The problems with US beef production.

 FOREIGN COMPETITION MAY MAKE THINGS WORSE

OPPORTUNITY FOR LOCAL PRODUCERS?

 

Everyone knows that beef prices have risen, particularly since the COVID disruptions. Most of the beef is produced in the western parts of the US. While there always have been local producers, most of the big markets are supplied from herds in the west, processed in the Midwest. Chicago has historically been the central distribution place for beef. Rail transportation mostly has been replaced by Trucks. In the past most retail stores had their own butchers and received shipment of hanging sides and would cut it up in house and package it. Today most beef comes already cut up in boxes. This creates a shorter shelf life and adds to the risks of retail markets.

 

The last several years the western producers have faced severe drought which has caused them to reduce their herds due to lack of food. Today the nations herd is at a decades long low level, particularly for western ranchers.

 

Last week Tyson closed a major processing plant in Illinois laying off 2700 workers also announced closing of plants in Utah and Washington state. This followed the closing of two  major plants in Pennsylvania. When and if production resumes there may be a shortage of processing capability in the future.

 

It should be noted that the meat processor union had a major new agreement in 2024 with wage, benefit and pension increases, now many tens of thousands of those jobs are gone. One wonders if there is not a trend developing of importing more beef.

 

The cost of raising, processioning and transporting beef has risen due to inflation, the cost of diesel fuel and feed.

 

Producers have been trying to increase their herds but it is very costly, Today calves, 4-6 weeks old can bring up to $1500 at auction. Feeders, 500 pounds can bring $2000. Old dairy cows which once sold for $400 can bring as much as $1000. Fat desirable Angus steers bring around $2.30 a pound live weight. A 1500 lb steer is then $3450 before processing. Processing can cost $600 to $800. Final retail weigh is around 40% of live weight. This would be $7.33 a pound before transportation and profit.

 

If the trend is going to be to import beef from oversees, it will be a disincentive for domestic production. The big processors can skip union and other domestic costs and buy beef already for retail sales. I would doubt that will significantly lower prices. 

 

It may be an opportunity for local producers, particularly if they can be allowed to process their own cattle. This would skip several transportation steps and other costs.  Today it is mandated that a inspector is on site with his own office and paid by the processor. It should be possible for a system of accreditation for domestic local producers, this would cut costs and possibly prices to consumers.