Two senators with disparate political views, Elizabeth Warren (D-Mass.) and Mike Rounds (R-S.D.), have gotten together to petition the Federal Trade Commission (FTC) to investigate the beef industry. “The top-four beef packers, JBS, Tyson, Cargill and National, AKA ‘The Big 4’ increased their market share from 32% to 85% in the past three decades. At the same time, each year since 1980, an average of nearly 17,000 cattle ranchers have gone out of business,” says the Bipartisan Beef-Packing Investigation Resolution introduced by the two Senators. The resolution directs the FTC to report to Congress within one year on the extent of anticompetitive practices and violations of antitrust law in the beef packing industry, including price fixing, anticompetitive acquisitions, dominance of supply chains and monopolization.

With 68% or 23 of the 34 domestic beef processing plants of the top ten U.S. beef companies (source: Cattle Buyers Weekly Top 30 Beef Packers 2021) and Tyson Foods just announcing they plan to build another 12 plants by 2024 (Source: Meatingplace, 5-24-2022), it seems clear that the oft repeated statistic of 80% of the beef business is controlled by four companies is verified if not soon to be exacerbated. It’s no wonder that the Biden administration and a Democratic, slimly controlled Senate have set their investigative sights on the consolidated beef industry; this, following entreaties from various cattle producing interests as well as consumer group’s petitions to find out why cattle prices are low, but beef prices are high and who is reaping the “exorbitant” resultant rewards.

Oh, the hue and cry that this brought. Strange bedfellows are senators Warren, an ardent liberal and Rounds a resolute conservative. What is their motivation for the FTC petition? The North American Meat Institute (NAMI) has rebutted nearly every reason the Senator’s petition gives for an FTC investigative need. NAMI deems all the reasons as mythical, not factual.(Source: NAMI, “Warren/Rounds Resolution Myth-Facts,” 5-20-2022). While I have not seen nor heard of R-CALF’s or NCBA’s thoughts on the petition, it would seem that groups purporting to represent cattle raisers interests would applaud the two senators’ petition. Suffice it to say that there is and will be much debate about the need and certainly the equity of the petition. My caution is that when all is said and done, usually more is said than done. I suspect that will hold true for the FTC’s conclusions in this instance as well.

To me, this brouhaha is not really a competitive stifling antitrust issue as much as it is a business building and marketing issue. My solution for this perceived mess is to break up the larger beef companies in some form or fashion such that the cattle raising and processing functions are spread more evenly among those who wish to engage in them, while at the same time integrate the entire beef industry from conception to consumption.

That means getting rid of the multitude of competing interests spread along the cattle/beef continuum and force them to cooperate through integrated companies of their ownership and choice. Rather than having four or five independent profit centers from cattle to beef, there would be only one for each integrated company. This would force each to drive costs out of the integrated system, forcing a lower cost competitive situation. Who would benefit? Both antagonists to the current situation—cattle producers and consumers. Each would receive their just rewards rather than rewards based on the whim of the next company along the chain, which in effect is the current complaint from the petitioning senators and others.

Such integration would force cattle producers to become owners along with backgrounders, feedlot operators, and processors of individual integrated companies. Could such disparate interests who are current adversaries successfully cooperate? Only if they want an alternative to government interference in their businesses and uneven profit distribution as is currently the case.

Need I mention that this integration model is the exact one adopted by the chicken industry over 40 years ago, propelling chicken consumption to surpass beef with the spread continuing to grow to this day. The beef industry needs to adopt such an integration model and forget its 19^thand 20^th century practices in this 21^st century.

My next blog in two weeks will add the flesh and bones to this integration idea. Please stay tuned.

Don’t investigate, integrate the cattle/beef business

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