While small- to mid-sized beef operations can take advantage of state inspected facilities and custom-exempt processors to sell direct to restaurants, stores and consumers, ranchers with large cattle operations are relegated to relying on the four major processing plants in the U.S. and internationally who continue to dominate the market.

Apart from drought and lukewarm beef markets, the greater long-term problem plaguing Wyoming’s beef industry is what some see as a power grab by the world’s four biggest meat processors.

While small- to mid-sized beef operations can take advantage of state inspected facilities and custom-exempt processors to sell direct to restaurants, stores and consumers, ranchers with large cattle operations are relegated to relying on the four major processing plants in the U.S. and internationally who continue to dominate the market.

The pandemic exasperated an already bad situation, as bottlenecks such as outbreaks in facilities, and most recently a ransomware attack at monolith JBS, forced many producers to slaughter animals that went to waste as prices soared and meat cases remained sparse to empty.

As time continued to pass, many producers in Wyoming and neighboring states saw the situation getting much worse, not better.

Speaking to the U.S. Senate Committee on Agriculture, Nutrition and Forestry on June 23, Justin Tupper, Saint Onge, South Dakota rancher and vice president of the U.S. Cattlemen’s Association, laid out the history of the four major packing firms: JBS, Tyson, Cargill and National Beef.

In 1977, Tupper explained, the four firms accounted for only 25% of the country’s total slaughter capacity, but today dominate about 85% of the market, according to data from the U.S. Department of Agriculture. Two of the companies are owned and operated in Brazil.

“Though the industry has been steadily building to this boiling point,” Tupper told Congress in his testimony, “three separate events in 2019, 2020 and 2021 served to heighten awareness of the increased level of concentration in the meatpacking sector.”

Tupper is referring to a fire at Tyson’s Finney County Beef Plant in Kansas in 2019 that heavily impacted the daily feeder and cattle futures market in favor of the plant, not the consumer.

He referenced a report that came out from Kansas State University following the fire that showed a loss in value for finished steers of just under $185, while packer margin spiked to nearly four times their average, just under $550.

A positive return for cattle feeders on finished steers and heifers was predicted for May 2020, which never occurred due to the rapidly spreading pandemic that further brought the industry to its knees.

And in March 2021, JBS was shut down by a ransomware attack. Together, the three incidents caught the attention of lawmakers, media and the public, Tupper told Congress, and now’s he asking for lawmakers to make meaningful change to create a more fair playing field for producers.

Tupper touted a new bill introduced by Democratic Sen. John Tester of Montana, Iowa Republican Sen. Charles Grassley and Republican Sen. Mike Rounds of South Dakota that would amend the Packers and Stockyards Act of 1921 to allow for a special investigator to look into competition and price gouging.

The bill would give the USDA and other federal agencies legal power to investigate corruption and anti-competitive practices, as well as more transparency in pricing and federal incentives for the building of more independent processors.

Speaking on behalf of the USCA, Tupper also asked for greater truth in country-of-origin labeling that would require that all beef receiving this label be born, raised and harvested in the United States. Current rules grant beef products the label even if just a small portion of the foreign product was trimmed, rewrapped or blended with a percentage of American beef.

Jim Magagna, executive vice president of the Wyoming Stock Growers Association, welcomed Tupper’s testimony, noting the positive impact these policies would have on large Wyoming cattle producers.

Meanwhile, Magagna touted a handful of recent positive developments impacting small and mid-size producers throughout the state. Among those include the 2020 expansion to the Wyoming Food Freedom Act, introduced by former Republican lawmaker and rancher Tyler Lindholm, that expanded the law to allow ranchers to cut out the middleman and sell beef directly to consumers.

Legislation passed this spring, including HB 51, which created an expansion grant program to help expand existing processing facilities, and HB 54 that directed Wyoming Business Council to offer more support to the state’s ag industry, are good signs.

Currently, there are 37 state-inspected and custom-exempt processing facilities in the state, according to Derek Grant with the Wyoming Department of Agriculture. Ten of these are state-inspected meat plants from Rock Springs to Jackson to Buffalo and Laramie, and the rest are custom-exempt, in which livestock owners can process beef for personal consumption only.

State-inspected facilities, meanwhile, allow producers to sell beef to restaurants, stores and customers within Wyoming, but not across state lines.

Currently, Wyoming has three USDA-certified processing facilities that allows the beef to be sold across state lines, including Wyoming Legacy Meats in Cody, and new additions Western Heritage Meat Company in Sheridan and Genuine Meats in Fremont County.

“Two years ago, we only had one USDA-certified processing plant,” Magagna said, “which is a huge improvement.”

Nationally, U.S. Rep. Liz Cheney, R-Wyo., hopes to further open new markets for Wyoming producers with the March introduction of the Expanding Markets for State-Inspected Meat Processors Act of 2021. If adopted, the legislation would allow state-inspected meats to be sold across state lines on the basis that state inspection programs are equal to those of the federal government – an idea endorsed widely by the Wyoming Stock Growers, several state legislators and Gov. Mark Gordon.

Gordon also announced he was extending the Wyoming Meat Processing Expansion Grant 2.0 Program in June that allocates up to $2 million in federal CARES Act funds to provide support for Wyoming processors and citizens impacted by supply chain disruptions and regional shutdowns of processing facilities.

News of increased processing capabilities and potential legislation on the table to help eradicate supply side blockages could help even the playing field to increase profits for producers. Some, like Acacia Elkins, rancher and ag and commercial loan officer in Gillette, have heard these promises before, but remain cautiously optimistic that anything will be done to break up what she sees as the big four monopoly that continues to hamstring large-scale producers like her family.

“Wyoming is not the squeaky wheel and probably never will be,” she said.

She’d like to see the state delegation have more first-hand understanding on the dynamics of the ranching industry in order to understand the real-life issues facing the state’s ag producers.

“We need people who have gotten their hands dirty,” she said, “to have a better understanding of what we’re facing and a willingness to put in the effort to get things done.”

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