AGs from beef-producing states request investigation

One of the joys of living in Wyoming is to see the miracle of life every spring. As the snowbanks disappear, pastures are turning a vibrant green. Then, they become dotted with newborn animals. It is the calving-lambing season.

For those who are not ranchers themselves, calves in the pastures are cute. But for the families who own those fields, the calving season is an annual gift from God to sustain them for another year.

Agriculture in Wyoming annually produces about $2 billion for Wyoming’s ranchers, shepherds and farmers. It is our third-largest industry — right up there with minerals and tourism. It is also the oldest industry in the state. Ranching brought cowboys to Wyoming long before Yellowstone was made a National Park in 1872, or the first oil well was drilled in 1884.

The cattle industry, in particular, runs 1.32 million head on 30.1 million acres of Wyoming land. That’s nearly half of Wyoming’s total acreage. Many millions more acres are leased for grazing rights.

These, however, are sterile statistics. The real story is told by families like Wes Lupher’s from Bridger Valley. He operates a family-owned farm that consists of about 240 cattle on 2,500 acres (about 1,000 of those acres are leased). This size of operation is able to partially support about six people — their incomes could be supplemented by a job in town that provides insurance for the family and some additional cash income.

The Lupher family is just one of 11,000 ranching families in Wyoming. Distress in the cattle industry doesn’t stress cows or faceless corporations. It impacts people like Wes. Of course, every industry in the country has been disrupted by the flu that originated in Wuhan, China. But for reasons that are completely unrelated to the coronavirus, the cattle industry faces a greater threat than most.

It is not every day that an attorney general asks the Department of Justice to investigate. But on May 5, not only one, but 11 attorneys general addressed a letter to Bill Barr, attorney general of the United States. It asks the Department of Justice to investigate the beef packing industry for violations of antitrust laws.

Bridget Hill, Wyoming’s attorney general, added her signature to a two-page letter along with AGs from North Dakota, Colorado, Missouri, Montana, Arizona, Idaho, Iowa, Minnesota, Nebraska and South Dakota. For the average consumer of beef, it would be difficult to understand how ranchers can be in trouble when the price of beef at the grocery store has spiked.

According to IRI Worldwide, grocery store prices in March were nearly double what they were in March of last year. In one week, alone, boxed beef prices (the cost that retailers pay to the packing plant) increased by 25%. For the consumer, the USDA reported that the same package of ground beef that cost $3.79 on April 2, cost $4.96 by April 9. That’s more than a 30% increase in the course of a week.

You might think that such pricing is making Wyoming ranchers rich. But just the opposite is happening. Since January, the price that our ranchers can get from the sale of an animal has dropped almost 20% below the five-year average. Nonie Proffit, an Evanston rancher, explains that this means a family has to run more cows at a lower price, just to make ends meet. Those operations unable to field more than 100-200 head are hardest hit.

With prices at the sale-barn down by 20% and prices at the grocery store up by 100%, who is raking in the profits? According to the letter addressed to Barr, “The U.S. beef processing market is highly concentrated, with the four largest beef processors controlling 80 percent of U. S. beef processing. In this highly concentrated industry, meat packers have achieved sizeable profit margins.”

It is highly problematic that so few corporations own so much of the packing industry. In a fair free-market environment, rival packers compete to buy cattle from the ranchers — driving up prices at the sale barn. These same rivals then compete to sell their products by increasing quality and lowering prices to the retail outlets.

But when there are only a few controlling so much of the market, it becomes what the 11 attorneys general called an “oligopolistic industry.” In plain language, it means that “firms can engage in tacit — or even express — collusion, providing artificially low prices to suppliers (e.g. farmers and ranchers) and inflating prices to consumers.” That possibility is what they asked the Department of Justice to investigate.

The concentration of market power is a significant problem. But there are others. A second problem is the enforcement of the Packers and Stockyard Act of 1921. This federal law intended to keep meat packing corporations from owning livestock and thus, being able to manipulate the price at the sale barn.

Muddy rules and regulations have hampered the USDA’s willingness and ability to enforce certain provisions of this act. This also has adversely impacted ranchers. In January, the USDA proposed several rule changes. These should be watched closely.

Finally, beef imported from South American countries can undercut market prices because both the beef producers and the packers are operating under less stringent quality control.

While beef raised and packed in foreign countries can certainly compete in the market for American consumers, those consumers should know what they are buying. Legislation that would require packers to label meat with its country of origin would help American producers with higher standards to compete on a more level playing field.

While America formally has such laws on the books, they have not been enforced since 2016. Loopholes enable companies to import meat from foreign countries and sell it as “Product of the U.S.A.” merely by repackaging it on American soil. This deceives the American consumer and further hurts our ranching families.

These are only a few of the dizzying array of problems that beset our Wyoming ranchers. We could easily double the size of this article without touching on them all. But is there anything that we can do to help our neighbors who are especially threatened at this time? Yes. There are long-term solutions — and there is a short-term one.

Long-term, we should make ourselves aware of the issues facing the American rancher. We can help them by supporting legislation and rule-making that can return fairness to the cattle industry. When you see ranchers in town, stop and talk with them. Learn what’s on their mind and talk with your friends about what they say. You can also start reading the fine print. Learn how to identify quality meat and let your local grocer know that you want it.

In the short term, there is a solution that can benefit both you and your local rancher. Gather up some friends and family and buy a locally raised beef. This can boost the rancher’s bottom line while, simultaneously saving you money. It’s a win-win situation.

In the process, you will also be supporting a local meat cutter. Recent decades have seen a sad decline in the number of custom meat processors. Dave’s Custom Meats was once an Evanston icon. Now it is boarded up and out of business. It would be a good time to patronize those local meat cutters that remain. They are partners with Wyoming ranchers in a vital way of life.


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