How Much Beef Comes From Nebraska
Exterior OF CODY, NEB. — Wade Andrews' 21-year-onetime pickup bucked wildly as he navigated the rutted Cherry Canton Sandhills where his family has raised cattle since 1888.
Down below, continuing in the bend of a shallow river, a herd of 200 Black Angus cows with their 4-month-old calves watched warily for who or what was invading their normally peaceful pasture.
This is the middle of a county known as "God'due south Own Cow Country," an oasis of grass-covered hills and articulate, shallow lakes ideal for raising cattle, which outnumber people here 50 to 1.
The seasons hither aren't measured in leap, summertime and fall, but calving, branding, weaning and and so, come November, auction twenty-four hours at the auction barn in Valentine.
But ranchers like Andrews worry that their style of life is slipping away amid low cattle prices and always-ascension expenses.
Andrews said he hasn't made a turn a profit in v years, despite tape-loftier prices for steaks and hamburger at the grocery store.
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Prices for his calves are well-nigh one-half of what they were half-dozen to 7 years ago. With cattle prices like that, he's had to dip into rainy day funds to encompass his rising expenses for hay, feed supplements, equipment, health insurance and those burdensome Nebraska property revenue enhancement bills.
However the way the arrangement is working now, the meatpacking firms are taking those same cattle and earning record profits.
"They're taking advantage of people," Andrews, 56, said of the packers. "That's just wrong."
Without question, something has changed dramatically within the economic science of the nation'south beefiness industry, which is the sturdy backbone of Nebraska's agriculture economy. At a fourth dimension of record consumer prices for beef, producers accept endured years of declining prices for their cattle.
Never in the last half century has the gap been greater between what producers similar Andrews are paid for their cattle and the cost of beef in grocery stores, a Globe-Herald analysis shows.
And never have the nation's beef packers snared a bigger share of that consumer beefiness dollar. In fact, in the past seven years, the packers' share has increased more than 300%.
Many ranchers blame current market conditions on the farthermost consolidation in the nation's meatpacking industry. Today, some 85% of the fattened cattle that are turned into steaks and other pick cuts of meat in the United States are slaughtered by only four behemothic international processors.
Producers say manufacture consolidation has given packers the market place power to dispense the flow of cattle into the organisation, drive downwardly cattle prices, fatten their profits and push up prices for consumers.
"The packing industry and its packers are no different than oil and OPEC," said Van Neidig of Battle Creek, who sells livestock equipment and buys and sells premium bulls. "What surprised me is that the consumer isn't freaking out at the prices they're paying."
Packing industry officials, many beefiness industry economists and even some producers counter that there's cypher fundamentally wrong with the economics of the beef industry.
They trace the current shake-upwardly in cattle and beef markets to normal economical cycles, including higher inventories of cattle, combined with several hugely disruptive "black swan" events, including the COVID-19 pandemic.
"The nowadays spread between live cattle and beef prices has everything to practice with the law of supply and demand," Shane Miller, a western Iowa native who is group president of fresh meats for Tyson Foods, testified recently before a congressional commission.
That hearing at which Miller testified is one of 3 Congress has recently held on beef markets. Some producers and policymakers are calling for major changes to the system, from overhauling the way cattle are sold to breaking up the "Big Iv" packers.
U.S. Agronomics Secretary Tom Vilsack said it's been frustrating for producers in recent years to oft sell their cattle at a loss, simply to then run across the packers process those same animals for sizable profits.
"The profit ought to get both ways," the erstwhile Iowa governor said.
It'southward too no secret the Justice Department'due south antitrust division has been scrutinizing the big meatpackers over the past year.
Wade Andrews, right, and his son Parker, cheque on cattle at the Andrews Ranch in Cody, Nebraska.
Considering two of the Big Four beef packers accept recently paid hundreds of millions in fines and civil penalties afterward allegedly conspiring to fix prices in the chicken industry, many producers suspect such collusive behavior is happening in beef, besides, which packers deny.
