Responding to dwindling cattle profits and rising grocery store meat prices, the White House has announced it will invest $1 billion in local processors and revive made-in-the-U.S. meat labeling.
The announcement comes as ranchers enter a third year of low cattle prices, even as supermarket rates remain high. Additionally, President Joe Biden announced during a livestreamed discussion with farmers and ranchers that he would get behind legislation proposed by U.S. Sen. Jon Tester and others. Cash sales for Montana livestock were more than $1.5 billion in 2020, down $100 million from the previous year.
Observers worried that reforming the meat industry would prove tougher than a 10-cent pot roast.
“Fifty years ago, ranchers got over 60 cents for every dollar a family spent on beef. Today, they get about 39 cents,” Biden said. “Fifty years ago, hog farmers got 40 to 50 cents for each dollar they spent. Today, it’s about 19 cents. And the big companies are making massive profits. As their profits go up, the prices you see at grocery stores go up commensurate.
“The prices farmers receive for the products they are bringing to market go down,” he said. “This reflects the market being distorted by lack of competition. I’ve said it before, and I’ll say it again: capitalism without competition isn’t capitalism, it’s exploitation.”
Four multi-national meatpacking companies control 85% of the beef market, which since 2019 hasn’t given ranchers a sustainable price for cattle. A fire in the fall of 2019 at a Tyson meatpacking plant in Kansas somewhat limited processing space, which pushed ranchers taking calves to market into an economic bottleneck. With less room for cattle because of the fire, the price paid to ranchers for cattle decreased.
Then in January 2020, Russian hackers shut down JBS, and meat processing fell by 40,000 carcasses. That ransomware shutdown was followed by COVID-19 outbreaks slowing down or shutting down meatpacking plants as workers became sick. Some died.
Through the disruptions, supermarket meat prices generally increased, while prices paid to ranchers remained unsustainable. Ranchers argue that poor prices were paid, or cattle stuck around, longer than it took meatpackers to recover.
The Justice Department and U.S. Department of Agriculture announced they would develop, within 30 days, a more useful way for ranchers to file complaints about antitrust violations in the meatpacking industry.
Ranchers, along with pork and poultry farmers have for years asked for better enforcement of the Packers and Stockyards Act. The last attempt at reforms ended during the Obama years, with a key House Democrat working with Republicans to kill the effort.
“The fact remains that the Administration has not announced that it will take decisive enforcement action to protect America’s cattle producers from the harms they’ve been experiencing for the past seven years, and we remain disappointed with that omission,” said Bill Bullard, CEO of the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America.
Bullard’s remarks were issued in a press release expressing doubt of the entire Biden plan, though Billings-based R-CALF USA praised Biden for trying, calling the investment in independent meat processors unprecedented.
There’s high demand for the independent meat processors in Montana. Meat cutter Lyle Happel said the last convention of the Montana Meat Processors Association drew probably 15 new members.
Happel is the group’s secretary and treasurer and a wild game processor in Bozeman. His sense is that there aren’t enough cutters available to expand the Montana meat processing industry easily. Everyone is already busy. The voicemail at Stillwater Packing in Columbus announces that the business is booked through 2023.
There are 31 meat processing businesses inspected by the state of Montana, according to the Department of Livestock. USDA records show another 28 Montana processors regulated by federal meat inspectors.
The Tester legislation mentioned by Biden is a bill the Montana Democrat introduced with Republican Sens. Chuck Grassley of Iowa and Mike Rounds of South Dakota. The bill creates a special investigator for competition matters in USDA. A second bill creates a minimum threshold for cash trades for cattle. A third bill requires that only beef raised in the United States receives a “Product of USA” label, meaning that a foreign animal processed in the United States can’t receive the designation.
After Biden’s event, Montana’s Republican Sen. Steve Daines called on the president to launch a thorough investigation into allegations of price fixing by meatpackers. Daines has proposed or cosponsored bills, which he said Biden should support.