I’ve been reading extensively about factors affecting the food supply pipeline in particular, ever since this became an issue during the COVID-19 pandemic. I came across a very interesting article from 2011, examining the meat-packing industry and the problems it’s causing for ranchers and farmers. It’s ten years old, but from what I’ve been able to confirm, the situation has only grown worse since then.
It’s a very long article, but worth reading in full. I’ve chosen one excerpt to whet your appetite. (Remember, the statistics date from ten years ago.)
The price a rancher gets for beef, adjusted for inflation, dropped from $1.97 to 93 cents per pound between 1980 and 2009 … The number of U.S. cattle producers has plummeted from 1.6 million in 1980 to 950,000 today … Four giant companies — Tyson, Cargill, Brazil-based JBS, and National Beef — now control about 80 percent of the U.S. beef market.
. . .
The meatpackers’ power derives from the industry’s structure, which resembles a pyramid. At the bottom are the “cow-calf” producers — mostly hundreds of thousands of mom-and-pop operations. They’re the ranchers who cope with feeding and calving in the depths of winter, graze their cows on private pasture and public lands in the summer, and then round them up for sale, either to a feedlot or to a “backgrounder” who fattens them up for resale to a feedlot. The feedlots typically keep the cows for only a few weeks of a get-fat-quick diet and then sell them to the meatpackers. There’s just a brief window of time when the cattle can be sold at their prime — and that gives the meatpackers leverage.
Randy Stevenson, who owns Double S Livestock LLC, a 6,000-cow-capacity backgrounding operation in Wheatland, Wyo., says he’s felt the packers’ power. From 1985 until a few years ago, he ran a feedlot, but his meatpacker troubles led him to switch to backgrounding, where he can sell to feedlots instead of packers. “I got educated on this out of necessity,” says Stevenson, who attended the Fort Collins workshop.
Beginning in the 1990s, Stevenson explains, the number of cattle buyers coming to his feedlot dropped to the point where he’d have just one stopping by once a week. That made it impossible for him to bargain among buyers and get the best price for his cattle. One time a few years ago, a lone “field buyer” stopped by and offered $1.03 per pound for the four truckloads of cattle on Stevenson’s lot. Stevenson says he tried to negotiate by offering to throw in five more truckloads if the buyer could offer $1.04. The buyer went back to his office to call his boss and ask if he could bid higher for the larger quantity. Then he called Stevenson to relay a counteroffer. “The field buyer was kind of grumbling,” Stevenson recalls. “I said, ‘Well, what’d (the boss) say?’”
“‘Tell him to go to hell,’” said the buyer. “‘It’s two and a half if they want to do anything.’” The boss had gotten so angry at Stevenson for trying to negotiate a better price that he dropped his offer a half cent per pound — just to teach the feedlot owner a lesson in who really controlled the deal, Stevenson says. And since Stevenson’s cattle were ready, and he had no one else to sell to, that was the price he ended up taking.
“This situation is what I call economic waterboarding,” says Stevenson. It happens when sellers are limited in who they can sell to — one meatpacker instead of 20. The impacts are obvious: 30,000 small feedlots have closed shop in the past 15 years, says R-CALF’s Bullard.
Cattlemen have another word for what’s happening: “chickenization.”
More than 90 percent of all poultry in the U.S. is now raised by growers who don’t own the birds or negotiate basic terms like price per pound. Over the past 50 years, chicken packers (known as integrators) like Tyson, Perdue, and Pilgrim’s Pride have talked chicken farmers into signing contracts that lock them into a relationship, rather than selling and buying birds on the open market. At first, farmers were pleased, because it gave them a guaranteed sale and a price they could count on. But over time, as the big poultry packers gained control of the majority of chickens raised in the U.S., the terms of the contracts deteriorated.
Many chicken farmers these days are forced, contractually, to invest hundreds of thousands of dollars in chicken houses that meet ever-changing packer specifications for feeding systems. Farmers often start off with five-year contracts and invest based on the assumption they’ll be in the business long term. After the initial contract period, though, poultry packers sometimes shorten contracts to a year or even a few months, putting more pressure on the farmers to cooperate. Meanwhile, nearly all chicken farmers get their chicks from the poultry packers. Sometimes the chicks are puny because they come from either very young birds or very old ones that tend to lay small eggs. The poultry packers constantly experiment with different breeds to find chickens that gain weight more rapidly, but it’s just the luck of the draw as to which chicks a farmer gets. Since farmers are paid by how well their chickens convert feed to weight, any farmer with a puny flock will do worse than other farmers. About the only way a farmer can get ahead is by investing in pricey technology that may give him a bit of an edge over his neighbor.
