Cattle producers hope to address profit gap against meatpacking corporations

Published: May. 28, 2021 at 6:57 PM CDT
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RAPID CITY, S.D. (KOTA) - Demand for beef, both in the U.S. and in export markets is strong. That should be good news for farmers and ranchers in the area.

So why are cattle producers struggling to make a profit while, on the other hand, corporate meatpackers are making a lot of money?

Recently, several stock growers and cattleman’s groups met to discuss possible producer-led solutions to address the gap between profits earned by the four biggest meatpacking companies in the country, and the profits of the cattle producers themselves. According to Real Agriculture, packers earn around $1,000 per head, while feed yards only see about a $100 profit.

President of the South Dakota Cattleman’s Association Eric Jennings said that these disparities have been there for a long time but have received more notoriety because of the COVID-19 pandemic. He says the four packing corporations still have a stronghold on the industry.

“If there are only four companies, is there some collusion going on?” Jennings asks. “Are they working together to keep the bids intentionally low? More competition is always better if you’re selling something. So, it would be beneficial if we had more packing companies involved.”

Lawmakers are also expressing concerns over the profit margins. Governor Kristi Noem, along with 5 other governors, signed a letter to the U.S. Justice Department asking them to continue the investigation into the packing industry to see if the packers may be influencing cattle prices.

Noem said on Twitter that consolidation of the meatpacking market severely limits where producers can sell their cattle.

But Rapid City meat shop owner Tanner Spilde wants to make sure that area ranchers have a fair shot and is using his shop as a custom exempt meat processer.

“They’re paying much less for their beef and getting it in their freezer and saving thousands of dollars over the course of a year, as opposed to buying single cuts or small amounts at a time,” Spilde said.

While custom exempt meat processing isn’t regulated by the USDA, processing must be sanitary and can only be used for the personal use of the owner of the animal.

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