Ranchers upset with market prices look to build their own meat-processing plants

A group of ranchers who have long complained about being paid low prices for beef while the price of the commodity continues to rise at supermarkets is set to break ground on their own meat-processing plant.

In an interview with The Associated Press, Nebraska rancher Rusty Kemp recalled how he and other ranchers have grumbled about the situation for so long they finally decided to act.

“We’ve been complaining about it for 30 years,” Kemp said. “It’s probably time somebody does something about it.”

As such, Kemp managed to raise more than $300 million from other ranchers to construct a processing plant of their own, so they can better determine their own futures.

“He and his neighbors blamed it on consolidation in the beef industry stretching back to the 1970s that resulted in four companies slaughtering over 80% of the nation’s cattle, giving the processors more power to set prices while ranchers struggled to make a living,” The AP noted. “Federal data show that for every dollar spent on food, the share that went to ranchers and farmers dropped from 35 cents in the 1970s to 14 cents recently.”

Construction on the new facility, called Sustainable Beef, will begin this fall on 400 acres near North Platte, Neb., as other groups are undertaking similar ventures in other states including Idaho, Iowa, and Wisconsin, the AP noted. The start-ups will determine if it’s possible for smaller private enterprises to become successful, financially speaking, against industry giants that rose in prominence to dominate American agricultural production in a system that saw meat shortages during the COVID-19 pandemic.

The initiatives come at a good time, as the Agriculture Department is making moves to shore up supply diversity throughout the beef industry.

“Still, it’s hard to overstate the challenge, going up against huge, well-financed competitors that run highly efficient plants and can sell beef at prices that smaller operators will struggle to match,” the AP added.

At issue, primarily, is whether smaller meatpacking plants will be able to pay ranchers more for their beef and still turn a profit. While an average steer weighs 1,370 pounds and is worth about $1,630, that money is divvied up between the processing plant, feed lot, and the rancher, the latter of whom normally bears the bulk of the expense as the cow is raised for more than a year.

Sustainable Beef CEO David Briggs agreed that it will be difficult to break into the processing market but that investors in the company are confident it can be done.

“Cattle people are risk-takers and they’re ready to take a risk,” Briggs said.

At present there are four companies that control over 80 percent of the U.S. beef market, with cattle slaughtered at 24 plants: Cargill, JBS, National Beef Packing, and Tyson Foods. The consolidation of meat processing in so few companies, however, became problematic during the pandemic when the virus infected workers and caused a work slowdown and even closures of the massive plants.

Also, the AP noted, a ransomware attack over the summer forced a brief shutdown of JBS plants until the company ponied up $11 million.

The new plant operators say they aren’t interested in competing with the majors. But they add they will have some advantages, including the most modern equipment and happier employees who will make an average of $50,000 annually plus benefits, along with better work schedules.

Also, the Midwest plants are looking to partner locally with ranchers who they hope will also invest in the plants and share in the profits.

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