It’s a perfect system from the poultry packers’ perspective: The chicken farmers take on the risk and the capital investment, and the packers can cancel their contracts at almost any time. Many chicken farmers complain about take-it-or-leave-it contracts and financial promises that never come true. But if they protest or look for a different buyer, retaliation may follow in the form of contract termination — leaving the farmer deeply in debt, surrounded by piles of chicken manure, a pollution liability, and with no alternate buyer to turn to, since there is frequently only one buyer in a region.
In Fort Collins, Vilsack said that during an Alabama hearing on competition in the poultry industry last May, many farmers complained about their contracts being shortened to 90 days — which he called “flock-to-flock contracts” — and “we heard many stories of people who were reluctant to speak because of fear they’d be retaliated against.”
That’s what it means to be chickenized. And hog farmers have experienced the same.
There’s much more at the link.
Perhaps the farmers among our readers could tell us in Comments whether they still find this same problem, or whether it’s gotten worse or better. Sources I’ve consulted say it’s the same or worse (usually the latter).
The COVID-19 pandemic has led to the rise in popularity of an alternative for farmers and ranchers. People are becoming “locavores“, buying produce locally from farmers they know, usually paying higher than supermarket prices, but getting fresher, higher-quality produce. For example, there are several small ranchers in our area who sell quarter-, half- or full cows directly to consumers. The price works out (at present) to about $6 per pound, hanging weight, which sounds expensive until you realize that’s across the entire selection of cuts. Your ground beef costs $6 per pound, which is high; but so does your filet mignon or sirloin steak or standing rib roast, which is very reasonable indeed. I guess it averages out about right. You can also specify (within reason) how you want your half-cow cut up, roasts or steaks or ground beef. (You’ll need enough freezer space for everything, of course. Half a cow is a lot of meat!)
If large food processors and distributors are going to be hamstrung by the supply chain logjam, we might all do well to start establishing contact with local suppliers and getting on their customer lists. It won’t do to wait until there’s nothing else available, only to be told that your neighbors have got in ahead of you and there’s nothing left.
My cousin does well selling directly to the end user, a restaurant in NYC.
Buyer typically buys 1-2 beefers a week, he deals with the butcher directly and moved the butchered carcass to his facilities in his own refrigerated box truck the 150 miles to the city.
This was during the COVID shut down as well. The buyer told my cousin he expects to double his business this year and the local butcher is also seeing demand out strip availablity.
I guess the successful model is staying local as much as possible.
Yearrrrrrrrrrrrrrrrs ago, when I was in college, I worked on the U's poultry farm for 3 summers. Yes, I was in Poultry Husbandry, until they caught me at it (That's a JOKE, folks; I SAY, that there's a JOKE!
I also liked the "Chicken Man" 5-minute episodes on local AM radio.
We have been keeping a few months supply of food on hand for years and decided going into 2020 to increase that to the best of our ability. We started buying half a beef that is grass fed from a reasonably local farm that has it custom cut, vacuum sealed and frozen for us by a local meat processing business. Our pork and poultry we shop the sales in volume at local markets. We keep a full pantry backed up with an even fuller deep pantry and have dozens of 5 gallon food safe pails with Mylar bags & O-2 absorbers filled with flours, grains, beans & legumes, rice, pasta and other items. We also invested over time in a supply of dehydrated fruits, veggies, meats and entrees. Food insurance is going to be essential in the dark days of the Great Reset ahead.
We live in the eastern part of the western NC mountains which is Tyson country. Tyson had a big processing plant in a town of 3.700 people about 45 minutes from where we live tucked away at the end of a relatively remote mountain gravel road. As you drive around the county you see Tyson signs out by the road side of many poultry farms. I believe Tyson trucks in the feed as well as picks up the chickens to take to be processed.
