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High beef prices aren’t trickling down to cattle growers

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TUCSON - If you had a Memorial Day barbecue you may have paid more for your burgers.

Analysts point to several factors behind the beef prices, rising corn prices, supply chain shortages, fewer workers in meat plants, and a shortage in truck drivers.

But Arizona cattle growers say it's more than that.

"We're just basically looking at survival in the cattle business and it's not looking good at all. And the consumers of course are paying higher prices than ever in the stores and, we get less and less every year," said Billy Elkins, President of the Arizona Cattle Growers' Association.

The average price for U.S. fresh beef rose 5% in April and it's up about 10% from 2020, according to NielsenIQ data.  

Four companies, called The Big 4, control more than 80% of the world's protein supply. Cargill, JBS, Tyson and National Beef have reported strong quarterly profits in their beef divisions. According to Bloomberg, Cargill is reporting the most profitable year in its 156 year history.  

Tyson Foods reports an increase in first-quarter net profit of  $476 million,
Cattle ranchers sell their animals to a feedlot for a fixed price. Feed lots fatten up the cows and sell to the beef packers, also for fixed prices.

"You have to feed the animal to a certain weight and then the packer takes the animal and then after he slaughters the animal, butchers the animal and cuts into primal cuts then he gets whatever those cuts are worth, whatever the consumer will pay," said Clay Parsons, President of the Marana Stockyards.

Parsons raises his own cattle and sells cattle for other growers and he said they are not seeing any of the profit beef packers are. Ranchers are losing $100 to $200 a head on cattle they raised for 18 months.

"And the packer, Tyson, JBS, whoever, they buy that they own it 5 days to a week and they make up to $800-$1200 profit in one week .So we're losing money on animals we raise," Elkins said.

Elkins says the Big 4 are manipulating the market and have been for decades.

"These packers like JBS have their own feed yards where they feed their own cattle, too. They own them. When the price to us starts to creep up just a little they stop buying out cattle and use only cattle they own and bring the prices back. It's just another way of market manipulation."

That's called captive supply, and Elkins says if the Big 4 would do away with that it would be a step toward fairness in the cattle business.

Last year, Arizona Attorney General Mark Brnovich joined 10 other attorneys general in asking the Department of Justice to investigate alleged monopolistic practices in the beef industry.

He writes, "In this highly concentrated industry, meat packers have achieved sizeable profit margins. Cattle ranchers, however, who for generations have supplied our nation's beef, are squeezed and often struggle to survive. The letter also urges the DOJ to consider regulatory strategies which would promote competition, address market manipulation, and protect consumers."

This past May, more than a dozen senators sent a letter to Attorney General Merrick Garland, demanding an update to the investigation.

Arizona Senator Mark Kelly did not sign that letter, but in a statement said, "Our office has heard from Arizona cattle growers and ranchers about how consolidation in the meatpacking industry is hurting their businesses.  Senator Kelly is joining Republicans and Democrats in writing to the Department of Justice urging them to investigate anticompetitive practices to ensure that Arizona ranchers can earn fair prices for their products."

News 4 Tucson reached out to the Big 4 beef packers, only Cargill responded to our request for an interview, saying they had nothing to add to the story.
Elkins says the situation for cattle growers is dire.

"There's going to be wholesale going out of business in the cattle business rancher, feeders and others. We're very close to it. "

Elkins also says the way Americans eat will change if something isn't done.

"Without the senators looking into it, investigating it, putting some type of regulation on them, basically al the food will be owned by the giant corporations. "

Cargill Inc., the commodity superpower that’s the largest private U.S. company, is emerging as one of the biggest winners of the boom in global agricultural markets as it barrels toward its most profitable year ever in its 156-year run. 

The company made almost $4.3 billion in net income during the first nine months of its fiscal year, a Tyson Foods, Inc. (TSN) Monday reported an increase in first-quarter net profit attributable to $476 million. 

The Big Four beef packers include Tyson Foods, JBS, Cargill and National Beef. Tyson and JBS, both public companies, recently reported strong quarterly profits in their beef sectors due to high demand. Cargill and National Beef are private companies and do not release income information. 

Last month, JBA left a major lobbying group the National Cattleman’s Beef Association, after the group started calling for more transparency in the industry.   

Shelle Jackson

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