Controls by big four meat

processors threatens ranchers

 

By Kristi Shields 

Staff writer

7-30-2020

 

Editor’s Note: This is the first part in a two-part series about how beef ranchers are struggling under unfair conditions to stay afloat in an already difficult industry.

 

Sanpete County ranchers are concerned about the record profits that the four major beef processors in the United States are making while they lose money.

Scott Christensen of Centerfield, owner of the Lazy C Ranch, said the four major packing plants — Tyson Foods, JBS Beef Co., Cargill Meat Solutions and National Beef — are controlling the prices, and there is not much a small-town farmer can do to stop them.

“There is such a monopoly on the packing plants,” Christensen said. “They can hold the price down.”

Farmer Zachary Jensen, also of Centerfield, and owner of the M&K Ranch in Centerfield and Axtell, has similar thoughts, said the prices being offered for his cattle compared to what the processors are making off their finished beef, don’t make sense. He would have lost $200 per head if he had sold at prices offered at a recent auction.

Christensen added, “I sold two semi loads of steers in February and lost $337 per head of cattle, yet the packers were making almost $2,000 per head. That is absurd.”

According to a letter Utah Atty. Gen. Sean Reyes wrote to U.S. Atty. Gen. William Barr, the four processors control more than 75 percent of the United States market.

The letter states: “The beef processors/packers have been accused of restricting the capacity of processing facilities by closing and downsizing a number of processing plants, thereby reducing competition among the four beef processors and depressing cattle prices.”

In essence, local ranchers said, the big four are able to push prices below ranchers’ cost of production. Yet, local ranchers said, if they try to go around the big plants and slaughter, process and sell their beef openly to the public, they are in violation of USDA

But Rep. Darrin Owens, R-Fountain Green, who represents Sanpete County in the Utah House of Representatives, said “To be honest, it still happens.”

It is common for farmers to still package their own meat, especially during the pandemic when some of the biggest packing plants in the country were forced to shut down temporarily due to COVID-19 outbreaks.

A related problem is foreign processors who, because of lower labor costs, are able to process meat at a lower cost than U.S. processors, especially small processors.

In a campaign video for Jon Huntsman, Carson Jorgensen, a sixth-generation rancher from Mt. Pleasant, said: “You’ve seen a lot of small local packing plants, those are the ones you’ve seen gone. They’ve been pushed out by the big, foreign meat market.”

Utah Rep. Carl Albrecht, R-Richfield, said the whole problem of big processors dominating the U.S. meat industry came to life during the pandemic. The major processing plants shut down, resulting in farmers having no way to get their animals processed, which in turn led to consumers not getting their beef—in other words, a shortage of beef products.

“There is a national problem that needs to be solved,” Albrecht said.

Jorgensen said this multifaceted issued of processing eating up a disproportionate share of the cost of meat combined with foreign competition have been going on for years, and it’s time to put a stop to it. “This is a problem that’s bigger than us [farmers] here,” Jorgensen said.

For those who do not know much about the beef industry, here is a rundown of how it works:

People who have cows and calves raise them to be about 800 pounds. From there, the cows can take one of two paths.

One option is for ranchers to sell them at auctions to feedlots. A feedlots fattens the cattle up on grain and corn before sending them to a slaughterhouse at around 1,400 pounds. After being slaughtered, the animals are packaged and sent to a store to be sold.

A second route, used by many smaller scale ranches, is selling cattle directly to a ranch known as a “finisher.” The finisher fattens the cattle up to about 900 pound before selling them to a big processor.

It is possible to get around the regulation barring slaughter of beef by ranchers themselves and cutting by local butchers who are not USDA certified.

That’s because “private sales,” as opposed to sales to the general public, are permitted. For example, a local resident contacts the rancher and orders a quarter of a beef. The rancher sends the meat to a local butcher shop in the name of the purchaser. The rancher then picks up the beef, labeled in the name of the purchaser, and delivers it to the purchaser’s home. The purchaser pays the rancher directly.

In 2012, Christensen decided to start using a local butcher, then selling his product straight to the consumer. But Christensen said it doesn’t fix the problem because business volume is too limited. He said he could use twice as much business.

The bottom line, he said, is unacceptable prices on cattle sold through the established meat processing and food marketing channels. “I think the things we struggle with are commodity prices, our cattle prices,” Christensen said.

“The cost to produce has gone up substantially,” Christensen said. “The input costs are so high compared to what our prices are that we get out of our product.”

Jensen said after a conference call with Congressman Chris Stewart and others in Stewart’s congressional district, he noticed more attention about the issue and hopes that Congress can come up with a solution soon.

“A lot of people in our situation don’t know if we will be able to maintain or stay open next year,” he said.

He said it is discouraging to wake up in the morning to go to work and know you’re going to lose thousands of dollars.

“We just want fair value for our product,” Jensen said. “We don’t want to be rich; we just want to wake up and think we can actually make a dollar [that day].”

Jensen wants people to understand that the farmers are not the ones getting rich right now while the world is in turmoil. “It’s the big boys.”

“We are getting beat to the curb like everyone else is,” Jensen said.” And it hurts when people blame us.”

However, he does think that most people around Sanpete County understand that when they see prices rise at the supermarket.

“Unfortunately, the biggest issue is what the poor citizens are having to pay for beef,” he said.