Big meatpackers a threat to cowboys, Sheridan meat cutter says
Big meatpackers a threat to cowboys, Sheridan meat cutter says
By Stephen Dow
The Sheridan Press
Via Wyoming News Exchange
SHERIDAN — Taylor Kerns, owner of the Western Heritage Meat Company in Sheridan, doesn’t mince words when discussing the impact the “Big Four” meatpackers have on the meatpacking industry.
“The short answer is that, if things continue the way they’ve been going, the American cowboy will be dead, and that’s the sad truth of it,” Kerns said.
The Big Four — Cargill, Tyson Foods, JBS SA and National Beef Packing — currently have what is known as an oligopoly in the meatpacking market, Taylor Kerns said. An oligopoly is a state of limited market competition where a particular industry is dominated by just a handful of companies.
The death of the American cowboy has been imminent for a while now, Kerns said, as ranching families have had to supplement ranching income with other sources of income to pay the bills. There’s an old ranching joke that behind every successful rancher is a wife with a town job, Kerns said, and that truth is more applicable than ever.
Cattle ranching has always been a difficult proposition, according to Dana Kerns, father of Taylor and owner of the Double Rafter Ranch in Parkman. Ranchers face drought and unpredictable weather and often emerge with only the smallest amount of profit. The Big Four continue to thrive and control more than 80% of the meat processing market, which allows them to control prices for cattle, the chance of success shrinks.
“As ranchers, we have no ability to market cattle any other way so we have to take what they offer,” Dana Kerns said. “Our cattle have to go to market so we often really take a beating on it because we have to take whatever the market is offering.”
The oligopoly wasn’t always the state of the meatpacking industry, Taylor Kerns said. There was a time in the not-too-distant past when the market was much more competitive. In 1977, the Big Four only cornered 25% of the meatpacking market.
What happened in the last 45 years?
In short, new technology helped pave the way for the companies’ successes, Taylor Kerns said. The development of new, quicker wet-aging technology meant the Big Four could move quicker, process more beef and stock products on grocery store shelves as quickly as possible. In addition, changes in automated equipment meant the Big Four could operate with fewer and less skilled staff, which allowed them to save money, Taylor Kerns said.
The net effect of these advances in technology is the Big Four were able to grow and thrive, often to the detriment of smaller processing plants.
The question of how the market got to this point is a relatively easy one to answer, Dana Kerns said. The question of how to get out of it is a little more complicated.
“It’s a tough one because it’s a two or three-fold problem,” Dana Kerns said. “No one simple solution is going to fix the entire problem.”
A recent letter from Wyoming Attorney General Bridget Hill and 15 other states’ attorneys general to U.S. Department of Agriculture Secretary Tom Vilsack suggested action, including using funds appropriated through the American Rescue Plan Act of 2021 to establish a grant for state antitrust enforcers to investigate and bring actions against the Big Four.
“It’s entirely possible that the actions of the Big Four are legal, but we are not going to know that without a thorough investigation,” said Jim Magagna, executive vice-president of the Wyoming Stockgrowers Association. “If this is happening because of market strength, that’s one thing, but if it’s something else, that should be corrected as quickly as possible, and we won’t know that without an investigation.”
The letter also suggests investing more than $500 million to support and incentivize new meat processors.
Taylor and Dana Kerns, along with Magagna, agreed increasing competition in the market was an important way to break up the oligopoly. Starting a meatpacking plant comes with hefty financial risks, according to Taylor Kerns.
“To replicate a facility like ours, you’re looking at $3 million easily,” he said.
It will take a lot of people willing to take those same risks to break up the oligopoly, Dana Kerns said.
“My son is processing somewhere in the neighborhood of 1,500 head of cattle a year, which is amazing,” he said. “But in a beef herd of 97 million, it will take hundreds and thousands of these types of facilities to make any sort of an impact.”
Taylor Kerns said that, while he appreciated the attorney general’s attempts to affect change in the market, he remains cynical about how effective the government is going to be in breaking up the Big Four. He said real lasting change will only come if the consumer wants it.
“People need to be conscientious about what they’re doing when they’re buying beef from a grocery store,” Taylor Kerns said. “They’re supporting the Big Four whether they know it or not. The only way to break the cycle is to find a local rancher they can buy from directly.
“I know it seems hopeless — you’re only one of 330 million people. How much of an impact are you going to have on this issue?” Kerns continued. “But if enough people are conscientious about where they place their dollars, they are going to create a market shift sooner or later.”
This story was published on Jan. 17.