"These are widespread practices," charged John Hansen of the Nebraska Farmers Union, whose parent organization is function of a federal civil suit alleging price-fixing in beef. "They practise it because they make coin doing information technology, and considering they tin."
Amid the fence, arguably nowhere are the stakes greater than in Nebraska. Nebraska has three times as many cattle every bit people, with almost one-half the state's land expanse dedicated to raising and feeding livestock. Merely Texas, with three times the total land area, has more cattle than Nebraska.
Nebraska's packing plants process more than beef than any other state. And almost half of all Nebraska corn is fed to livestock, making beef the foundation of agriculture in the Cornhusker Country. The economic impacts of the state'southward $10 billion-plus cattle manufacture ripple into cities like Omaha, too.
"The reality of Omaha would be very unlike without cattle in the country," said Glynn Tonsor, a beefiness industry economist at Kansas Land University.
But more than that, raising cattle is a way of life in a place whose license plates once declared it "The Beefiness State." Some 20,000 breeding and feeding operations, mostly family-owned, bridge the landscape from the Missouri River to the Sandhills.
That effigy, though, is down by x,000 — roughly a tertiary— over the terminal three decades, including thousands of mostly small operators who have gotten out simply since 2012.
Along with the current market crisis, Nebraska'southward beef manufacture faces a number of additional long-term threats.
They include the rise of found-based alternatives fabricated to look, scent and taste like beefiness. Some believe that even the animal-based meat of the time to come won't be raised in Nebraska pastures simply instead grown in a lab.
In addition, the threat of global climatic change is not merely altering a Nebraska ecosystem that's perfect for grazing cattle only likewise is bringing cattle and their contribution to rising greenhouse gas levels under environmental scrutiny.
In an occasional series, The World-Herald will examine the current land of Nebraska'south No. 1 agricultural sector and how information technology tin navigate the decades to come. It begins with today's wait at the sizzling controversy over cattle markets and packer consolidation.
*****
Workers herd cattle for sale at the Valentine Livestock Market in Valentine, Nebraska.
The clank of heavy steel gates and the rhythmic chant of an auctioneer rang through the tiny loonshit as 23 bred heifers shuffled nervously in a prove ring.
The Blackness Angus cows at this cattle sale in Nebraska's Sandhills came from a ranch in South Dakota, where an epic drought is withering pastures, leaving producers short of feed for their animals.
"They're a practiced set up of heifers," said Greg Arendt, manager of the Valentine Livestock Market place, grabbing a microphone and interrupting the auctioneer'due south patter.
Two dozen men sabbatum in plastic theater seats scattered effectually the testify ring, a couple making the slight hand gestures or head nods that denote a bid.
Ranchers watch cattle be displayed for sale at the Valentine Livestock Market.
This is a auction 24-hour interval at the Valentine marketplace, when months of work raising these young cattle, forth with years of work on breeding and genetics to meliorate a herd, finally pays off for a rancher.
It tin can be an exciting day if they hit a market tiptop. But generally in recent years, sale days have been a bitter thwarting around Nebraska, with prices sometimes failing to fifty-fifty cover expenses.
Dillon Lambley calls the sale at the Valentine Livestock Market.
"Sold for 14-thirty 5," said auctioneer Dillon Lambley, indicating a bid of $1,435 per head for the heifers, which weighed an boilerplate of 940 pounds. A "just OK" price, co-ordinate to Arendt.
The market in Valentine is one of many moving parts within the nation's complex, heavily segmented beefiness manufacture.
Moo-cow-calf operators, who number roughly 18,000 in Nebraska, breed and heighten cattle and ultimately bring their calves and yearlings to such markets to sell them. The bidders are most frequently operators of feedlots, those large, and sometimes fragrant, seas of metallic and wooden pens that often hold thousands of cattle.
Feedlot operators, who number about 2,500 in Nebraska, will "finish" the cattle, fattening them up for market.
Display prices are updated for in-person and online bidders at the Valentine Livestock Market place.