Having lived in 7 states over the last 35-40 years in mostly rural counties we have witnessed first had the centralization by a minority of corporations of the agriculture industry and the slow painful death of many local family farms. But it is much worse than it seems. Black Rock, Vanguard, State Street and to a lessor extent Brookshire Hathaway have control of all of our industries from agriculture to food processing to the medical industry and the list goes on and on.
The board of directors of these investment companies call all of the shots in every major company so in reality there is no real competition just the elites made up of the familiar family names slowly working at the globalist end game, The Great Reset. Even these investment companies own a share in each other with board members from the same families so there is little competition between them.
Lastly do not forget who is the largest owner of agricultural land here in the US, Bill Gates. The man who thinks you should be eating lab grown meat and on vaccines plus boosters for life who also believe in depopulation of the planet. Yeah I know it all sounds like tin foil hat conspiracy theories and they will push that narrative to marginalize any opposition. The Great reset cannot be stopped nor can the 4th turning which is well under way. There is no voting our way out of this and that has been evident for years, just more of the same old uni-party going along to get along. It is a big club and we aren't in it.
There is no winning back the republic for it has been dead for decades. Sometimes you don'y win, you just prepare to survive. Sadly right now that should be our goal at this point. Plan to survive and come out the other side of this 4th turning and the Great Reset hoping to be part of the remnant that just might have a chance to really "build back better". Remember in the end God wins and may he have mercy on those who look to Him and recognize the greatest gift he could have ever given us, salvation through His Son Jesus Christ.
Your strategy is the same strategy my family is pursuing. Dozens of 5 gallon buckets with Mylar bags and oxygen absorbers. Three small freezers filled with grass fed beef. Mountain house freeze dried packets. wood burning stoves and six cords of wood. This will last us 3 years. Hand pump for the well and a Burke water filtration system with three years worth of filters. Wish I could get relocated out of the blue state I am currently in and to a deep red state. Planning the move in June 2022, however, I am not sure that will be soon enough. Trying to get my very young grandchildren to saftey.
I had visited Saint Petersburg, Russia, last October. Meat in the markets was inexpensive, and what would be restaurant grade in the US.
Meat that would sell in a US supermarket were used only for sausage in Russia.
Yes, big meat corps are driving smaller packers out of business with regulation and contract trusts. And we get to eat expensive monopoly produced meat.
Indiana must be doing better on beef prices. We recently contracted for a January delivery of 1/2 a beef. We will be getting 400 LBs for $1300. About 1/4 of it is going to be ground beef.
We paid $3.50 pound for the half of grass fed beef we purchased here in NC but that was hanging weight so the yield in meat was less than that. We took it all including excess fat/suet and all the bones which we froze along with everything else. Over time we have been processing the bones into bone broth and canning it. Bone broth is very rich in nutrients and minerals, Much better than the commercial broth you buy in the store. having a lot of ground beef we have been making batches of jerky from some of it.
The other half of this equation can be spelled with 4 letters:
I USED to be in the sheep/lamb, angora goat business here on our farm. No more. This article explains it exactly as far as meat is concerned. Then there was the NAFTA, GATT, WTO deals that destroyed the US fabric industry and that finished it for tens of thousands of us on the farms and ranches.. The elite got rich and we who did the work went broke. —ken
Granny we were lucky enough to retire to our mountain homestead 5 years ago in a very rural "red" county in NC when my partner and I sold our shares in the company to the junior management group. Like you we have 4 freezers fully stocked and a 24 KW whole house generator and a 1000 gallon underground propane tank. Our well is a true artesian and even without electricity will supply water to the ground floor of our house as it has a run off rate of 2-3 gallons a minute out the overflow pipe. Our property has two run round strong running creeks, multiple springs and a one and a half acre spring fed pond that is also fed from a pipe in the creek that is fully stocked with bass and black crappie. Our daughter and her family including 3 grand children relocated to a small town about a 45 minute drive away and can get to our homestead utilizing back rural roads. I sincerely hope you are able to make your move before that becomes impossible. Hopefully real estate prices stabilize because that market now has seen incredible inflationary increases as have many other areas. Food insurance is essential and I suggest that everyone invest whatever they can afford to in long term storage food even at today's inflated prices. It will only get much worse. Money sitting in a bank or a 401K will lose value but stored food will not.