Agriculture adds $2 billion to Wyoming’s annual economy. It is our third-largest industry and, also the oldest. Ranching brought cowboys to Wyoming before Yellowstone was made a National Park in 1872, or the first oil well was drilled in 1884.
Cattle cover nearly half of Wyoming’s private land, with 1.32 million head. The cattle industry feeds 11,000 families. One typical family in southwest Wyoming runs 240 head on 2,500 acres to support a half-dozen people.
For ranching families, disruption of the industry doesn’t stress cows or faceless corporations, but people. Of course, every industry has been hurt by the virus from China. But the cattle industry’s problems are magnified by underlying injustices stretching back for years.
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| meat packers in Lexington, Nebraska |
On May 5th, Bridget Hill, Wyoming’s attorney general, joined with eleven beef producing states to send a letter to Bill Barr, head of the U. S. Department of Justice. It asked for an anti-trust investigation of the beef-packing industry. The following day, President Trump added his voice in support of it.
For the average consumer of beef, it may be difficult to understand how ranchers can be in trouble when the price of beef at the grocery store has spiked. Average consumer prices nearly doubled between March 2019 and the March this year. During the first week of April, boxed beef prices (the cost that retailers pay to the packing plant) increased by 25% while consumers saw a package of ground beef increase from $3.79 on April 2, to $4.96 by April 9. That’s more than a 30% increase in one week.
But, while beef is skyrocketing at the check-out line, ranchers are being squeezed at the sale barn. Since January, the market for butcher cattle has dropped almost 20% below the five-year average. Nonie Proffit, an Evanston rancher, explains that lower prices mean that a family has to run more cows to make ends meet. Operations unable to handle more than 200 head will likely lose money.
With prices at the sale barn down by 20% and prices at the grocery store up by 100%, who is raking in the profits? According to the letter addressed to AG Barr, “the four largest beef processors,” which control 80 percent of U. S. packing facilities, “have achieved sizeable profit margins.”
In a fair free-market environment, rival packers compete to buy cattle from the ranchers—driving up prices at the sale barn. These same rivals then compete to sell their products by increasing quality and lowering prices to the retail outlets.
But when only a few control the market, “firms can engage in tacit—or even express—collusion, providing artificially low prices to suppliers (e.g. farmers and ranchers) and inflating prices to consumers,” the letter explains. That is why it asked the Department of Justice to investigate.
This is not the only unfair practice. Two other federal laws are also in play.
The “Packers and Stockyard Act” of 1921 prohibits meat-packing corporations from owning livestock and thus, manipulating the price at the sale barn. Despite this, giants like Cargill, Tyson, National Beef and Swift effectively own feedlots filled with cattle being fattened for slaughter.
In January 2020, the USDA proposed several rule changes to address these loopholes, but by that time, the coronavirus was already on the loose. When it hit the beef packing industry, the sudden glut at the packing houses, amplified a market ripple into a tsunami.
Imported beef weakens the market further. With less stringent quality control, foreign-raised and foreign-butchered beef is cheaper. If that’s what the consumer wants, fine. But clear “country of origination” labeling laws have not been enforced since 2016. Loopholes enable imported meat to be sold as “Product of the U.S.A.” merely by repackaging it on American soil. This both deceives the consumer and hurts the rancher.
Every Wyoming citizen should be more aware of the challenges that face our ranching families. They are our neighbors and the backbone of our state. When we support their calls for the enforcement of federal laws, we are not only helping 11,000 families, we are also supporting Wyoming’s entire economy.
Consumers can also support ranchers by paying more attention at the meat counter. Read the fine print and learn which companies are actually selling American beef processed in American plants.
Better yet, go in with a few people and buy a locally raised beef for your freezer. Bypassing the meat-packing giants will give you better meat at a lower price. It will also give a higher price to your local rancher and support our local, custom meat processors. It’s a win-win for Wyoming.
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