As Beef Prices Soar, West Slope Ranchers See No Benefits

Livestock managed by the Dry Fork Ranch endure a snowy winter. Beef cattle will be sold to feeders who will then resell to slaughterhouses at prices set by the oligopolistic industry, which sells more beef than ever.
Kacey Green/Courtesy Photo

CRAIG — Kacey Green, a member of the Green family’s Dry Fork Ranch, doesn’t buy her beef at the grocery store.

When shopping, she sometimes stops at the beef section, and she is appalled at the high prices some of her neighbors pay for cow products. Despite the lucrative business that beef production has become of late, Green, whose children will be the fourth generation to raise cattle in the Yampa Valley, says local ranchers aren’t seeing a share of the beef boom.

“It’s going somewhere else, that’s for sure,” Green said. “We don’t see that profit.”

The problem of packers

Americans are eating record amounts of beef, and the money it’s costing them has also reached record levels. The average cost of a pound of ground beef in November 2021 (latest data available from the United States Department of Labor Statistics) was $5.26. Just a year ago it was $4.59 – a jump of 14.5% in one year.

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

The four major cattle processors are Tyson Foods, Cargill, National Beef Packing Company and JBS.

Over the past several decades, the nation’s top four meatpackers accounted for about 36% of all processing in the beef industry, according to a New York Times report.. But these meatpackers are now heavily consolidated, processing more than 80% of the industry.

“My husband has a very good analogy. He said, “You know, they can either sell one pound for $5 or five pounds for $1,” Green said. “They’re going to get their share. They are going to get their profits no matter what. In the last quarter alone, I read that the revenues of the main packaging plants increased by 32% compared to last year. And breeders have raised maybe 30% in the last 20 years.

Mike Camblin, who is a Northwest representative for the Colorado Cattlemen’s Association, said the fact that few packers control this part of the market creates a bottleneck situation. His wife is a fourth-generation rancher and he said the family operation is changing his business model significantly. Instead of relying on beef, the Camblin family ranch will now rely on grass.

“The reason for this bottleneck is that, to start with, we only have four (processors), when more are needed,” Camblin said. “We have had several major events over the past three years: COVID being one. They have lost the ability to maintain their production. People were sick at home or they were closed.

Rising beef prices affect not only the finances of the local consumer, but also those of herders. Green said she had friends who decided to quit farming after the economic roller coaster caused by rising prices coupled with extreme drought conditions last summer. Hay prices rose exponentially during the drought and many herders had to bring water to their herds, adding extra costs to a business that is already becoming more expensive.

“It’s pushed a lot of people out of business, especially in tough years like this year,” Green said. “It was like the perfect storm of rising prices, droughts and low livestock prices when they sold off this fall. It’s kind of scary, actually, to be in the cattle industry.

Some of Kacey Green’s cattle walk through the snowy landscape in a line.
Kacey Green/Courtesy Photo

The beef supply chain

Many ranchers on the West Slope are cow-calf ranchers. In industries like pork or poultry, it is common for cattle to be raised by the same company that harvests them. With beef, there are segments: cow-calf, feeders and packers.

On a cow-calf operation, a cow has her first calf around age 2, Green said. The calf will be raised by the breeder until it is weaned, usually around nine months of age. Then it is sold to a rancher, who feeds the cattle grass or grain for about three to four months before the cattle are slaughtered at 12 to 20 months. Cow-calf producers generally don’t deal with the big packers (that’s further down the line), but any additional costs incurred by the feeders will eventually accrue to the producers – as will the deflated prices set by the packers.

Whatever prices the packers set, that’s what most breeders have to live with. 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 past 20 years, but the increase in what the rancher gets has only increased by about 30% over the same period.

“We like to say we’re price takers, not price setters,” Green said. “We really have to accept the price offered to us. We don’t have the luxury, I guess, of holding onto our product until a better deal comes along, because a better deal might not come around.

A grim future

Although in 2014 profits were high, the situation quickly changed to become more dire. He said that seven years ago it was possible to receive $3.40 a pound, but now the same stock costs $1.50 a pound.

“It really varies from year to year,” Camblin said. “Here for the past few years it’s been common to break even or go negative. Most ranches depend on government grants to survive because they don’t make enough money to do what they do. they do. Typically, I think (my wife) and I over the last two years will make a few hundred dollars a head, so it’s not very profitable.

He added that without support, long-running breeding operations could be shut down.

“You can’t make money in the industry without water and weed, and we lack both,” Camblin said. “I think one of the main reasons is also the price of our calves. If we can’t raise the price of our calves, a lot of these guys just won’t have the ability to continue. They will be closed. »

A long line of cattle crosses snowy land.
Kacey Green/Courtesy Photo

Washington takes note

Some elected officials in Washington have recently taken an interest in ensuring ranchers get their fair share. In a Jan. 3 speech, President Joe Biden shared his own concerns about the lack of competition in the meatpacking industry. In his remarks, Biden cited the packaging industry’s position as a middleman with breeders and retailers as one of the main factors contributing to higher prices for consumers – as well as issues. with the country’s supply chain.

“Without meaningful competition, farmers and ranchers cannot choose who they sell to,” Biden said. “Or, in other words, our farmers and ranchers have to pay whatever these big four companies say they have to pay, on balance. But that’s only half. These companies can use their position as middlemen to overcharge grocery stores and ultimately families.

In June 2021, a bipartisan letter signed by 28 members of Congress was sent to the Justice Department asking it to examine the control exercised by the four major packers. Specifically, the 19 Republicans, eight Democrats and one independent hope the department will investigate whether the control meat packers have over the beef processing market violates US antitrust laws.

The local option

Green said it’s easier to go the traditional route when it comes to selling your livestock, even with the rising costs at the end. Although she and her husband may decide to keep their livestock and continue to feed them until slaughter time, due to increased costs in areas such as shipping food and transporting water, that would only create more of a deficit. The choice to cut feeders and raise cattle for slaughter is becoming increasingly popular, Green said, but the choice is risky.

However, local herders 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. A lot of communities don’t have these little plants like we do. We can do that if we sell three or four heads. We can remove them and have them processed.

Camblin also said he’s noticed the growing popularity of non-ranchers contacting beef ranchers directly with meat orders. Customers would mainly buy in quarters, halves and wholes, which include cuts not traditionally used by the common customer, such as beef tongues. Packers also have the advantage in this area. They can easily export to other countries and have the resources to more easily distribute all parts of a cow. Either way, the option of hyper-local sales is frequently used on social media as shoppers are increasingly concerned about where their meat comes from and how it is produced.

“There’s a lot of direct marketing going on,” Camblin said. “We take an animal and fatten it up with grass, take it to the processing plant and then sell it that way. It becomes very popular when the consumer wants to know where their meat comes from. »


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