Ranchers are getting tired of scraping the barrel for minimal prices for their cattle – while the price consumers actually pay at the store goes up and up.
The exact culprit is, of course, subject to interpretation. According to one rancher, Rusty Kemp of Des Moines, Iowa, the issue is the consolidation of the beef industry since the 1970s, which has seen meat packing companies merge until there are now only 4 major corporations slaughtering more than 80 percent of the nation’s cattle, reported ABC33/40 News.
Kemp and his colleagues say that this monopolization of the market by a few large meat companies has resulted in significant price increases for consumers while the actual ranchers raising cattle can barely meet their expenses. Data from federal records for food since the 1970s seems to support this idea, showing a huge drop in the money that went to actual ranchers and farmers: only 14 cents out of every dollar (paid by consumers for food) in the current year, versus 35 cents in the 1970s.
The situation with meat companies has been a tangled one, recently pitting “big meat” against the Biden administration. Back in September, Secretary of Agriculture Thomas Vilsack and National Economic Council Director Brian Deese attacked the meatpacking industry for price gouging, accusing them of using the Covid-19 pandemic for shameless profiteering. The meat industry fired back in a letter from the North American Meat Institute, insisting that rising prices have more to do with the generally unfavorable economic situation and a labor shortage crisis, and accusing the Biden administration of trying to score some cheap points by using the meat industry as a convenient scapegoat.
Whatever comes from the squabbling between the Biden administration and the big meatpacking firms, Kemp and his associates set out to bypass the industry and cut out the middleman by becoming the middleman. Kemp and others are trying to raise $300 million in order to build their own meat processing plant, and distribute the meat to grocery stores and other distributors themselves.
“We’ve been complaining about it for 30 years. It’s probably time somebody does something about it,” ABC33/40 quoted Kemp as saying.
The “Sustainable Beef” facility will begin construction later this fall, on a site covering almost 400 acres outside of North Platte, Nebraska. Nor will it be the only one. Other groups of disgruntled ranchers have begun organizing similar projects in Iowa, Idaho and Wisconsin.
The ranchers aren’t completely alone, however. Following up with its attack on the major meat companies, the U.S. Department of Agriculture is now actively encouraging these small start-ups, and back in July, it announced its intention to spend $500 million to encourage the construction of these smaller meat processing plants, and another $150 million to help support existing ones with unexpected costs. The stated goal of these subsidies is diversifying the meat supply chain and breaking the grip of a few large companies over the prices.
The going will certainly be tough, however. These 4 companies have large and efficient operations, and have the financial resources needed to absorb the cost of running their operation at a loss in order to undercut new competitors. It also remains to be seen as to whether a smaller plant and pay ranchers while still being profitable. A typical steer may be worth roughly $1,630 or so, but that price tag needs to be divided between the slaughterhouse itself, the feed lot, and the rancher.
That hasn’t deterred ranchers from taking the risk, however. David Briggs, CEO of Sustainable Beef, said that in spite of the many known risks and difficulties, the ranchers are determined to press on:
“Cattle people are risk-takers and they’re ready to take a risk.”
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