America’s beef industry is in certain respects even more consolidated than other animal industries. Some 84% of beef slaughter is controlled by four companies: Tyson, JBS, Cargill, and National Beef. But concentration in the beef industry looks different than in other animal agriculture production. Cows have only one calf each year, rather than the many chicks or piglets born by hens and sows. And it often takes more than a year before this calf grows big enough for slaughter. These characteristics mean that cattle farming is still largely unsuited for the many of the forms of vertical integration that now define chicken and hog farming.
Until recently, the beef market was a model of open, competitive markets. Independent ranchers bred and raised their own cattle, then sold them to independent feedlots, which fattened the cows and sold them to independent slaughterhouses. At each stage of the process, stakeholders were paid a fair price, based on the sale of cattle in competitive auctions. But beginning in the 1980s, a few large slaughterhouse corporations began to consolidate their hold on all stages of the business. Just in that decade, the number of cattle-feeding operations in the largest cattle states dropped by 40%.
Such consolidation means today there are fewer buyers available to bid for cattle at market. In many regions of the country, ranchers report finding as few as two buyers in a market, and increasingly these buyers do not compete against one another. One result of this consolidation is that ranchers earn far less profit per head of cattle than they did 30 years ago. Between 1981 and 1994 farmers averaged $36 per head in profits, but that amount dropped to $14 between 1995 and 2008. Another result is that there are many fewer ranchers. Since 1996, an average of nearly 11,000 have gone out of business in the U.S. every year. Today there are around 620,000 beef cattle operations.
In many parts of the country, meatpackers have further increased their power over independent ranchers by going into the business of owning their own animals before slaughter. Such vertical integration gives the packers more control over when they must turn to outside suppliers for the cattle they slaughter, hence how much they have to pay the independent ranchers. Many states, including Oklahoma, Nebraska, Minnesota, and Iowa, have long had laws on the books that restrict corporate ownership of livestock and land. But in recent years the meat industry has managed to overturn most of those laws. In 2015, an anti-corporate farming law in Nebraska, the last of such laws still in effect, was nearly repealed by politicians and interest groups aligned with Big Ag.
Traditionally, such consolidation would have meant that packers could charge retailers – and therefore consumers – more. But the massive consolidation in the grocery business has limited the pricing power of even the biggest slaughterhouse corporations. In general, it is giant grocers like Walmart and Albertsons that capture most of the money farmers used to earn. Between 2000 and 2010, consumer prices for beef and pork increased by 40%, but the gross income of small- and medium-sized cattle and pig operations fell by over $7 billion in that same time span. The profits of large retailers account for this growing discrepancy.
The size of the U.S. cattle herd has been declining for many years, since reaching a peak of 132 million head in 1975. Reasons include a per capita decline in eating of all meat, a shift by American eaters from beef to poultry and pork, and more competition from places like Canada, Mexico, and Brazil. In recent years, the extreme drought across much of the west, and resulting higher slaughter rate, has pushed the herd size down even further. In 2015, the herd size did grow for just the second time in 63 years, by 1% to 89.8 million head of cattle.
Increasingly, the most powerful beef packers are foreign-owned. The biggest player in the American beef industry is the Brazilian-owned company JBS, which is also the largest beef company in the world, and which is also one of the world’s largest producers of poultry and pork. JBS has very close ties to the Brazilian government. In 2007 when it became a publicly traded company in Brazil, JBS received a $390 million investment from the Brazilian Development Bank, a government-controlled bank that funds development projects in the country. This investment helped to fund JBS’s 2007 purchase of Swift & Company, then the third largest beef and pork processor in the United States, and its 2008 purchase of Smithfield’s beef operations. Today, Brazil’s government directly controls about 25% of JBS.
Marfrig Global Foods is another key Brazilian player in the beef industry. Marfrig is the third-largest food processor in Brazil, and the fourth-largest beef producer in the world. Marfrig acquired Keystone Foods, a Pennsylvania-based meat processor, in 2010.
This role of the Brazilian state in funding these companies has led some Americans to question whether JBS and Marfrig would have accomplished this level of dominance in the meat industry without government support. For Americans, this relationship means that the Brazilian government is involved in regulating the U.S.’s meat supply, hence the price the consumer must pay for meat, as well as the price the farmer and rancher receives for growing that meat.
The U.S. government has regulated competition among big beef packers for almost a century. Following hearings on concentration in the meat industry in 1919, a solidly Republican Congress passed the Packers and Stockyards Act of 1921. That Act meant to limit packers’ ability to create monopolies, engage in unfair pricing practices, or otherwise manipulate the meat market. The Act was successful in containing the power of the largest meatpackers, and by 1980 the top four packers controlled just 30% of the meat industry. In 2008 Barack Obama, then a candidate for president, promised to strengthen enforcement of the Packers and Stockyards Act and in 2010 his Administration held five hearings on concentration in agriculture. But so far those hearings have had little effect.
The highly consolidated nature of the beef industry in the U.S. also harms the welfare of workers, animals, and the environment. The enormous amount of manure produced by industrial feedlots can spill into rivers and lakes, leach into groundwater, and thereby enter municipal water systems. The close quarters in which animals are kept in contained animal feeding operations (or CAFOs) leads to air pollution for nearby residents, often resulting in asthma or other health conditions. Cattle kept in confinement are more likely to be exposed to diseases, requiring more antibiotic treatment and contributing to human over-consumption of antibiotics and the decrease in antibiotic efficacy. Slaughterhouse workers are also endangered by the industrial beef industry, as described in more detail on our Slaughterhouse Workers page.