This Week In Ag #180
Where’s the beef?
That infamous line, first uttered in 1984 by then 81-year-old Clara Peller, was part of Wendy’s iconic advertising campaign that compared their thick burgers to the slivers of beef sold by McDonald’s and other fast-food competitors. Now, a better question may be:
Where’s the beef from?
Last week the Trump administration announced its intention to import 300,000 metric tons of beef, while lifting tariffs for 90 days. This imported beef is to be subsidized at 25% below current market prices. The rationale, according to the administration, is to address high food prices. Retail beef prices are 10% above last year. According to the leader of the USDA, it’s a move that is “putting our ranchers FIRST.” I’d love for someone to explain to me how this move puts our ranchers first.
A detail left out of this announcement was: where exactly will this beef come from? This brings up a major point of frustration. There is no mandatory country-of-origin labeling (COOL) law that requires retailers to list the exact country where the animal was born, raised and slaughtered.
This year, a loophole was closed that permitted cattle born, raised and slaughtered outside the USA to be labeled as Made in the USA as long as the final product was packaged within the USA. In addition, voluntary labeling was instituted for Made in the USA. But that does not go far enough. To show transparency, COOL must be mandatory.
The problem is, four companies — Cargill, JBS, Tyson and National Beef Packing (two of whom are foreign-owned) — control 85% of beef processing. They monopolize retail meat counters.
How much money will consumers actually save on this discounted beef at the checkout aisle? Or will this be a boom to the packers? Will packers simply mix cheaper foreign beef with US product and pocket much of the difference? Without COOL, there is no way to know. Nor is there any way for consumers to choose.
US cattle numbers have reached their lowest level in 75 years. Beef prices are at historically high levels. Yet for every dollar consumers spend on beef, the rancher’s share is about 35 cents. That’s down from 60 cents in 1980. Meanwhile, the USA has lost over 17% of its cattle ranches since 2017. That’s more than 150,000 producers.
Recent droughts across the Plains dramatically shortened feed supplies, forcing many producers to cull their herds. Production costs have soared, along with interest rates and other inflationary factors, further shrinking rancher margins.
Replenishing herds is a slow and costly process. Gestation periods for cows are over 9 months. From the moment a replacement heifer is born, you’ll wait well over three years before her calf is ready for market. Meanwhile, packing plants continue to close and scale output. And the ability for cattlemen to sell directly to consumers is fraught with federal regulations on small-scale processors and producers.
The market’s reaction to last week’s announcement was predictable. Feeder cattle dropped over $4; live cattle lost nearly $4. Nor is the timing rancher-friendly. Now is when many cattlemen receive their annual paychecks, and it’s the time when they make future herd decisions. Will these lower prices encourage cattlemen to hold back heifers? Most likely, it will have the opposite effect.
As TWIA has opined multiple times, no producer segment within the ag industry is more proud, passionate, and loyal to their trade than ranchers. Ranching defines who you are, and it remains in your blood forever. As a former beef producer who married a cowgirl, we resemble that remark. So yes, in full disclosure, this is an issue I’m fiercely passionate about.
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