Beef prices keep climbing

For four decades, while the U.S. cattle industry continually underproduced for the U.S. market, Washington let a handful of multinational meatpackers monopolize America’s cattle markets. Competition was replaced with corporate control.

At the same time, government opened the U.S. market to unlimited imports of cheaper foreign cattle and beef. These imports are undifferentiated, direct substitutes for American cattle and beef.

Multinational meatpackers control both exports and imports in an industry that does not produce enough beef to meet domestic consumption.

This has given the packers power to manage America’s beef supply — to shrink the domestic cow herd, drive ranchers out of business and leave both ranchers and consumers at the mercy of a dysfunctional market.

Since 1980, American beef consumption grew by more than 21%. This should have triggered a bonanza for domestic ranchers.

But instead, hundreds of thousands of U.S. cattle farms and ranches disappeared, and with them, millions of head of breeding cows.

America lost more than half its cattle farms and ranches and nearly a quarter of its breeding cows in just over a generation.

Consequently, domestic beef production from U.S.-born and U.S.-raised cattle couldn’t keep up with consumption and multinational packers made up the difference with increased, undifferentiated imports.

Today, imports make up more than 22% of U.S. beef consumption — more than double what it was just over a generation ago.

Conventional theory suggests that America’s increased reliance on cheaper beef and cattle imports would lower consumer prices and provide more choices. But this theory fails in a market where imports and domestic products are undifferentiated as to origin.

Here, undifferentiated imports are priced the same as domestic products, and beef is beef regardless of where, by whom or how it was produced.

Thus, multinational meatpackers in America’s underproducing market are regulating the available beef supply by increasing or decreasing import and export volumes in proportions that maximize their profits while pricing beef at whatever the market will bear.

And when, as it is now, demand is incredibly strong, beef prices can hit extremes never seen in a fair, competitive market.

For example, last year’s production of beef from U.S. cattle was 3.2 billion pounds below domestic consumption.

Yet packers diverted 3 billion pounds of beef into the export market and compensated for the domestic supply shortage by importing a record 6.3 billion pounds of beef from foreign-born cattle.

This import-export mix netted a record all-fresh beef price of $8.01 per pound while displacing opportunities for domestic ranchers to breed and raise an additional 3.8 million head of cattle.

Drought is not to blame for the cattle industry’s crisis, though it accentuated the effects of the industry’s chronic decline. The root cause is policy choices that handed control of our beef supply to corporate monopolies and foreign sources.

The consequences are that national security is weakened as America loses self-reliance in beef production, ranchers are forced to exit the industry, consumers pay more than a competitive market would decide and rural America is hollowed out.

The Solutions

Put American Consumers And American Producers First

• Require mandatory country of origin labels on all beef sold in America.

Restore Competition

• Enforce antitrust laws that protect competition.

• Implement and enforce the Packers and Stockyards Act that protects both individuals and the market from abuse.

• End packer procurement practices that limit price discovery.

Manage Imports

• Set tariff-rate quotas to give U.S. ranchers room to rebuild.

• Impose tariffs to counter subsidies, currency manipulation and weak foreign standards.

Free Ranchers To Compete

• Reform the mandatory beef checkoff.

• End the electronic identification ear-tag mandate.

Doing nothing, or relying on even more imports, will accelerate the collapse of America’s cattle industry and leave the United States dangerously dependent on foreign beef and cattle.

Congress and the administration must act now to rebuild the domestic herd, restore competition and secure America’s food supply.