid to regain control of their technical operations. Add the obvious issues related to market share, anti-competitive tactics, poor quality control, and a blatant disregard for the ranchers and cattlemen who provide the livestock for processing.
Ranchers Hurting – With four mentioned companies controlling the industry pricing model. It is a sad commentary that even though consumer prices are increasing steadily, the farmers and ranchers are only getting on average 14 cents of every dollar spent on food, which is a 50% reduction from where they have been historical. So a saga unfolding is literally ranchers versus mega meat producers.
Ranchers Taking All the Risk – In the cattle business, you fight every day to care for your livestock and deal with uncertainty like weather, drought, sickness, feed price increases, taxation, environmental issues, grazing rights, land grabs, and a hundred other potential problems in getting your cattle to market. It certainly seems unfair to have those that sweat every day to produce the best product possible are also the ones being taken advantage of and many going out of business themselves.
Ranchers Fighting Back – A savvy group of cattlemen has decided to take control of their future by investing in and building their meat processing plant in hopes of taking control of their destiny. One of the new venture in the Rancher versus mega meat producer battle is located in Nebraska and expect to break ground this fall on a new facility with all of the latest energy-saving and efficiently operating equipment. This new business is appropriately named Sustainable Beef at the cost of over $300-million.
Food Processing Equipment – These new and improved plants will take advantage of innovation in manufacturing meat bandsaws, grinders, slicers, injectors, tumblers, choppers, conveying systems, packaging systems, and labelers. These systems are as automated as they can be, energy-efficient, and powerful to speed production time up significantly.
Uphill Battle – with the inherent cost associated with running a production plant, labor shortages, increasing cost of benefits, and employee-related expenses, this effort will undoubtedly see its share of challenges. Still, this writer hopes this maverick group of ranchers can change the world or at least the meat processing industry and bring a better and more balanced solution that benefits every consumer.
If you are a rancher or a processor, we would love to hear your opinion on this issue and the implications of new processing plants coming into play.