The Low Down on the Markets, and How it Affects You

Last week, the White House announced the Biden-Harris Administration’s Action Plan for “Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.”

Now, before we begin, I don’t want to start a big debate over why Biden is this or that; whether the Biden Administration came up with this initiative or whether the Trump Administration did; or what latest words the Commander and Chief stumbled over on national television last week because frankly, in this specific column, none of that matters right now. What matters is fair, competitive livestock markets — and how it affects all of us from the barn cats to the consumer. Today, I will do my best to tell you what I know from my experience and what I predict based on that experience. Buckle up boys, this is about to be a bumpy ride down a twisted road.

 

The year was 2019; the location: Holcomb, Kansas; the issue at hand: fire.

A fire at Tyson’s Holcomb location was a tragedy that made waves within the beef industry — no, made waves in an understatement — it made a hurricane, and the beef industry was in the eye. Thankfully, no one was harmed in the Holcomb Fire flames but, at the time of the incident, it looked as if a wrench would be thrown into one of America’s largest meat packing operations.

At the time (August 2019) this specific processing plant was harvesting 6,000 head per day, or 30,000 head per week. Surprisingly enough, the week following the Holcomb fire, Tyson harvested 653,282 head of cattle across the country and actually hit one of the largest “Saturday day kills” Tyson had ever seen. In other words: tragedy struck for a minute, but the company bounced back quicker than you can snap your fingers.

Following the Holcomb Fire, the cattle market (which was in distress anyway) crashed and burned as well. Cattleman, cattle feeders, truck drivers, grocery stores — everyone in the beef supply chain suffered at this time…well, everyone except the Big Four Meat Packers.

 

The Big Four Meat Packers consist of Cargill, Tyson Foods, JBS, and National Beef Packing. They control anywhere from 55-85% of the hog, cattle, and chicken markets. Whatever the Big Four says goes because at the end of the day, they are the ones buying livestock for harvest.

In other words: the Big Four don’t just play the game; they make the game, win the game, then pass go and collect $200,000 over and over and over again.

Following the Holcomb Fire, cattle market prices were unreasonably low, and ranchers just had to take whatever offers the Big Four had to give — and the Big Four knew that. The speculation is: at the beginning of each week, the Big Four would decide on bottom of the barrel prices to offer at sale barns across the country so their input cost was low and their profits were high. This is called “price fixing” and in turn, this meant the Big Four would have been breaking anti-trust laws.

The Big Four knew they were the Don Corleone’s of the meat supply chain; they made livestock producers offers they couldn’t refuse…literally. It was awful, everyone but the Big Four was completely fed up, and no one was listening to us. Enter social media.

 

I’ve said it before and I’ll say it again: for as much as social media is bad, it is good.

Following the Holcomb Fire with the cattle market dwindling, many cattle industry professionals took to social media to express their disappointment and frustrations under the #FairCattleMarkets. After one domino fell, they all did.

Cattle industry organizations sent out email blasts urging their members to speak up. Cattlemen and women voiced their opinions to politicians. Even old cowboys who retired to the easy chair before Twitter was invented sent a few tweets in protest. For a minute, this worked.

The #FairCattleMarkets campaign got the attention of a few government officials and for a while there the cattle market did get better. All was looking up for the cattle industry — then a worldwide pandemic happened.

 

Short, sweet, and to the point: supply chain issues led to an opportunity for the Big Four to be on top once again.

Cattle prices: low. Grocery store prices: inflated. Cattleman: frustrated. Consumers: mad. Packers: diving into a pile of gold coins like Scrooge McDuck.

 

While everything was going on in the beef industry, the same issues were happening in the pork and poultry industries as well. Investigation began in all three sectors which later led to litigation. I wish I had something of significance to report but the fight is ongoing. It’s been years, now, of court hearings, depositions, lawsuits, and media releases.

But as of today, January 11, 2022, not much has changed.

The pessimist in me poses these arguments: sure, the markets may look better but how much have livestock producers’ input costs gone up? 

There may be lawsuits going on but let’s get real here, if there really was a “conspiracy” with the Big Four Packers going on and price fixing happened, don’t you think they’d cover their tracks pretty good? 

Furthermore, why would the federal government take down some of their biggest money makers?

 

The above text is a summary of what has happened in the world of livestock markets since August 2019. There’s wayyyy more history and quite a few more details I know I missed, but hey, I needed to fit everything in a column. However, after reading that, you’ve got to be asking: what now?

As stated earlier, the White House announced the Biden-Harris Administration’s Action Plan for “Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.” This could end great, or things very well could just stay the same — at this point, who knows?

I don’t know what’s going to happen to the beef, pork, or poultry industry in the coming months or years. I hope they change for the better, I mean, I come from a long line of ranchers then I married a rancher — obviously I hope the future of the cattle industry is bright.

I guess it all comes down to this: at least competitive markets are on the radar.

Humor my optimist spirit for a minute…the packer monopoly has been around forever, literally. I mean there were similar lawsuits going on before I was even born. The issue has been the same for decades now. However, the difference is: Big Government has the Big Four in their crosshairs. Will they pull the trigger? No idea. But is it nice to know government officials have breaking up the packer monopoly on their brains? Absolutely.

I guess all we can do is hope and pray that livestock markets do become more competitive for the sake of the farmers, ranchers, feeders, truckers, grocers, consumers, and most importantly, our future.

 

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