State of the Beef: Producers call on Congress to increase competition among packers | Agriculture
Current livestock prices are at the root of the problem. As consumers pay record prices for beef at the grocery store, farmers and ranchers have endured years of declining prices for their livestock.
Many farmers and ranchers attribute the market conditions to the extreme consolidation of the domestic meat packaging industry. Today, some 85% of fed cattle that are processed into prime steaks and other cuts of meat in the United States are slaughtered by just four giant international processors.
Producers say industry consolidation has given slaughterhouses the market power to manipulate the flow of livestock through the system, drive down livestock prices, fatten their profits, and drive up prices for consumers.
It is clear that cattle ranchers now have Washington’s ear. The Senate held two hearings this summer on competition in the cattle and beef markets, and there was one in the House as well.
During the hearings, lawmakers overheard farmers and ranchers lament the lack of competitive bidding for their livestock, saying that often only one or two packers show up at auction.
One of the reasons for this is that slaughterhouses now only get about a quarter of their livestock from these open markets. Instead, the vast majority are purchased through marketing agreements with individual producers.
Such agreements are not publicly disclosed, which reduces the ability of producers to know what a fair price is. The small number of cattle sold in open markets also tends to set the market price for all cattle, including those sold under marketing agreements.