Most Policy Initiative logo
donate

Beef Cattle Costs & Prices

February 25, 2022
view pdf
WRITTEN BY Dr. Elena Bickell

Executive Summary 

The U.S. meatpacking industry started consolidating rapidly in the 1970s and today, more than 70% of beef is processed by only 3% of meat processing companies. Large meatpackers are able to lower the cost of processing via economies of scale by running bigger operations. Options to supply beef cattle for processing for cattle managers have declined, since large packing organizations have led to the permanent shut down of smaller plants. By concentrating cattle slaughter geographically, large processors are able to mark down cattle prices because they have access to larger numbers of animals over a greater geographic area. Meanwhile, the cost of shipping cattle to processors, which increases with distance from the farm to the plant, are incurred by cattle farmers who already face increasingly narrow profit margins. These facets of the beef cattle industry are reflected in higher meatpacker profit margins, lower farm incomes for cattle producers, and higher consumer prices. 

Highlights 

  • Four meat processors control the majority of the U.S. beef cattle market. They are:
    • Cargill, a global commodity trader based in Minnesota,
    • Tyson Foods Inc., the largest U.S. meat company by sales,
    • Brazil-based JBS SA, the world's largest meat packer, and 
    • National Beef Packing Co, which is controlled by Brazilian beef producer Marfrig Global Foods SA.
  • Due to this consolidation of the beef cattle industry, U.S. and state lawmakers are seeking increased oversight of the beef sector.
  • Farm financial conditions in the cattle industry could continue to be challenging if slaughter capacity remains limited. 

Limitations 

  • Changing to more transparent negotiating trade practices may help with price discovery and transparency for all market participants. However, it is not clear how any new system of negotiating cattle beef can affect future innovations in beef products and consumer preferences.
Most Policy Initiative logo
Contact
238 E High St., 3rd Floor
Jefferson City, MO 65101
573-340-5738
info@mostpolicyinitiative.org
Newsletter

© 2022 MOST Policy Initiative | Website design and development by Pixel Jam Digital
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram