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Shrinking Slaughter Capacity: What's Next in 2026?

Wed, 24 Dec 2025 17:33:42 GMT

The long-feared rightsizing of shackle spaces to more closely match the number of cattle has begun.

“The market’s reaction to the November announcement was a good reminder that market volatility still exists even when the supply and demand fundamentals continue to be positive forces into the start of 2026,” says Dave Weaber, Terrain senior animal protein analyst, in his Q1 2026 Outlook .

In late November, Tyson Foods announced its plan to end operations at its Lexington, Neb., beef facility and convert its Amarillo, Texas, beef facility to a single, full-capacity shift.

“Terrain estimates the changes will eventually reduce U.S. slaughter capacity by about 6.6%,” Weaber explains. “However, slaughter plant capacity utilization is still nearly 6% behind historical norms, as the number of cattle is still well short of filling available slaughter capacity.”

Weaber predicts this positive shift in operational efficiency will likely encourage plants to fill available capacity and better compete for the available cattle.

“I expect utilization to decline by about 2% during 2026 when two new plants in Nebraska and Missouri complete their startups,” he adds.

A proposed plant in the Panhandle of Texas that would handle 6,000 head per day has the potential to lower utilization rates back to early-2025 levels if completed.

“Even without additional future slaughter capacity, utilization rates will remain low; fed cattle numbers are expected to decline during the next two to three years because of cow-calf producers’ beef cow herd expansion efforts,” Weaber summarizes.

The reduction in current fed slaughter capacity will help the remaining plants run more volume, improving efficiency by spreading fixed and semi-variable costs across more head and pounds of beef. This positive shift in operational efficiency will likely encourage plants to fill available capacity and better compete for the available cattle.

“I expect that in the near and intermediate term, this effect will at least partially offset the shift in market leverage, which currently favors the packer,” Weaber says.

Markets and Beef Prices Remain Resilient

Beyond the near-term impacts to futures traders’ sentiment, the market impacts of the announced closures are fading.

“Calf, feeder cattle and fed cattle cash markets are already recovering and have posted significant rallies,” Weaber says. “Fed cattle supplies for the first half of 2026 are not going to change. The number of cattle placed into feed yards is the number placed and will be the number that gets slaughtered. The location the cattle get processed into beef may change, but overall beef production is mostly set.”

(USDA NASS, Terrain)

He adds: “ Consumer beef demand and spending remain strong and supportive of cattle prices. Presidential and executive branch rhetoric about lowering beef prices has had little to no impact on retail and wholesale beef prices. Tariff reductions on imported lean trimmings from South America are driving volumes, but prices for contracted loads delivering in the first quarter of 2026 are record high, up 20% from a year earlier.”

“I expect the choice cutout to average between $375 per cwt and $385 per cwt and fed cattle prices to average between $234 per cwt and $238 per cwt in Q1.”

— Dave Weaber

Q1 2026 Price Outlook

“I expect available fed cattle supplies during the first quarter of 2026 to be 6% to 7% smaller than the year prior,” Weaber says. “Even with a 2% shift in leverage (fed cattle price to comprehensive cutout) to the packers’ favor, I expect the Choice cutout to average between $375 per cwt and $385 per cwt and fed cattle prices to average between $234 per cwt and $238 per cwt in Q1.”

By early December, light feeder cattle and calf auction prices have recovered much of the losses incurred since late October and appear poised to start 2026 at record levels.

“Changes to the U.S.-Mexico border status remain the greatest known risk for cattle prices,” Weaber stresses.

Further rallies in deferred live cattle futures will drive the balance of the recovery in prices for heavy feeder cattle that make up the CME feeder cattle price index. He explains demand for light cattle to be turned out on wheat pasture and California coastal range has been a key driver for the rally in light cattle.

Biggest Risk Is South of the Border

Changes to the U.S.-Mexico border status remain the greatest known risk for cattle prices.

“The Mexican government has implemented broad cattle movement and import restrictions within the country as well as greater fly control measures in partnership with the USDA,” Weaber says. “Meanwhile, U.S. and Mexican officials have begun inspections of only one border crossing into New Mexico. Additional cases of New World screwworm have been found in Mexico, which I expect to further delay the reopening.”

Active risk management to preserve operation equity should remain a priority.

“If the border were to reopen, cash feeder cattle and calf prices and feeder cattle and live cattle futures would be the first to move down,” Weaber explains. “The magnitude of the impact will depend on the rate-limiting and cost impacts of the protocols that are implemented and the number of backlogged cattle south of the border.”

One Lesson From Plant Closures

“If we’ve learned anything from the market reactions to the plant announcements, it’s that price volatility should be a focus for producers in all segments of the cattle industry,” Weaber says. “Active risk management to preserve operation equity should remain a priority.”

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Tyson Foods to Close Lexington, Neb., Beef Plant

Fri, 21 Nov 2025 21:43:35 GMT

Tyson Foods today announced network changes designed to right-size its beef business and position it for long-term success. The company will end operations at its Lexington, Neb., beef facility and convert its Amarillo, Texas, beef facility to a single, full-capacity shift. To meet customer demand, production will be increased at other company beef facilities, optimizing volumes across its network.

The Lexington plant, which operated for 35 years, employs nearly 3,200 people and can slaughter almost 5,000 cattle a day, according to industry estimates. It is one of 11 beef segment facilities in the company and one of the largest. Another 1,700 workers will be impacted in Amarillo.

Tyson Beef Division Faces Losses
In the latest U.S. Security and Exchange Commission report Tyson Foods reported operating loss for the beef division of $1.135 billion for the fiscal year ending September 27, 2025 with adjusted operating losses of $426 million also released by the company. Tyson reported its cattle costs were up $1.575 billion versus a year ago.

For 2026, Tyson projects additional losses in its beef division. In a Nov. 10 news release the company stated that USDA projects domestic beef production will decrease approximately 2% in fiscal 2026 as compared to fiscal 2025. Therefore anticipate adjusted operating loss is estimated between $(600) million to $(400) million in fiscal 2026.

Beef Packing Industry Faces Negative Margins
“As I have commented several times this year, a packer or packers would eventually reduce capacity,” says John Nalivka of Sterling Marketing. “Capacity is critical to the success of any business with the natural economic incentive to increase capacity to gain economies of scale and reduce per unit costs. Sharply reduced cattle numbers became the downside of economies of scale for packers in the face of significant herd liquidation that took the cattle inventory to its lowest numbers since 1951.

Nalivka says the packing industry has been reducing absolute capacity since 2000.

“Fed plants have still been operating at an average of 78% utilization this year compared to the low-to-mid 90% range from 1994-2008,” he adds.

Industry Faces Historically Tight Cattle Supplies
Record fed and feeder cattle prices during 2025 have been a result of a 70 year low in the cattle herd tied to consecutive years of drought in major cattle producing regions of the United States. The supply was recently constricted even further by the closure of the Southern border to Mexican feeder cattle to prevent New World Screwworm (NWS) from entering the U.S. Plus, the 50% increase in tariffs on Brazilian beef in mid-August nearly shut off imports of lean trimmings and grind which are blended into ground beef.

The rebuilding of the U.S. cow herd has also been slower than expected due to a number of factors including the older age of producers, higher interest costs and the desire of cattle producers to pay down debt. That has all attributed to less heifer retention.

Negative Reaction
In a news release from the company, Tyson Foods said it recognizes the impact these decisions have on team members and the communities where we operate. The company said it is committed to supporting its team members through this transition, including helping them apply for open positions at other facilities and providing relocation benefits.

Nebraska Senator Deb Fischer (R), who also serves on the Senate Agriculture Committee, released a statement following the announcement.

“I am extremely disappointed by this news from Tyson today. As the single largest employer in Lexington, Tyson’s announcement will have a devastating impact on a truly wonderful community, the region, and our state. Nebraskans are nothing if not resilient, and Lexington has a robust workforce. I hope their skill and experience will be sought after by other employers.

Senator Deb Fischer (R-NE)

With these changes, Tyson Foods says it is ensuring it will continue to deliver high-quality, affordable and nutritious protein for generations to come.

The plant is scheduled to close on Jan. 20.

Beef Industry Chaos: Tight Supplies, Strong Consumer Demand and Political Interference

Wed, 12 Nov 2025 20:04:16 GMT

The current state of the cattle market and beef industry has been described as chaotic. “There’s chaos in cattle,” as Chip Flory, AgriTalk host, put it.

The industry turmoil follows recent statements made by President Donald Trump regarding the need to lower beef prices as well as his request for the Department of Justice to immediately begin an investigation into meatpackers for driving up the price of beef.

Derrell Peel, Extension livestock marketing specialist from Oklahoma State University, affirms these are unique times, emphasizing while political factors have always indirectly influenced agriculture, it’s unprecedented for the cattle and beef markets to be at the center of direct political debate.

On a recent AgriTalk segment, Peel points out the inherent biological and production constraints of the cattle industry — particularly the fixed timeline to raise cattle — make quick fixes impossible. Both Flory and Peel stress that no political policy can shorten the cattle production process; any effective supply response requires patience and long-term adjustment.

Packers Under Fire

The concept of industry consolidation and foreign packer ownership has long drawn scrutiny with frequent government investigations. Peel says highly concentrated industries such as beef packing have been targets for skepticism and regulatory attention for over a century, to the point suspicion of packers is almost “a cultural thing” within segments of the industry.

He characterizes the latest call as another attempt to target convenient scapegoats rather than addressing deeper systemic realities of supply and demand.

“The reason we have the industry structure we do is because the economies of size and cost efficiencies are such a powerful economic force,” Peels explains.

He confirms researchers have long studied market power, and while concentration does have a small negative price impact for producers, the efficiency and cost-savings from large-scale firms more than compensate. These benefits, he says, keep cattle prices higher for producers and beef prices lower for consumers than they would be with a less efficient structure.

Dissecting the economics of margin markets Peels explains why price changes in different parts of the beef supply chain — cow-calf, feeders, packers and retailers — don’t move in lockstep. He uses a “bungee cord” analogy to illustrate the complex, dynamic and time-lagged interactions linking cattle prices at the farm with retail beef prices.

“All cattle prices and beef prices are ultimately connected, but they’re not connected with a stick or a chain,” Peel summarizes.” They’re connected with a bungee cord. There’s just an enormous amount of dynamics in this thing.”

Regarding the foreign ownership debate, Peel says there is no evidence foreign ownership alters packer behavior within the U.S. marketplace. He emphasizes foreign firms have made large investments in U.S. facilities and continue to operate them by the same market logic that would govern domestic ownership.

He also points out it is unclear who else would be in a position to make such significant investments if these foreign companies were not involved. This pragmatic view suggests the ownership issue might be less important than is commonly believed, at least concerning everyday operations and market outcomes.

A Lot Hinges on Rebuilding the Cow Herd

In his latest article, “ All Bets are Off ,” Peel says: “The latest edition in the torrent of recent political attentions directed at the cattle and beef industry includes allegations of market manipulation against the beef packing industry. Beef packers are the one segment that has been most negatively impacted in the current market, incurring huge losses due to poor margins and limited cattle supplies.”

(Meat Institute)

Peel reports packers have been losing enormous amounts of money for about the past 18 to 24 months. According to the Meat Institute, packer margins slipped into the red in September 2024. Through the week ending Oct. 4, 2025, packer margins were a negative $126.50 per head, up slightly from a year earlier at a negative $125.65 per head, according to Sterling Profit Tracker. The outlook for the year is a negative $165.96 per head packer margin.

“There’s just simply not enough cattle for them to operate at cost efficient capacities,” Peel explains.

This negative trend was anticipated — the reduced supply of cattle has made it difficult for packing plants to function at cost-efficient capacities, leading to the accumulation of operating losses. Peel points out the combination of low unit margins and insufficient cattle supplies challenges the economic viability of packers, further illustrating the complexity of the current environment.

This decline in inventory is not the result of a single factor but is driven by several years of drought and other market pressures. It is clear high beef and cattle prices are a result of these tight supplies and, according to Peel, these high prices are likely to persist for several years. The industry simply cannot turn around production levels quickly, and it will take time — a matter of years, not months — for conditions to normalize.

“Using logic that only works in the office of a politician, packers are supposedly wielding unacceptable market power while paying record high cattle prices and artificially raising beef prices … but not enough to avoid losing a couple hundred dollars on every animal they process — certainly many millions of dollars,” Peel says. “If beef packers had any significant ability to exercise market power, I am certain that we would not have record high cattle prices and packers would not be losing money.”

Peel suggests the federal government attacks on beef packers are aided and supported by a vocal minority of the cattle industry and a few sympathetic politicians who view packers as a perennial villain and always worthy of attack anytime the opportunity is presented.

“The timing of such attacks this time is particularly puzzling as dismantling the packing industry would certainly jeopardize current record high cattle prices and the best economic returns most producers have ever enjoyed,” Peels says. “I guess some cowboys just can’t stand prosperity.”

R-CALF CEO Bill Bullard says the cattle market is fundamentally broken citing years of an inverse relationship between falling cattle prices and increasing retail beef prices when the only ingredient in beef is cattle. Read more about his perspective.

Patience not Politics

Beef and cattle prices, Peel notes, are historically high, a result of industry-wide low cattle inventory. Rebuilding the nation’s cow herd will be a long, slow process, keeping prices elevated for an extended period. And Peel says there is no definitive evidence producers are saving heifers to start the rebuilding process.

“2025 may prove to be technically the cyclical low, but 2026 is going to be barely bigger, if it is, and no growth in 2026 and probably none in 2027 ... it’s 2028 into 2029 before that turns into increased beef production,” Peel predicts.

He summarizes neither regulatory nor political action will can speed up the rebuilding process. It will take years of concerted effort, market healing and stability before the industry can expect a meaningful rebound in herd numbers and production — a reality that requires patience across the industry.

“There is absolutely nothing anybody can do to make beef prices go down, or cattle prices, other than maybe tear up the industry completely,” Peels says. “And if we tear up the industry, it’ll make cattle prices go down, but it won’t make beef prices go down. It’ll make beef prices go even higher for consumers and the only way to fix this is to give the industry time to rebuild, and that’s going to take two to four years if we ever get started.”

He says a majority of cattle producers understand the beef industry is extremely complex and all segments are critical and essential.

“Though the outcome of current political actions is uncertain, the potential for long-term harm to the industry is substantial,” Peel says. “Anytime politics trumps economics, the strong supply and demand fundamentals that have determined the outlook for the industry to this point become irrelevant. Expectations for prices and production going forward are now completely clouded…therefore… all bets are off.”

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Unpacking the Beef: Report Clarifies Cattle Market Realities, Packer Challenges & Trade Tensions

Fri, 31 Oct 2025 20:17:59 GMT

Since President Donald Trump’s comments last week, a lot has been discussed on social media and at the coffee shop about increasing beef imports from Argentina, beef retail prices, the cattle market and beef processing concentration.

“It is complicated,” the Meat Institute posted on LinkedIn regarding the current state of the beef industry and the dialog about beef prices. In response, the Meat Institute released a nine-page document — The Reality of Beef and Cattle Markets — addressing import trends, market conditions, industry concentration, ground beef production, policy proposals and international trade challenges.

Key discussion points include:

1. Argentine Beef Imports

The report summarizes increasing beef imports from Argentina is unlikely to significantly lower ground beef prices in the U.S. If Argentina fills the proposed 80,000 metric ton quota, it will only increase its share of U.S. beef imports from 2% to 5%, which is unlikely to significantly impact retail or restaurant beef prices.

Argentina primarily exports grass-fed frozen lean trim for ground beef production, with limited impact on overall U.S. beef imports. In 2024, Argentina was the eighth-largest beef supplier to the U.S., exporting 32,798 metric tons, while the U.S. imported 1.56 million metric tons overall.

2. Beef and Cattle Market Conditions

The report summarizes current market conditions with these six statements:

Cattle producers are enjoying record prices, while beef packers are suffering under negative margins.
The shortage of market-ready cattle continues, adding further pressure to packers’ margins, which first dropped to negative values in September 2024.
Packing plant utilization rates have dipped, and some facilities are scaling back operations, including reduced shifts and shortened workweeks. Uncertain immigration policy moving forward can have an impact here as well.
Trade policy uncertainty from proposed tariffs adds to the cost pressures on the cattle market.
Additionally, foreign animal disease import restrictions — particularly on Mexican feeder cattle — are another contributing factor to increasing costs.
Consumer demand has remained resilient with improved beef quality. However, prospects for elevated cattle prices and the beef those cattle yield remain directly tied to the extent end-user consumer demand can remain robust.

“Cattle prices were at record levels for most of 2023, surpassing the 2014-2015 previous record highs as the cattle herd rebuilt from the previous low points of the cattle cycle,” the report says. “Through 2024, prices continued at new record levels and increased further into 2025, exceeding an average of $242 cwt. in August, the highest nominal price on record.

“Cash prices have declined to $232 cwt. in the first two weeks of October, but futures contracts are at record levels, even after adjusted for inflation. The previous highs in October 2015 would be $222 cwt. in today’s dollars, a full $10 cwt. below the current prices as of Oct. 14.”

The report goes on to say: “This has put U.S. beef packers under financial pressure. Packer margins slipped into the red in September 2024. Through the week ending Oct. 4, 2025, packer margins were a negative $126.50 per head, up slightly from a year earlier at a negative $125.65 per head, according to Sterling Profit Tracker. The outlook for the year is a packer margin of negative $165.96 per head.”

(Meat Institute)

For 2025, cow-calf producer margins are estimated to be up 122.3% from 2024 and 180.67% from 2023 to $900 per head. Feedlot margins are estimated to be up 351% from 2024 to $514.33 per head. But packer margins have declined 120% from already negative margins in 2024 and are estimated to be down 269% from 2023.

“With fewer market-ready cattle available, plant utilization rates have dipped and some facilities are scaling back operations, including reduced shifts and shortened workweeks. Packing plants were operating at 77% capacity for the week of Oct. 4, down from 85% a year ago. Uncertain immigration policy moving forward can have an impact here as well,” the report summarizes.

(Meat Institute)

The share of the retail beef dollar also indicates producers have been faring well. The producers’ share of the retail beef dollar was 55% in August 2025 and has averaged 54% so far in 2025. The packers’ share has dropped from 13% to 5%, reflecting the negative packer margins.

Download the Meat Institute’s full Cattle and Beef Market Update .

3. Concentration in the Beef Packing Sector

“The U.S. meat packing sector is a dynamic, resilient and highly competitive industry with a long history of providing an abundant supply of high quality, safe and affordable products to American consumers and serving as a vital economic engine that supports America’s farmers and ranchers,” the report says.

(Meat Institute)

The top four beef packers in the U.S. account for the purchase and slaughter of about 81% of all fed cattle in the U.S., according to the most recent report from the USDA’s Packers and Stockyards Division. But those fed cattle make up only about 78% of the Federally Inspected cattle slaughtered in the U.S. The other 22% is made up of cows, both dairy and beef and some bulls.

“Much of the rhetoric about beef industry concentration implies that consolidation in the beef packing sector is ongoing and that market power is becoming increasingly concentrated. That is not the case,” the report says. “The four-firm concentration ratio in the beef cattle industry has not changed appreciably over the past 30 years. According to USDA, in 1994, for example, that ratio was 82%, compared with 81% today.”

4. Ground Beef

Ground beef accounts for approximately 50% of U.S. beef consumption. Imported lean trim complements U.S. beef production from cull cows, helping maintain affordability without directly competing with domestic beef.

“Without imported lean trim, more highly marbled quality U.S. beef would be used, and ground beef would be more expensive,” the report explains.

5. Policy Issues

Despite record cattle prices and the smallest cattle herd in 75 years, there are increasing calls for mandatory country-of-origin (COOL) labeling for beef.

“The mandatory COOL experiment was implemented and it failed,” the report says. “From 2002 through Congress repealing the law in 2015, we learned that mandatory COOL adds massive compliance costs — the industry incurred implementation costs of approximately $1.5 billion, plus $200 million in additional annual compliance costs thereafter — yet by USDA’s own analysis, it did not increase consumer demand. Mandatory COOL simply adds cost, not value.”

On Jan. 1, 2026, USDA’s Food Safety and Inspection Service will begin implementing its voluntary COOL rule.

“Let the rule and the free market work: if consumers demand ‘Product of the U.S.’ labels on their meat, then processors can and will provide it,” the report says.

For more info, download the Meat Institute’s mCOOL paper .

The reports also explains proposals like the PRIME Act and interstate shipment of state-inspected meat are seen as threats to food safety and international trade relationships.

“The concept in the PRIME Act is even worse,” the report explains. “Under Rep. Thomas Massie’s legislation, custom exempt meat establishments would be allowed to slaughter animals, process the meat and sell it directly to consumers or to restaurants, hotels or grocery stores within the state, without any inspection. It is a recipe for foodborne illnesses, and consumers in restaurants and hotels would have no idea they would be eating uninspected meat (and grocery store consumers would only know if they look for and can’t find the USDA inspection symbol). Food safety should be the top priority, not something legislated away.”

6. China Beef Exports

The Meat Institute urges action as China blocks more than 415 U.S. beef facilities from exporting.

“In 2024, China was the U.S.’s third largest market, by value, for beef, at over $1.5 billion,” the paper summarizes. “The strong beef exports to China were thanks to President Trump’s leadership in securing the U.S.-China Phase One Agreement during his first term. However, since the beginning of 2025 — and in contravention of the terms of the Phase One Agreement — China has failed to renew the registrations for more than 415 U.S. beef establishments, making them ineligible to export to China. This is a massive market loss for the U.S. that Brazil and other countries have been eager to fill.”

