As grocery shoppers know, beef has been getting more expensive these days — up $1.34 per pound over the past four years.
But what you might not realize — unless you read an article last week by The World-Herald’s Henry J. Cordes — is that only a tiny fraction of that increase has gone to farmers and ranchers.
Producers received less than 2 cents of that $1.34 rise in beef prices since 2017. Instead, retailers got about 32 cents and meatpackers got the lion’s share of the increase: $1 or nearly three-fourths.
Cattle producers in Nebraska and elsewhere contend that what’s happened to prices in recent years shows a fundamental problem: an overly concentrated meatpacking industry where the biggest companies have too much market power, hurting both producers and consumers.
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Some 85% of the more than 30 million head of cattle raised for slaughter each year in the United States are processed by just four leading meatpackers.
Sen. Deb Fischer of Nebraska and a bipartisan group of other senators are pushing her bill that would require beef packers to buy more of their cattle in open, competitive markets. The Senate’s agriculture committee held a hearing on the bill last week.
As Cordes wrote, packers argue there is nothing inherently wrong with cattle markets, attributing the price changes to natural supply and demand forces and market disruptions like the pandemic. And in fairness, producers did see an increase in cattle prices last year after three years of declines.
But Fischer said the overall trend is a problem, with meatpacking consolidation making it hard for markets to operate properly. Lawmakers have been talking about this long before COVID-19, she said.
“You can’t blame the pandemic for everything,” she said. “It’s a result of 85% of meat going to four packers. It’s the result of continued consolidation.”
And with those dominant packers often buying cattle from individual producers through private transactions, that prevents the cattle market from being open, competitive and fair.
Fischer’s Cattle Market Transparency Act would require more public disclosure of what packers are paying for their cattle and also require the packers to buy more cattle through competitive cash markets.
Her legislation strikes us as a reasonable approach to ensure that the cattle market will operate fairly.
As we said in October: “It’s in the interest not only of cattle producers but of the general public itself that the market operate fairly, transparently and efficiently. Otherwise, the market can be subject to distortion and possible manipulation, harming producers and consumers alike.”
It’s a good sign that Congress is taking a careful look at the issue. Fischer says she is pleased with the apparent momentum behind her bill, which now has a total of 19 co-sponsors in the Senate, including nine Republicans and 10 Democrats.
Cattle producers’ shrinking share of the beef dollar compared to packers was the subject of a series of stories in The World-Herald last year. Fischer highlighted those stories at last week’s hearing, and emphasized how important the issue is to Nebraska.
“It is the economic engine of my state,” she said, noting that the livestock industry contributes $13.8 billion to Nebraska’s economy annually.
It’s important for Nebraska to have that sector of the economy succeed, and that won’t happen if meatpackers are always in the driver’s seat.
“Producers face a take it or leave it market,” Fischer said. “That is the reality.”
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Farmers and ranchers have endured years of declining prices for their cattle. Meanwhile, the four big packers, who control 85% of the market for fattened cattle, have seen their share skyrocket.