Harvest Public Media | By Elizabeth Rembert
Published August 1, 2023 at 4:00 AM CDT
A highly concentrated beef market has meant higher prices for consumers and lower returns for the people raising the animals. Some ranchers in the Midwest and Great Plains want a new option by organizing their own processing plants.
A crane looms above a dusty field just outside of North Platte, Nebraska, where trucks loaded with dirt criss-cross the busy site and workers set up a foundation. Two years ago, an old sewer lagoon took up this stretch of land. Cattails and marshy soil made the field a swampy mess.
Today, it’s the future site of Sustainable Beef, a meatpacking plant that Nebraska ranchers and cattle feeders began planning in 2020.
Sustainable Beef is one of a few projects across the Midwest and Great Plains, where local producers came together to organize their own meat processing facilities in a bid to break away from the four massive companies that dominate the beef market.
Ranchers in Missouri, South Dakota and Iowa are also organizing plants, like the Cattlemen’s Heritage Beef Company near Council Bluffs, Iowa.
In Nebraska, Sustainable Beef CEO David Briggs said he expects the facility to be up and running in 2025. When the plant is fully operational, it will process around 1,500 cattle a day. That’s roughly 1.5% of the nation’s capacity, according to Briggs.
“Our mission was not to just be a local or to take care of one community,” he said. “It was to help with the national security concept, and actually be a player in the overall industry.”
The cattle business has become increasingly challenging for ranchers and cattle feeders, as processing companies like Tyson, JBS, Cargill and National Beef have gotten bigger. Today, four companies control around 85% of the beef market.
That’s left fewer buyers and forced ranchers to take lower prices when they sell their animals to be turned into steaks, even as grocery shoppers pay more for those cuts.
The packers have been hanging onto large profits. But this group of Nebraska ranchers and feeders want another option. Modeled after a co-op business, they are establishing their own plant where they can process their own animals.
Keeping money in cattle country
Sustainable Beef represents a bid at stopping the flow of money toward corporate bank accounts, instead putting it in local cattlemen’s pockets, like board member and founder Trey Wasserburger.
Wasserburger works alongside his father-in-law Kirk Olson at Olson Farms, a feed yard west of North Platte. He looks out over one of the feedlot’s pens, where cattle crowd close to the edges to push their heads through a fence and get to the golden grains in a feed trough.
“These will probably be ready to go here in the next 30 or 40 days,” Wasserburger said. “They’ll go to a large packer and they’ll be in the beef supply chain in 60 days, probably.”
It takes three years of hard work to even get the cattle to this point, he said. Now they need twice-daily feedings, regular cleaning and constant health checks.
Cassie Lapaseotes – another Sustainable Beef board member and founder – runs a feed yard with her family in far western Nebraska. She said it’s sort of like a hotel model.
“Before you go to a hotel, you want clean sheets and everything ready for you to come in,” Lapaseotes said. “When these cattle come into a feed yard, we want their pens to be clean, their water tanks to be clean, the feed to be freshly laid out in front of them.”
Wasserburger and Lapaseotes are proud of how they take care of their animals to bring quality meat to the market.
But when the processors buy their cattle, they basically get a predetermined rate that’s based on the price of animals of a much lower quality than what they’re raising.
“It would be like comparing an Audi and a Kia. And the Kia sets the price for the Audi,” Wasserburger said. “It’s a broken system, totally.”
Right now their paychecks don’t reflect the sweat, science and money they’ve invested in their cattle. They hope Sustainable Beef can fix that and provide a new option for ranchers and feeders, a long way into the future.
“The way we look at it is very much ensuring a place for our next generation to have a home to sell their cattle,” Lapaseotes said. “I’m the fourth-generation on my family’s operation, so I’m looking forward to the next 20 years so the next wave has opportunities.”
Boost from Walmart
Walmart Inc. has stepped up to be among the company’s first customers. The retailer has invested in the project and agreed to buy and distribute the majority of Sustainable Beef’s product.
To Briggs, the partnership is what could set the company apart from other collapsed meatpacking projects.
“This is how a lot of things get in trouble, in my opinion. They have this grand idea. And they’re good ideas,” he said. “They got good support from the producer, and they build a plant, but then what do you do with all the beef?”
Even with a boost from the nation’s largest grocery chain by market share, Wasserburger says they’re not trying to compete with the giant packers.
“That’s like comparing the Yankees to my son’s T-ball team,” he said. “We don’t want to be the Yankees and we’re not pretending like we are. This model works for us and our families and so we’re going to play ball like we know.”
But they have an uphill climb to even get into the game. This isn’t the first time ranchers have tried coming together to start their own packing plant.
Past startups in Kansas, Nebraska and Iowa have tripped over logistics, collapsed under market pressure or even been swallowed up by one of the giant packers.
“If they succeed, that means the Big Four lost a little bit of market share,” said Austin Frerick, a Yale fellow who studies concentration in the meat market. “And there’s nothing in recent history that says those four will lose a point of market share without a fight.”
He’s seen the Big Four overbid for cattle to edge out other offers and cross ethical lines to cut costs.
Frerick said he hopes the ranchers can find a foothold, but that the broader industry needs regulation to truly level the playing field for projects like Sustainable Beef.
“If they can carve out a niche where they can play T-ball, at least they’re playing baseball,” he said. “But I want a bunch of baseball teams. I think the best thing we can do for them is break up the Big Four and put competition back into these markets so they have a chance to succeed.”
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest. It reports on food systems, agriculture and rural issues.
Comment form John Hansen, President of Nebraska Farmers Union:
The Harvest Public Media article is about the new North Platte processing plant. Our concern about that project is with betting on Walmart to pay Sustainable Beef a premium price for their beef when Walmart’s marketing plan is all about selling the best for less, and ruthlessly beating down the price of everything it buys. Walmart is a partial investor in the project, and will also have a seat on the board of directors. If past performance is an indicator of future performance, Walmart will use their ownership leverage and board confidential information to beat down, not up the price it pays for the Sustainable Beef.