LINCOLN, Nebraska: Nebraska rancher Rusty Kemp has complained for years about the low prices paid for his cattle, even as the cost of beef at groceries continued to rise.
This issue has been blamed on the consolidation of the beef industry, which started in the 1970s, which resulted in four companies, Cargill, JBS, Tyson Foods and National Beef Packing, accounting for over 80 percent of U.S. beef processing, enabling processors to set prices while ranchers struggled to make a living.
According to federal data, for every dollar spent on food, the share that went to ranchers and farmers dropped from 35 cents in the 1970s to 14 cents currently.
Kemp, therefore, drafted a plan to raise more than $300 million from other ranchers to build their own Meanwhile, construction has begun on a plant owned by the company, Sustainable Beef. Other groups are also planning to build their own plants in Iowa, Idaho and Wisconsin.
"We have been complaining about it for 30 years. It is probably time somebody does something about it," said Kemp, as quoted by ABC News.
The U.S. Department of Agriculture is also encouraging the creation of a more diverse supply chain in the beef industry, allocating $650 million to fund the construction of mid-size and small meat and poultry plants, along with $100 million in loan guarantees.
However, the new players face considerable challenges going up against large, well-financed competitors that run highly efficient plants and can sell beef at prices they will struggle to match.
David Briggs, CEO of Sustainable Beef, acknowledged the difficulties, but stressed that his company's investors remain confident, stating, "Cattle people are risk takers and they are ready to take a risk," according to ABC News.
But the COVID-19 pandemic, which infected many workers, slowed production and even closed some of the major plants, and a cyberattack last summer briefly shutdown production at JBS plants until the company paid an $11 million ransom, highlighted the problems caused by the concentration in production.
The Biden administration also blamed the 14 percent increase in beef prices from December 2020 to August 2021 on the lack of competition.
In response, the North American Meat Institute, a trade group that includes large and medium-scale plants, said the shortage of workers is the industry's largest challenge.
However, Tyson Fresh Meats group president Shane Miller said it is unfair to blame the big companies and consolidation for the industry's problems.
In July, he told a senate committee, "Many meat processing companies, including Tyson, cannot run their facilities at capacity, in spite of ample cattle supply. There are simply not enough workers to fill our plants.