While beef prices skyrocket, ranchers on the Western Slope aren’t seeing the benefits
Kacey Green, part of Green family’s Dry Fork Ranch, doesn’t buy her beef at the grocery store.
When she does her grocery shopping, she will sometimes stop by the beef section, and she finds herself aghast at the high prices that some of her neighbors are paying for cow products. Despite the lucrative business that producing beef has recently become, Green, whose children will be the fourth generation running cattle in the Yampa Valley, says that local ranchers aren’t seeing a cut of the beef boom.
“It’s going somewhere else, for sure,” Green said. “We are not seeing that profit.”
The problem with packers
Americans are eating record amounts of beef, and the money that it’s costing them has reached record highs, as well. The average cost of one pound of ground beef in Nov. 2021 (the latest available data from the U.S. Department of Labor Statistics) was up to $5.26. Just a year before, it was $4.59 — a 14.5% jump over the course of a year.
The question of why prices of beef at the grocery store have risen is a complicated one, Green said. With rising costs across the board as a result of supply chain issues, labor shortages due to COVID-19 or higher prices set by processors, it’s difficult to point to a single reason that consumers are paying more for meat.
The four main and largest livestock processors are Tyson Foods, Cargill, National Beef Packing Company and JBS.
In decades past, according to reporting from the New York Times, the top four meatpackers in the country accounted for about 36% of all processing in the beef industry. But those meatpackers are now heavily consolidated — processing upwards of 80% of the industry.
“My husband has a really 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’re going to get their profits, no matter what. Just in the last quarter, I read the revenues for the major packing plants were up 32% over the last year. And ranchers have maybe raised 30% in the last 20 years.”
Mike Camblin, who serves as a Northwest representative for the Colorado Cattlemen’s Association, said that having few packers that control that portion of the market creates a “bottleneck” situation — especially in the past couple of years. His wife is a fourth-generation rancher, and he said that the family operation is changing its business model significantly. Instead of relying on beef, the Camblin family ranch will now rely on grass instead.
“The reason that bottleneck is there is, for one, we’ve only got four (processors), when there needs to be more,” Camblin said. “We had several major things happen just in the last three years: COVID being one. They lost the ability to keep up their production. People were home sick, or they were shut down.’
Camblin also pointed to a fire in a Tyson packing plant and a cyber attack on JBS as unique, detrimental events that caused an outsized impact on the industry as a whole because of the bottleneck.
Rising beef prices not only affect the finances of the local consumer, but also those of the ranchers. Green said she has friends who have decided to leave the ranching business after the economic rollercoaster caused by rising prices paired with dire drought conditions last summer. Hay prices rose exponentially during the drought, and many ranchers had to haul water to their herds, adding extra costs in a business already becoming more expensive.
“It’s driven 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 not great cattle prices when they sold this fall. It’s kind of a scary time, actually, to be in the cattle industry. It’s really difficult when you do go to the store, and we see those prices, and you think, ‘Wow, I don’t know who can afford to eat beef at those prices.’”
The beef supply chain
Many ranchers on the Western Slope are cow-calf producers. In industries like pork or poultry, it’s common for livestock to be raised by the same company that harvests them. With beef, there are segments: cow-calf, feeders and packers.
In a cow-calf operation, a cow has her first calf when she’s around two years old, Green said. After nine months of gestation, the cow will be raised by that rancher until it is weaned — usually when the calf is around nine months old. Then, it’s sold to a feeder, who feeds the cattle with grass or grain for about three to four months before the cattle is slaughtered at between 12 and 20 months old. Cow-calf producers usually don’t deal with the large packers (that’s further down the line) but any extra costs incurred by the feeders will eventually come back to the producers — as will the deflated price points set by the packers.
Whatever prices packers set are what most ranchers have to accept. Green said that they’re at the mercy of the market and what people are willing to pay for the cattle that they raise. She added that the price of beef has doubled in the last 20 years, but the increase in what the rancher is getting has only gone up about 30% in that same period of time.
“We like to say we’re price takers, not price setters,” Green said. “We really have to accept the price that we’re offered. We don’t have that luxury, I guess, of holding onto our product until a better offer comes along — because a better offer might not come along.”
A dire future
Camblin said that change is a constant in the ranching industry, but recent years have taken a toll on many local ranchers. Though in 2014, profits were high, the situation quickly changed to be more dire. He said that, seven years ago, it was possible to receive $3.40 per pound, but now, the same stock is going for $1.50 per pound. Camblin said it’s common to have a “it’ll be better next year” mindset, but it’s not sustainable.
“It really varies year to year,” Camblin said. “Here in the last several years, it has been common to break even or be in a negative. Most ranches rely on government subsidies to survive, because they’re not making enough money to do what they’re doing. Typically, I think, (my wife) and I in the last couple of years, we’ll make a couple hundred dollars per head. So it’s not very profitable.”
He added that, without support, more long-time ranching operations could shut down.
“You can’t make money in the industry without water and grass, and we’ve got a shortage of both,” Camblin said. “I think one of the main reasons is also our calf prices. If we can’t get our calf prices up, a lot of these guys just aren’t going to have the opportunity to continue. They’re going to get shut down. I’m not saying that the prices need to be high in the market or any grocery store. I think that we’ve just got to figure out this bottleneck.”
Washington takes note
Some elected officials in Washington have taken recent interest in making sure that ranchers get their share. In a Jan. 3 address, President Joe Biden spoke about his own concerns regarding the lack of competition in corporate meatpacking. In his remarks, Biden cited the packing industry’s position as a “middleman” to both ranchers and retailers as a main contributing factor to why prices have risen for consumers — along with issues with the nation’s supply chain.
“Without meaningful competition, farmers and ranchers don’t get to choose who they sell to,” Biden said. “Or, put another way, our farmers and ranchers have to pay whatever these four big companies say they have to pay, by and large. But that’s only half of it. 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 Department of Justice asking the department to examine the control held by the top four packers. Specifically, the 19 Republicans, eight Democrats and one Independent are hoping the DOJ will investigate if the control meatpackers have of the beef processing market violates U.S. antitrust laws.
The local option
Green said that it is easier to go the traditional route when it comes to selling her livestock — even with rising costs on the backend. The family’s operation does hold over a few — her children show steers in 4H — but she said there’s no way they would be able to hold onto and feed all of them, especially with 2021’s drought. Though she and her husband could decide to hold their cattle and continue to feed them until it’s time for slaughter, because of increased costs in areas like shipping food and hauling water, it would just create more of a deficit. The choice to cut out the feeders and raise cattle to slaughter is becoming more popular, Green said, but the choice is risky.
There are ways that local ranchers can still benefit with resources in the community, however.
“I think it’s often overlooked, but we have two USDA-inspected packing plants in Craig,” Green said. “That is a huge asset for our community. A lot of communities don’t have those small plants like we do. We are able to do that if we have three or four heads that we’re selling. We can take them down and get them processed.”
Camblin also said he noticed the increased popularity for non-ranchers to reach out directly to beef ranchers with orders for meat. Customers primarily would buy in quarters, halves and wholes, which include cuts that traditionally aren’t used by the common customer — such as beef tongues. Packers have the advantage in that area, as well. They can easily export to other countries and have the resources to distribute all parts of a cow more easily. Regardless, the option of hyper-local sales is being used frequently on social media because buyers are becoming more concerned about where their meat is coming from and how it’s being produced.
“There’s a lot of direct marketing going on,” Camblin said. “We’ll take an animal and grass fatten it, and take it into the packing plant and then sell it that way. That is getting to be very popular for when the consumer wants to know where their meat’s coming from.”
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