Cattle ranchers not seeing profit from high grocery store beef prices; many blame major processors

Annual farmers' share compared with beef and veal prices, 1970-2020. Midwest Center for Investigative Reporting chart; click the image to enlarge it.

"While consumers pay high beef prices at the grocery store, very little has trickled down to ranchers — in fact, according to the U.S. Department of Agriculture, the gap between the retail price for beef and the price producers receive is the largest it's ever been," Mary Hennigan reports for the Midwest Center for Investigative Reporting. "In interviews, eight ranchers in seven states agreed their profits have stagnated or even decreased, while the meatpacking companies — which buy the animals for slaughter, then package the meat to be sold at grocery stores — have benefited."

Some ranchers blame limited processing capacity, especially with pandemic shutdowns. But most ranchers blame meat processors Cargill, JBS, Tyson Foods and National Beef, which accounted for more than 80 percent of the processed beef in the U.S. Numerous lawsuits in recent years claim meatpackers have colluded to raise beef prices by limiting supply, Hennigan reports.

Whatever the cause, "since 2017, the price consumers have paid for beef and veal has increased each year. In 2020, the cost increased by about 10% from 2019, the sixth highest year-to-year increase in four decades. In turn, the companies’ profits have skyrocketed. From 2010 to 2020, both Tyson and JBS saw an increase in revenue from their cattle operations, 34% and 66% respectively, according to the companies’ annual reports," Hennigan reports. "But, at the same time, the farmers’ cut has decreased. Between 2010 and 2020, the farmers’ share — beef’s value to the rancher divided by its retail value — decreased by about 9%."

The federal government is taking notice. The Senate Committee on Agriculture, Nutrition and Forestry held a hearing in June to seek answers. On July 9, President Biden signed an order to promote economic competition, and specifically addressed agricultural consolidation. And that same day, "Agriculture Secretary Tom Vilsack announced the USDA would spend half a billion dollars to encourage building more meatpacking plants closer to producers," Hennigan reports.