Consumers overpay for beef while underpaid ranchers are squeezed out of business
WASHINGTON, D.C. – Today, the U.S. House Committee on Agriculture conducted a hearing analyzing the lack of competition and transparency within the beef industry. Four corporations – National Beef, JBS, Cargill, and Tyson – control approximately 85% of the cattle market, monopolizing the market and squeezing both ends of the supply chain so that ranchers are paid unsustainable prices for their cattle and consumers are overpaying for meat at the grocery store.
Allegations that these meatpackers have abused their position in a highly concentrated market to fix prices have led to $400 million in fines and settlements in recent years.
In his opening statement, Rep. David Scott, the committee’s chairman, noted one ag producer witness chose not to testify “due to intimidation and threats to this person’s livelihood and reputation.”
Gilles Stockton, a Grass Range rancher and spokesperson for the Northern Plains Resource Council, a family agriculture group, testified before the committee about the impacts market concentration has had on agricultural producers.
“This corporate concentration is underlying and shaping the economic reality that prevents farmers and ranchers from thriving,” said Stockton in testimony to the committee. “Monopoly power extracts wealth from rural communities and takes a larger share of the retail dollar away from producers like me.”
Congress passed the 1921 Packers and Stockyards Act over a century ago to address this very issue. At that time, a few corporations controlled 82 percent of the market. After reforms were put in place to restore competition, that number fell to 36 percent by 1980.
Shortly thereafter – during the 1980s – antitrust law largely stopped being enforced, and corporate mergers in the agriculture industry expanded dramatically. The result is concentration in the meatpacking industry that surpasses the levels that led to the Packers and Stockyards Act. Since corporate consolidation resumed in the 1980s, 40 percent of family ranches no longer exist.
In his testimony, Stockton noted two measures to restore fairness and competition to the beef market.
“The first solution is mandatory Country of Origin Labeling. Meatpackers oppose COOL because they don’t think consumers should have the right to know where their beef comes from, and they want to be able to use international livestock trade to help keep the prices they pay producers low,” said Stockton.
“The second policy that’s needed is to require that the beef packers purchase their cattle in a competitive and transparent marketplace that they neither own nor control,” continued Stockton. “USDA can do this through rules under the Packers and Stockyards Act, or Congress can do so by strengthening amendments to the Act to require this free enterprise approach to antitrust enforcement.”
The hearing was divided into two panels of witnesses, beginning with cattle producers. The second panel was composed of the CEO’s of the “big four” meatpackers. The executives were asked about rising beef prices for consumers, diminished cattle prices for ranchers amid record meatpacker profits, and transparency within the marketplace.
“Your companies reported over $15 billion in profits over this last year alone,” Rep. Scott said to the CEOs during his questioning. The chairman went on to show a graph of skyrocketing profits for the four corporations since 2015 before asking the CEO’s if they had fixed prices or engaged in other illegal activity to generate these profits. The CEO’s all responded “no” or “not that I’m aware of.”
After the hearing, Stockton summed up the situation, noting his concerns for ranchers and the larger culture.
“Corporate executives are manipulating the system to hoard extravagant profits for themselves and their investors while everyday people are suffering. These reckless corporations are not simply hurting ranchers like me, they are tearing at the very fabric of the American system,” concluded Stockton.
A video recording of the entire hearing can be viewed here.