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Livestock producers battle shared monopolies and seek to improve returns

The pandemic’s supply chain woes reveal to Americans a fact long known to farmers: Shared monopolies dominate the food industry. Just a few companies market everything — soft drinks, cold cereal, packaged carrots, and more. Beef packing is among the most concentrated. The top four firms slaughter 85% of all steers and heifers.

While inflation surged 7% last year, shoppers paid 23% more for steaks. Yet, fed steer prices sank to a 10-year low in 2020, finally recovering a bit as 2022 began.


The divergence between steer prices and retail beef prices took off in 2015, says Brett Kenzy, a Gregory, South Dakota, cattle rancher with a 3,000-head feedlot. “What’s changed is the amount of publicity this has gotten in the last few months,” says Kenzy, who is a director for R-CALF USA (which stands for Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America).

This spotlight on food industry weaknesses during a pandemic leaves cattle producers such as Kenzy juggling a mix of optimism and skepticism — optimism that Congress might respond to farmers and ranchers and skepticism about how USDA will challenge meatpacker power. Kenzy and others point to many ways to improve producers’ share of the food dollar.

Food industry consolidation

For his part, Agriculture Secretary Tom Vilsack says pandemic disruptions have “highlighted the need for our nation’s food system to be more diversified.”

This isn’t the first time farmers and ranchers have punched into a tightly woven food system.

Successful Farming magazine covered the “new wave co-ops” of the 1990s — North Dakota vegetable co-ops, Minnesota and Iowa ethanol plants, egg processors. Many ultimately failed. In other cases, local investors cashed in and sold to larger companies.

Since then, the trend hasn’t favored the diversity Vilsack seeks.

“I think the food industry is becoming more consolidated,” says Mary K. Hendrickson, a rural sociologist at the University of Missouri who has tracked concentration for years.

Hendrickson grew up on a farm delivering hogs to a Crete, Nebraska, packing plant. She was drawn to study market concentration because of its effects on the lives of farmers and rural communities.

In 2020, Hendrickson and three other scholars exposed current trends in a report to the Family Farm Action Alliance, “The Food System: Concentration and Its Impacts.”

They compiled concentration ratios for the amount of a market held by the top four players (CR4) in different food industries. When the CR4 gets above 40%, businesses have more power to control prices. The report covers mainly U.S. markets and some global trends.

How bad is it? The CR4 for all beef packing is 73%.

Two of those companies, JBS and Marfrig (the owner of National Beef), are Brazilian. For steer and heifer slaughter, the CR4 is 85%.

“Globally, just two firms control 99% of turkey genetics, 95% of laying hen genetics, and 91% of broiler genetics,” the report notes.

It concludes: “To transform our agrifood system from one that is monopolized and brittle to one that is democratic, equitable, ecological, and resilient will take many solutions and experiments across all scales and sectors of food production and consumption.”

That’s a tall order. Here are some things farm groups are already doing in the livestock sector:


In 2019, R-CALF filed an antitrust lawsuit against the big four meatpackers, alleging a price-fixing conspiracy that violates the Sherman Antitrust Act, the Packers and Stockyards Act, and the Commodity Exchange Act. National Farmers Union later joined the lawsuit. It seeks damages for anyone who sold fed cattle to packers beginning in 2015, as well as to those who traded cattle contracts in the futures market, says Bill Bullard, CEO of R-CALF.

The lawsuit doesn’t seek the big four’s breakup, but Bullard says the Justice Department already has that power. “I believe the Justice Department should revisit the mergers that have already been approved,” he says. Despite the Biden administration’s pledge to heighten Justice and USDA oversight, Bullard doubts they will dismantle “one of the most highly concentrated markets in America.”


Congress might increase meatpacking competition. R-CALF backs S. 949, a bill requiring packers with more than one plant to buy at least half their cattle in the cash market. The group also favors mandatory country of origin labeling (S. 2716), which Congress repealed in 2015. That’s what made beef producers lose more of their share of beef dollars, contends South Dakota rancher Kenzy. “Product of the USA”-labeled beef may include imports, misleading consumers, he says. “The inability to differentiate American beef from imports gave a major tool to the packers to manage the market.”

Packing plant construction

Independent cattle producers and local investors are planning new plants in Iowa, Nebraska, Missouri, and elsewhere. Some may use loans and grants pledged by Vilsack’s USDA to encourage diversity.

“It takes an incredibly gifted businessperson to build a packing plant,” says Kenzy. “You sure have to applaud people who make that leap.”

Economists have warned Congress that adding new plants will create overcapacity in livestock slaughter. Bullard and Hendrickson worry that big packers eventually could buy these smaller players.

A niche in the market

A model that avoids brick-and-mortar costs is thriving in the hog industry, which has fewer independent producers than beef.

In a small storefront on the north edge of Des Moines, Iowa, Berkwood Farms, founded in 1998, has freezer cases stuffed with hams, pork chops, and bacon. From this spot, the co-op dominates one niche in pork production, shipping flavorful meat from Berkshire hogs to Japan, to high-end restaurants on the U.S. coasts, to Midwest grocery chains, and directly to consumers.

Farrow-to-finish producer Quentin Bowen of Humboldt, Nebraska, feels lucky to be among more than 90 farmers who own the Berkshire co-op.

“Berkshires are difficult. They grow slow. They don’t have very big litters, but you’re getting paid for that,” Bowen says. Since joining in 2015, “I haven’t gotten below 75¢ a pound.” In good years, the co-op’s disbursement check “is almost like having a couple more pigs per litter.”

Bowen feels the co-op has done well by not growing too fast and avoiding big capital investments. He credits its success to CEO Nick Jones, who joined Berkwood in 2004 with a degree in marketing and supply chain management from Iowa State University.

“I didn’t know anything about meat or pigs, but I could get it from point A to point B,” Jones says.

Today, that supply chain includes working with a smaller 4,000-head per day packer, renting a curing facility, outsourcing cold storage, hiring trucks, and using specialty distributors to get the Berkwood product to distant restaurants. Berkwood also controls its Berkshire genetics to maintain quality. The co-op board interviews potential new co-op members.

Jones’s advice to other would-be meat start-ups: “Don’t be afraid to fail,” he says. “Learn from your mistakes. If you don’t know the answer, find the answer. Just be smart and grow the right way.”

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