Historic cattle shortages push US beef prices to record highs

{"text":[[{"start":7.55,"text":"At crowded cattle auctions in the rolling ranchland of Coryell County, Texas, auctioneers used to call out prices in their rapid-fire staccato into the early morning hours every week."}],[{"start":19.45,"text":"But amid a severe cattle shortage, the auctions are winding down “around 9 or 10 o’clock at night,” said Blayr Bernard, a rancher who runs about 17,000 head annually. “We’re now looking at 20 to 30 per cent fewer calves” than a year ago. "}],[{"start":35,"text":"As the number of cattle passing through the ring has fallen, the prices shouted out by bidders have climbed sharply."}],[{"start":41.95,"text":"US beef prices have soared to record levels — up 75 per cent since 2020, according to the St Louis Fed — leading regulators, industry leaders and consumer advocates to search for causes and lay blame across various sectors of the livestock chain. The Justice Department has launched an antitrust investigation focusing on companies that render and package meat. "}],[{"start":null,"text":"

"}],[{"start":63.7,"text":"But economists say years of drought and high input costs have driven herds to their lowest levels in more than 60 years, at a time when protein-hungry consumers have driven up demand. "}],[{"start":74.75,"text":"“The cattle ranchers, they’re collecting a stronger dollar on the cattle prices than they really ever have in history,” said Brian Earnest, lead animal protein economist at CoBank."}],[{"start":85.25,"text":"The beef price surge is one of the biggest drivers of US food inflation at a time when affordability and rising grocery costs have become a political flashpoint in an election year. It has intensified scrutiny of the highly concentrated meatpacking industry. "}],[{"start":101,"text":"“Politically, [the administration is] very sensitive to the fact food prices are high. Beef is easy to single out because it’s at record levels, and they’re desperate from a political standpoint to be able to say ‘we’re doing something about that,’” said Derrell Peel, a livestock marketing specialist at Oklahoma State University. "}],[{"start":null,"text":""}],[{"start":119.55,"text":"The US cattle and beef supply chain runs from cow-calf ranchers to feedlots, then to a handful of large meatpackers before beef reaches processors, supermarkets and restaurants."}],[{"start":131.1,"text":"Unlike in previous cycles, record prices have not triggered a rapid rebuilding of the US herd."}],[{"start":138.35,"text":"Fallon Savage, a livestock finance executive at Farm Credit Services of America, said despite ranch balance sheets being “the strongest” in many years, no concerted herd rebuilding was under way. “A lot of them needed to re-heal their balance sheets,” Savage said, adding that drought and competition for land were further constraints. "}],[{"start":158.54999999999998,"text":"“They were really incented to liquidate not only portions of their herd but also some of the mama cows too,” she said. With fewer heifers to produce the next generation, rebuilding the herds becomes even more difficult. "}],[{"start":172.74999999999997,"text":"“I think we may be in a new normal of incremental growth,” said Savage."}],[{"start":null,"text":""}],[{"start":177.79999999999998,"text":"Earlier this month, the Department of Justice confirmed it was investigating whether major meatpackers used “price-fixing and collusion” to inflate beef prices. Tyson Foods, JBS, Cargill and National Beef together control roughly 85 per cent of US beef processing."}],[{"start":194.74999999999997,"text":"The US Cattlemen’s Association, which represents ranchers, said it supported the investigation and that scrutiny of “potential market manipulation and anti-competitive conduct” was overdue. "}],[{"start":206.04999999999998,"text":"The USCA urged regulators to ensure any remedies targeted “structural problems in the marketplace — not the great American ranchers who raise this nation’s beef,” President Justin Tupper said."}],[{"start":217.95,"text":"Critics of the industry say concentration among the largest processors has historically allowed packers to widen the gap between cattle and beef prices by restricting slaughter capacity, a claim that sits at the centre of multiple ongoing antitrust lawsuits. The companies deny wrongdoing."}],[{"start":235.14999999999998,"text":"Tyson has previously settled multiple lawsuits alleging anti-competitive conduct in the beef industry, including agreements last year to pay $55mn to consumers and a further $87mn to small grocers and retailers of case-ready beef in January. The company denied wrongdoing in both settlements."}],[{"start":255.04999999999998,"text":"“Market concentration does not affect beef prices because there has been a four-firm concentration for 30 years,” said the Meat Institute, a lobby group for the packing industry. “During this time, costs for consumers, prices for livestock and profit margins rise and fall with supply and demand. This is a dynamic and transparent market.”"}],[{"start":275.7,"text":"“The populist arm of the industry has gotten the ear of this administration,” said Peel. “Because of the nature of this administration and its willingness to listen to that nonsense, they’re taking advantage of it . . . if they get their way and break up the packers, they’re going to tear up everything that’s benefiting them right now and they might do damage for 10 or 20 years in this country.” "}],[{"start":295.8,"text":"Economists and industry participants say the current cattle cycle has shifted pricing power sharply upstream, leaving ranchers with record leverage over increasingly scarce cattle while the rest of the chain struggles with tighter margins."}],[{"start":null,"text":""}],[{"start":309.55,"text":"“Everybody beyond the ranch is getting squeezed on their margins,” said David Anderson, a livestock economist at Texas A&M University. Packers “are losing a lot of money, because even though wholesale beef prices are higher, the live animal prices have gone up faster and higher than the wholesale prices”."}],[{"start":327.90000000000003,"text":"Modern slaughterhouses are large, capital-intensive facilities that require a steady flow of animals to cover fixed costs and operate efficiently. But with cattle supplies tight, some plants are running below optimal utilisation."}],[{"start":342.20000000000005,"text":"“These processing plants are designed to run with every single shackle filled,” Earnest said. “They need to run at full capacity.”"}],[{"start":349.35,"text":"Tyson Foods has closed a Nebraska beef plant and cut shifts in Texas as tight cattle supplies erode utilisation rates across the industry, while rivals including Cargill have warned of mounting pressure on beef-processing economics."}],[{"start":363.70000000000005,"text":"Tyson also reported a $240mn loss in its beef division in the quarter ending March despite record beef prices, and has forecast as much as $500mn in annual beef losses this year as cattle costs continue rising."}],[{"start":null,"text":""}],[{"start":380.05000000000007,"text":"While the packers’ “margins are nearly always in the red”, said the Meat Institute, “cow-calf operators and feeders are earning record margins on the sale of cattle.”"}],[{"start":390.25000000000006,"text":"Bernard, who said many ranchers still viewed meatpackers as having disproportionate leverage over the industry, argued that years of weak cattle prices had discouraged producers from maintaining and rebuilding herds. “Previously I might be able to make $100 a calf,” said Bernard, who buys calves before selling them on to feedlots. Now she was “losing $3 a calf”, she said."}],[{"start":414.75000000000006,"text":"“If they had been paying ranchers and stockers a liveable price, quite frankly, I don’t really think we’d be in this place,” Bernard said. “It would be more of a symbiotic relationship instead of this competitive relationship.”"}],[{"start":434.70000000000005,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780144817_4315.mp3"}