The feeders will so sell the animals to packinghouses, where they're turned into the T-bones, filets, roasts and hamburger we buy from the meat case.
While a number of feedlot operators were on manus to competitively bid for the immature cattle at the market in Valentine, the price feedlots are ultimately willing to pay is largely adamant by the cost major meatpackers will pay them afterward for the fattened cattle once they are fix for slaughter.
And that, many livestock producers say, is where the organisation appears to be broken: There are simply as well few packers to bid and compete for fat cattle.
Feedlot operators say they are sometimes lucky if 1 or two packers bid for their animals, which they trace to the way the packing manufacture has heavily consolidated over the past four decades.
USDA figures evidence that in 1980, the nation'due south iv largest processors slaughtered only nearly 36% of all fed cattle, less than one-half of today'due south 85% figure.
How did the industry become so concentrated?
Industry experts say many of the biggest packing firms in the 1980s moved to larger plants to control costs and drive economies of scale.
A USDA study shows that in 1977, only sixteen% of all fattened cattle were candy in what were considered large plants — those with annual capacities of a half million animals or more. By 1997, 80% of beefiness was processed in plants of that size. And that included 63% processed in megaplants with million-animal annual capacities.
The drive for scale didn't just reduce costs for the large packers; it drove many smaller operators out of business.
Federal antitrust regulators first in the 1980s likewise took a laissez-faire view when it came to reviewing and approving mergers, leading to further consolidation.
Today the beefiness industry is dominated by the Big Four packers: Tyson Foods, JBS Foods, Cargill and National Beef Packing. JBS, based in Brazil, is the world'southward largest meat processing company, and National also is majority endemic past a Brazilian company.
That consolidation also has brought significant changes over the concluding two decades in how cattle go to market.
Historically, packers bid for most of their fat cattle on livestock markets. But today less than a quarter of cattle are bought and sold in such open up marketplaces.
Ryken Lambley, viii, counts bidders at the Valentine Livestock Market.
Packers at present secure the vast bulk of the cattle through culling marketing agreements, or AMAs, in which the packers contract with producers to have cattle delivered on a certain day at a preset price.
Packers prefer such agreements considering today'southward huge plants crave big volumes of cattle, delivered on time, to operate efficiently. The agreements also offer some advantages to feeders, who lock in markets for their cattle and hedge gamble. Packers say the agreements really originated with feeders.
AMAs take also been credited by some with helping to improve the quality of beef, every bit incentives are often congenital into the agreements for cattle that grade higher. Some say such standards may be one reason per-capita U.S. beefiness consumption has actually been on the rise in contempo years after decades of decline in the face of Americans' growing appetite for chicken.
"Make no mistake, (AMAs) improved incentives for cattle producers to invest in beefiness quality, and nosotros take seen the fruits of that," Kansas Country's Tonsor said.
But some cattlemen'southward groups say such agreements provide preferential handling to some select, large feedlot operators; increase packers' control of the cattle supply; and stifle competitive bidding.
The agreements also aren't publicly disclosed, reducing the ability of producers to know what a fair price is. The small number of cattle sold on open markets tend to set up the market cost for all cattle, including those sold through marketing agreements.
Some producers say the lack of competitive bidders for their cattle can often get out them as "cost takers" — forced to accept whatever price the packer is willing to pay.
"There'southward nowhere else to go," said Tom Feller, whose family has been feeding livestock effectually Wisner for more a century. "We have no leverage."
In the sometime days, he said, it wasn't difficult to notice a packing institute ready to bid on your critters once they were ready for market. But now, the message from the packinghouse is often that they're at chapters, either due to as well many cattle or too few workers.
A cow stands in the low waters of the Snake River at the Andrews Ranch in Cody.
Feller said that his fifteen,000-capacity, family-run feedlot — a medium-sized operation — hasn't made money in 5 years due to low cattle prices and ever-rising costs of feed.
"We have record demand and record prices (for beef), but information technology'southward not coming down the ladder," he said.
