Record Beef Prices, but Ranchers Aren’t Cashing In

 

Judging from the prices at supermarkets and restaurants, this would appear to be a lucrative moment for cattle ranchers like Steve Charter.

America is consuming more beef than ever, while prices have climbed by one-fifth over the past year — a primary driver for the growing alarm over inflation.

But somewhere between American dinner plates and his 8,000-acre ranch on the high plains of Montana, Mr. Charter’s share of the $66 billion beef cattle industry has gone missing.

A third-generation cattle rancher, Mr. Charter, 69, is accustomed to working seven days a week, 365 days a year — in winter temperatures descending to minus 40, and in summer swelter reaching 110 degrees.

On a recent morning, he rumbled up a snow-crusted dirt road in his feed truck, delivering a mixture of grains to his herd of mother cows and calves. They roam a landscape that seems unbounded — grassland dotted by sagebrush, the horizons stretching beyond distant buttes.

Mr. Charter has long imagined his six grandchildren continuing his way of life. But with no profits in five years, he is pondering the fate that has befallen more than half a million other American ranchers in recent decades: selling off his herd 

“We are contemplating getting out,” Mr. Charter said, his voice catching as he choked back tears. “We are not getting our share of the consumer dollars.”

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The following is something I wrote on another person's face book page. This particular post refers to the 1906 Meat Inspection Act, but the discussion went on to discuss the Packers and Stockyards Act of 1921 and the several times it has been amended. My point was that every time the feds intervened, it resulted in, over time, fewer firms and less competition. My suggestion was instead of trying to control the big packers, which so far hasn't worked, we should concentrate on freeing the little guy to operate and compete.

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“Secondly we need to energize small america and find a way small butchers/processors can serve as USDA graders and inspectors to allow for a delivery system and a link to grocers, restaurants and communities”

  I believe that is our best shot at reform, to allow state or other types of inspection for local processors. It is the quickest and most politically viable option, and it will do exactly what the big 4 don’t want: increase competition.

Let’s remember the big packer, the Big Six as they were known then, not only supported but lobbied heavily for the meat inspection act. They wanted this for two reasons: to gain access to the European market where U.S. beef had been banned, and to limit competition within their own industry. And there was competition. A government study of the meat industry in 1905 found the Big Six killed and sold from 45 to 50 percent of the nation’s beef. The number of slaughtering and meat packing outfits was increasing sharply, from 1,080 in 1889 to 1,641 in 1909. This increase of 52 percent in the number of firms was not appreciated by the big boys. Plus, by 1904, 73 percent of the entire U.S. kill was inspected. “It was the smaller packer that the government inspections system failed to reach, and the major packers resented this competitive disadvantage.” Thus the push for the 1906 bill and the huge increase in appropriations that accompanied it. Even Sinclair Lewis, the author of The Jungle, which is often credited for engaging the public in this issue, afterward wrote “The Federal Inspection of meat was, historically, established at the packers’ request; … it is maintained and paid for by the people of the United States for the benefit of the packers.”

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I had some personal experience with this. While attending NMSU, I worked for PowWow Lewis, who had a small feedlot and a slaughtering plant on Picacho Avenue. I especially like working for him because there were deliveries to El Paso, and every time I crossed the state line the federal minimum wage kicked, which was substantially more than the NM one. There was even one guy in the El Paso area whose place looked like a jungle, and where he kept wild animals. There was bamboo-like plants growing along the roadsides in Dona Ana County, and we would chop it down, load it in a trailer and deliver it to him for feed (and again, the federal wage kicked in).

Things were fine until the USDA came out with their new sanitary standards. The modifications Lewis would have to make to be in compliance were just too many and too expensive for his size operation, so he shut down.

He wasn't done in by behemoth companies or market manipulation. He was forced to shut down because of government regulations. Multiply this across the country and you can see the picture it paints. Let's revise the program so these smaller, local firms can compete.