Shad Sullivan has stopped paying for cable TV, yearly vacations and trips to movie theaters. He’s contemplated ending his health insurance, even though he needs it for his chronic bone marrow cancer.
A rancher in Olney, Texas, Sullivan, 47, has cut costs as producers like him have felt squeezed by the beef market. While consumers pay high beef prices at the grocery store, very little has trickled down to ranchers — in fact, according to the U.S. Department of Agriculture, the gap between the retail price for beef and the price producers receive is the largest it’s ever been.
In interviews, eight ranchers in seven states agreed their profits have stagnated or even decreased, while the meatpacking companies — which buy the animals for slaughter, then package the meat to be sold at grocery stores — have benefited.
Iowa rancher Eric Nelson said he’s heard people say he’s probably experiencing a windfall based on grocery store prices.
“I tell them, ‘No, we’re not getting any of it,’” the 59-year-old said. “We’re getting less and the consumers are having to pay more.”
Most ranchers agreed the culprit is market concentration. Four companies — Brazil-based JBS, Tyson Foods, Cargill and National Beef — slaughtered about 85% of the cattle in the U.S. in 2018, according to the most recent USDA data. Another school of thought placed the blame on limited capacity — not having enough slaughter plants to process all the beef produced.
Either way, since 2017, the price consumers have paid for beef and veal has increased each year. In 2020, the cost increased by about 10% from 2019, the sixth highest year-to-year increase in four decades.
In turn, the companies’ profits have skyrocketed. From 2010 to 2020, both Tyson and JBS saw an increase in revenue from their cattle operations, 34% and 66% respectively, according to the companies’ annual reports.
But, at the same time, the farmers’ cut has decreased. Between 2010 and 2020, the farmers’ share — beef’s value to the rancher divided by its retail value — decreased by about 9%.
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