Information on the growing gap betwixt beef prices and what producers are paid for their cattle make information technology plainly to see why producers like Feller are so upset.
The USDA publishes information for livestock industry "spreads," the gross share of the final consumer beef price that goes to the producer, packing and retail sectors.
The figures show that since 2011, the average price consumers are paying for a pound of beefiness is up more than $2 to nearly $7 — with packers and retailers capturing nearly all of that increase.
The packers' share of the full beef dollar has rocketed up from 35 cents per pound in 2011 to $ane.58 and then far this year. That'due south an increment of more than 350%. The retailers' per-pound share is up, too, from $2.05 to $2.79.
Meanwhile, the producer share of $2.58 per pound is up just slightly from $two.41 a decade ago, despite the much college beef prices. The producer share has also fallen more xx% from the height level of $iii.thirty a pound seen in 2014.
Looking on a percentage basis, the shares of the beef dollar going to packers in the past three years have been the three highest years on record, while the share going to producers represents three of the four lowest on record.
Cattle graze through fields of grass and sunflowers at the Andrews Ranch.
In figures back to the 1970s, in that location has never been a bigger, longer-lasting spread in the retail price of beef and what producers are being paid for their cattle.
For producers, recent falling prices have also been accompanied past higher costs, including much steeper prices for feed corn. According to Tonsor, moo-cow-calf operators on net per cow lost coin in four of five years from 2016 to 2020.
While many economists don't arraign packers for the current market, they say conditions have no dubiety benefited packers, who in some cases are seeing tape profits. Tyson recently reported robust third-quarter earnings. The publicly traded company's stock price is up 25% in the past year.
"It'south definitely a good time to be running a slaughter facility," Tonsor said.
Many producers see ample evidence that consolidation and control of cattle flow have given packers besides much pricing ability. They point to iii contempo events every bit especially shining light on how much packer consolidation is hurting the industry: a 2019 burn down that shut down a massive Tyson plant in Holcomb, Kansas; the COVID-19 outbreaks that disrupted numerous plants in 2020; and a ransomware attack in May against JBS.
In each instance, the plant disruptions stopped or reduced the incoming menstruum of cattle. That left many producers with nowhere to sell their animals and drove downward prices. At the same time, consumers were charged record amounts for beef, and packer profits soared.
Wade Andrews, left, and his son Parker identify different weeds on the Andrews Ranch.
David Wright, who ranches in northeast Nebraska's Holt County, said the incidents showed how packers now have a stranglehold on cattle supply and beef prices.
All they have to do is stop or slow down their production line and they of a sudden create an oversupply of cattle, allowing them to pay producers less. At the aforementioned time, the reduced supply of beefiness at retail lets them charge consumers more.
"During the COVID virus, they figured out pretty rapidly they could kill less cattle and make $i,000 a caput," said Wright, a past president of the Contained Cattlemen of Nebraska.
Hansen, the Nebraska Farmers Union president, said the lack of market players besides leaves producers at the mercy of packer ownership representatives, hoping they will come up out to bid on their cattle. He said he's even seen cases where packer reps retaliated against producers who turned downwardly a bid they considered too low or who criticized the system.
"All they have to exercise is not show up," Hansen said of packer buyers. "That sort of thing goes on all the time. They have all the leverage and command."
Wright said something must be done to convalesce the competitive imbalance. If non, he said, thousands more operators could be forced out of business organization.
"They are going to shove that (cattle) price down and stick the meat price to you higher and college, and the small towns are going to die," he said. "We can all move to Omaha."
Beef industry officials counter it'southward simplistic to blame the recent beefiness margins on consolidation. They note that the industry today is petty more than concentrated than it was two decades ago, a menstruation which covers years-long stretches where producers enjoyed strong margins and profits.
Cattle cantankerous the Snake River at the Andrews Ranch.
They also say what happened in cattle beef markets after the recent black swan events was simple supply and demand at work. Cattle prices fall when at that place's an crowd, and beef prices volition ascent when at that place are shortages.
