4-Conglomerates Control the nation’s 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 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 multinational companies operate 24 plants scattered around the U.S. and have been in the news recently in less than flattering ways. COVID-19 outbreaks and plant closures to the recent cyber attack on JBS and being held hostage until an $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.

The image shows Cows at Pasture

Ranchers Hurting

With four companies controlling the industry pricing model, it is a sad commentary that even though consumer prices are increasing steadily, 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 historically. So, a saga unfolding is literally ranchers versus mega meat producers.

Ranchers Taking All the Risk

In the cattle business, you fight daily 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 that those who sweat every day to produce the best product possible are also the ones being taken advantage of, and many are 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 ventures in the Rancher versus mega meat producer battle is located in Nebraska, and we expect to break ground this fall on a new facility with all of the latest energy-saving and efficient operating equipment. This new business is appropriately named Sustainable Beef at a cost of over $300 million.

Food Processing Equipment

These new and improved plants will use innovation in manufacturing using the latest food processing equipment, such as meat bandsaws, grinders, slicers, injectors, tumblers, choppers, conveying systems, packaging systems, and labelers. These systems are as automated as possible, energy-efficient, and powerful enough to significantly speed up production time.

Uphill Battle

With the inherent cost associated with running a production plant, labor shortages, the increasing cost of benefits, and employee-related expenses, this effort will undoubtedly face 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.