Cattle ranchers have always held a measure of distrust for beef processors. Maybe it began in the late 1800s when cowboys were driving thousands of cattle hundreds of miles on the old Chisolm trail to be shipped to Chicago’s fabled stockyards for “processing.” Sitting around their campfires eating beans and bacon, those cowboys had a lot of time to think and talk about how they weren’t being properly rewarded because the packers seemed to be making all the money. And, they were probably right.

Ranking second and third respectively, Swift and Armour were two of the largest companies in America in 1917. (Source: American Business History Center) By 2022, each having been absorbed and reabsorbed over the ensuing years, plus given the rise of tech industry giants, neither was even in the top 100 in market capitalization. But in the 1920s these two meat processing behemoths were among America’s largest and most profitable companies, and along with Cudahy and Wilson, controlled 90% of the meat production in America.

Egregious profit-taking charges were leveled at the original big four in the early 1900s. However, it was author Upton Sinclair and Congress who brought sanity and safety to beef processing. By exposing the filthy, back-breaking and onerous working conditions in Chicago’s beef processing plants, Sinclair’s 1906 book, “The Jungle” encouraged unionization and concurrently Congress passed a spate of new laws to curb meat processing plant filth.

Today, the American successor to Swift — JBS USA — along with Tyson, Cargill and National, control more than 80% of U.S. beef sales. Cattle ranchers still don’t trust these four latter-day beef behemoths as evidenced by their plaintive caterwauling about being maligned by “big beef” and needing help to be a countervailing profitable industry participant.

Hearing these cattle rancher cries, Congress and the Biden administration are attempting to “level the playing field” for all who play the game of beef, with Congress trying to bring more transparency to cattle trading and Biden sending tranches of taxpayer money to smaller beef processors, all to facilitate “competitiveness.”

A comparison of previous year’s meat company margins reveals that, yes, operating incomes are higher today. JBS, by its own admission, is raising margins due to rising demand, but isn’t that a rather fundamental economic dictum? From their quarterly reporting, Tyson shows a 5.2% rise in operating margin from FY19 to FY20 and 23.5% increase from FY20 to FY21. Are these evidences of corporate greed or reactions to cost increases and competitive opportunities?

As for cattle rancher profitability, live cattle prices have progressed from $68/cwt in 1980 to a high of $170 in 2015, a 150% increase before falling back to $86 in 2020 and rising to $140 in the last two years, or 105.9% since 1980.

What about the retail price of beef? According to U.S. Bureau of Labor Statistics, ground beef was priced at $5.20 in 1943, which has the same "purchasing power" as $92.58 today. Recently, I found that same retail ground beef similarly priced at $5 to $8 per pound.

Cattle ranchers may justifiably feel that they have done their part to lessen beef’s cost with fewer cattle yielding more beef; with improved environmental stewardship lessening GHG emissions; with improved beef nutrition from breeds and feeding regimens. But, these same cattle ranchers balk at profits made by their antagonists, beef processors, who have also improved yields, processing techniques and efficiency, lowering their production costs.

Have both the cattle rancher’s efforts to improve the animals they send to the processors, or the processors cost improvements, been reflected in consumer beef prices? To me, it appears so, along with increased margins, but not egregiously so.

Capitalism, for all its faults, cannot be so restrictive that it inadvertently constrains our freedoms. Or, you must call it what it becomes: authoritarianism, Communism, Socialism, etc. However, unrestrained capitalism may be as bad as its alternatives. Thus, the need, at least in the government’s eyes and certainly in the eyes of those maligned and in my eyes too, that there are some restraints that must be put on capitalism. However, the level of constraints is the crux of either side’s arguments and must be tempered with realism and common sense.

You cannot have it both ways. Capitalism unrestrained is freedom denied. However, capitalism unnecessarily restrained is Communism.

Who’s greedy?

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