Packers representatives contend they compete intensely for both cattle and consumers, and say they can't succeed if producers don't.
"We rely on these farmers and producers and want them to be successful," Tyson's Miller said.
The North American Meat Constitute, which represents the packing manufacture, said the disruptions brought on by COVID-nineteen in 2020 take continued into this year in the grade of labor shortages, still limiting the ability for plants to operate at full capacity.
Firms accept been raising wages to try to attract more workers, NAMI officials said. They also note the meatpacking industry is an important one in Nebraska. It employs more than than 26,000 workers, including many immigrants, refugees and others willing to take on the difficult work.
NAMI also said the kink in the cattle supply chain is straightening itself out, as indicated past recent rise cattle prices and higher futures markets.
Historical figures on the size of the U.Due south. cattle herd and cattle prices indeed do show the two tend to ascent and autumn in relation to each other. But that doesn't mean herd size explains the historical magnitude of the contempo toll changes for both cattlemen and consumers.
Nor does it prove that beefiness markets are fair, balanced and working properly for all — including the consumers who enjoy a good steak.
The level of business organization among beef producers was evidenced earlier this year in an unprecedented coming together of all the major groups representing beef producers, among them the American Farm Bureau Federation, National Cattlemen'south Beef Association, National Farmers Union, R-Dogie USA and the U.Southward. Cattlemen'southward Association.
The beef industry has historically been fragmented, with lots of disagreement and fighting among the groups, Tonsor said. "It is telling that they got together to play nice for the first time ever."
The Nebraska Cattlemen likewise is believed to be the first beef organization to call for a federal investigation of the packers, which it did in April 2020. Other national organizations joined in, and then-President Donald Trump also urged an investigation, which is believed to be ongoing.
Pete McClymont, executive vice president of the Nebraska Cattlemen, said information technology's frustrating to run into packers making hundreds of dollars per caput while "we're trying to exist."
"Packers and cowboys have been fighting always since there's been packers and cowboys," McClymont said. "Nosotros've just had such a long, extended time when people aren't making money. So something has to give."
Meanwhile, producers like Andrews are trying to hang on.
On his vast Cherry County ranch, he has cut back, delayed buying new equipment and dug into savings. He'southward looking at cutting dorsum his herd as much equally 20%, citing dry weather and college expenses to feed cattle.
His neighbor's son recently left for a college paying job in the city, and he worries whether his sixteen-year-old son volition acquit on the family unit tradition of raising a line of calves whose genetics take been developed over a century.
"I'll muddle through it," Andrews said, "merely the adjacent generation?
"Why would yous encourage someone to become into this field when you lot work your barrel off for minimum wages? It's not like we're doing nothin'. We're providing nutrient."
What does Nebraska sell? The country'south biggest exports by value
Soybeans
Soybeans and soybean products take consistently been Nebraska'southward chief export. In 2019, the land sent $one.73 billion worth overseas.
Beefiness
Where's the beef? Thanks to Nebraska, information technology's all around the world. The state has more cattle than people, and in 2019, it exported $1.35 billion in beef and beef products, a 96% increment from 2010.
Corn
It should be no surprise that the Cornhusker State sells a lot of corn. In 2019, Nebraska exported $966 one thousand thousand worth of corn.
Nuclear parts
Nebraska'due south main not-agronomics consign is nuclear components, which totaled $920 meg in 2019.
Pork
Cattle is king in Nebraska, but producers like this family subcontract in Osmond, Nebraska, exported $472 million of pork products in 2019.
Miscellaneous chemicals
Chemicals are among Nebraska's fastest-growing exports. The state sent $372 million worth overseas in 2019, a 403% increase from 2010.
Medical instruments
The land exported almost $370 million in medical and surgical supplies in 2019.
Source: https://omaha.com/news/local/the-state-of-beef-nebraska-s-most-important-ag-sector-faces-uncertain-future/article_b5c967a6-1baf-11ec-857a-37ef6d6fb1e6.html
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