Corrupt pricing by packers putting ranchers out of business
By JEANIE ALDERSON
As Americans try to feed their families on a budget, many have surely noticed the high price of beef in grocery stores. However, most shoppers probably don’t see the struggles faced by families who have worked hard for generations to raise the world’s best beef. Those high beef prices obscure the true story of U.S. cattle ranchers going out of business by the thousands each year.
We ranchers are selling our herds, our land, our legacies, and our grandchildren’s future in alarming numbers, all because of unfair, unlawful practices in today’s marketplace. Since 1980, 40% of U.S. cattle producers have gone out of business according to the USDA. With almost half of ranching operations being erased — even as demand for beef remains strong — a host of questions arise.
Why are ranchers going out of business with cattle numbers at an all-time low, beef prices so high, and so many Americans eating beef? And what are the costs to us all when our grasslands and pastures turn into parking lots and shopping malls? Imagine if all those ranches were still in business. How much stronger might rural America be today if we retained all the wealth extracted during the last 40 years? Consumers and cattle producers are both struggling, especially in our rural communities, so where did that wealth go?
Two words explain this crisis: captive supply. The supply of beef is monopolized by just four multinational meatpacking corporations that control roughly 85% of the market. These conglomerates own or have controlling interests in every aspect of the supply chain, allowing them to use cartel-like tactics to artificially deflate prices during the selling season.
This unlawful activity creates a dynamic where independent ranchers get rock-bottom prices for high quality cattle sold to these corporations. Shortly thereafter, the resulting beef sells for exorbitant profits. In recent years, these corporate monopolies have paid more than $400 million in price-fixing lawsuit settlements, but even that is a tiny fraction of the damages inflicted on ranchers. These fines essentially become a paltry “crime tax” paid for the right to break the law. It’s like being fined one dollar for stealing $100.
So, what’s the solution to keeping ranchers in business and rural communities thriving? We can look to the 1921 Packers and Stockyard Act, which was created to address this issue exactly 100 years ago. The law was designed to ensure transparency in pricing and prevent the monopoly behavior that was keeping the corporate packers fat and happy while starving ranchers. Today’s problems are just as bad if not worse.
First and foremost, we have to modernize this law to address the rigged marketplace in its current form. We also need to aggressively enforce all existing laws the corporate meatpackers are breaking today.
As a family rancher, I am encouraged by some of the Biden administration’s recent efforts. The USDA has been tasked to strengthen and enforce the Packers and Stockyards Act. Forthcoming rulemaking sessions to update the law provide an opportunity to restore integrity and competition to the livestock industry.
For these reforms to have a meaningful impact, they must dismantle the secretive, negotiated price system used by the big meatpackers to fix prices. Rulemaking must ensure all cattle bids occur within an open, public market — with all prices reported — to achieve a genuinely transparent system. This is the only way to prevent meatpackers from continuing to corrupt the marketplace. With properly restored market competition, ranchers can earn a secure livelihood and consumers can expect fair prices.
The USDA has to get this right for ranches like mine to remain viable. Rural communities are here to support these necessary reforms, because we know this opportunity cannot be squandered. If we continue to discard U.S. ranchers in favor of multinational corporations, the high price of grocery store beef will pale in comparison to the devastating costs levied on rural America.
Jeanie Alderson is a fourth generation cattle rancher in Birney and the board chair of Northern Plains Resource Council, a grassroots conservation and family agriculture organization.