During the 18 years from 1947 thru 1964, the New York Yankees baseball teams won 15 American League pennants and 10 World Series. This caused cacophonous calls from some baseball “fans” to break up the Yankees as they were “ruining” professional baseball with their dominance and storied concentration of talented players. The “playing field” was not level as other major league teams just couldn’t compete with the Yankees.

Like those baying baseball fans, varied meat and poultry producer interests are clamoring for the government to level their competitive playing field with infusions of money to fund greater capacity utilization amongst the disparate players. There are even calls for trust-busting action to unbridle the perceived competitive-stifling concentration of the four companies that control 80% beef processing (Source: Cattle Buyers Weekly) or the five companies that control 60% of the ready-to-cook chicken production (Source: WATT Global Media’s Top Poultry Companies).

Secretary of Agriculture Vilsack made it clear in a September 8, 2021, White House press conference that the Biden administration is intent on infusing the beef industry with money to cure a perceived competitive problem. He proposed sending money to the smaller processing players to help increase industry capacity, curb anticompetitive actions of the big players by regulating more price transparency into the cattle buying process as well as helping cattle producers with money to alleviate their losses. All of this will be done with the hope of bringing more money back through the value chain so that cattle producers receive their “fair” share of the profits being made by the beef processors.

Additionally, R-CALF USA, a cattle producer organization, wants the government to start antitrust action to break up the big beef behemoths. In R-CALF’s view, the big beef boys with their captive supplies and lack of pricing transparency are stifling the cattle producer’s ability to make a decent living. Both R-CALF and the USDA continue to insist that there is a dearth of beef industry processing capacity that hurts cattle producers by offering them fewer processing options.

Is there really a lack of capacity in beef production? John Nalivka of Sterling Marketing Inc., says just the opposite, citing statistics as reported in Steve Kay’s Cattle Buyers Weekly on Oct. 4, 2021, that show a lack of labor has reduced plant utilization to 87.3%. The capacity is there, the labor is not.

Nalivka asks the question, “If capacity is increased against a declining cattle supply and reduced capacity utilization, how can a new plant carrying large debt and working capital compete?” Nalivka also asks, “What would R-CALF do if there were no packers or only small packers who did not have the financial resources to build global markets and value-added processing lines to meet demand while sustaining rigid food safety regulations, labor laws, all-the-while addressing and negotiating union contracts?” John’s questions are good ones.

In conjunction with Nalivka’s questions are my questions: Will infusing the industry with $150 million to $160 million in aid to small processing facilities help make them more competitive? And is an added tranche of $500 million to state and local governments to help finance expanded processing capacity, as Vilsack announced, a potential solution? Or is it sending money to cure a capacity problem that doesn’t exist?

Secondarily, is the beef industry rife with nefarious collusive price fixing? R-CALF USA and its CEO, Bill Bullard must think so. Bullard brought up the scarlet letter “A” — for Antitrust — in R-CALF’s lawsuit against The Big Four of Beef, i.e., JBS, Tyson, Cargill and National.

We now have the USDA Secretary, plus a group purporting to represent cattle ranchers, decrying the “consolidation” and potential price fixing of beef processors at the expense of cattle producers. Both seem to be saying that all the cattle producers’ financial problems are someone else’s fault, which can be salved by a government infusion of taxpayer capital and the deconcentration of these beef behemoths.

U.S. beef consumers' mawing mouths demand processing efficiency to annually feed 57 pounds of beef to each of our 331,449,281 citizens, not to mention the growing global gustatories of China and Hong Kong. Unfortunately, such efficiencies are only available from the large processing plants of beef’s Big Four, not local or regional processors distant from feed sources, feedlots and labor.

Break up the Yankees!!

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