Are We Seeing Signs of Herd Rebuilding?

Fri, 12 Sep 2025 19:50:44 GMT

The U.S. beef cow inventory has reached its lowest point since 1962, marking what appears to be the bottom of the current cattle cycle. Tight supply is driving the strong pricing environment beef producers are enjoying today.

“For cow-calf producers right now, things are as good as they’ve probably ever been,” says Troy Rowan, University of Tennessee assistant professor. “Even though things are really good, producers are conscientious and vigilant about potential challenges,” Rowan summarizes.

Agreeing with Rowan, South Dakota cattleman Ken Odde adds while profits are currently strong, inflation quickly erodes economic gains. He stresses the importance of risk management and diversification.

Early Signs of Herd Rebuilding?

This is the million-dollar question: Are there encouraging signs of expansion?

“The beef industry is not currently in herd expansion mode, with producers hesitant to retain heifers due to high costs and economic uncertainties,” says Dave Weaber, Terrain senior animal protein analyst.

In Drovers State of Industry Report to be released the week of Sept. 15, we breakdown the July USDA cattle inventory and cattle on feed reports. While the USDA reports showed the smallest U.S. herd in history and continuing tightening numbers on feed, analysts predict producers have not experienced the highest cattle prices, yet.

“Our national herd size has the industry at an interesting point,” Rowan says. “Prices are at all-time highs, inputs are reasonable and more cow-calf enterprises are profitable than ever. When the industrywide rebuild will happen remains up in the air, but producers are keeping in mind that the high-flying industry right now is not going to stick around forever. They’re starting to adopt new technologies, leveling up their crossbreeding programs and expand opportunities for non-cattle related income on their ranches.”

Weaber adds producers need to be intentional about herd expansion, understanding the financial implications of adding new cattle.

Beef-on-Dairy Fills the Beef Supply Gap

“The current dynamics of supply is going to be a challenge,” says Jarrod Gillig, Cargill senior vice president, managing director for beef.

Gillig summarizes the cattle industry is experiencing a critical period of transition. He doesn’t expect the cow herd to return to previous peak levels of 32 million head. Instead, he predicts the gap in supply will be filled by beef-on-dairy calves.

Nick Hardcastle, Cargill senior director of meat grading and technical specialist, explains how the beef-on-dairy calves are an upgrade to the traditional Holstein steer and the positive impact they are making on beef supply.

“Beef-on-dairy is more desirable because it helped overcome several Holstein difficulties,” he says. “Improvements include red meat yield — more meat to a consumer — as well as improved acceptance in branded programs.”

Hardcastle says the beef-on-dairy cattle are filling the supply gap by filling pens in the Plains states where feeders are needed, and they are widely accepted by feeders and packers.

Defining Future Beef Producer Success

Odde says the beef industry is not just surviving but positioning itself for significant transformation.

“Producers who remain flexible, technologically savvy and strategic in their approach will be best positioned to thrive in this changing environment,” he says.

Weaber agrees saying successful producers will be those who can adapt, manage costs effectively and align themselves with evolving market trends.

“Don’t let cost get away from you,” Weaber warns, emphasizing that “being a low-cost, high-productivity producer means you get to make money seven, eight or nine years of the cycle.”

He stresses the importance of understanding financial implications, particularly during market transitions.

“If we’re not working on the business, we can’t work in the business,” Weaber adds, summarizing his philosophy regarding producers’ need to adopt more strategic, data-driven approaches.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

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Connecting Cattle Producers and Beef Wholesalers Through Supply Chain Management

Wed, 23 Apr 2025 18:59:55 GMT

For producers or groups of producers wanting to sell directly into wholesale beef channels, three big issues have created challenges to the marketplace: scale, balancing the carcass and logistics.

“If you have a steakhouse that has to buy hundreds of ribeyes every single week, it’s probably pretty hard to find many producers who are going to be able to fulfill that procurement spec weekly,” says Farmshare CEO Henry Arrowood. “No. 2 is balancing of the carcass — you might find a restaurant that wants to buy all your primes, but what are you doing with the rest of that carcass? And No. 3 is the logistics — how do I actually get the animal to the processing facility, secure a slot, secure the cut order, then get that product out into the hands of the buyer? That is exactly what our platform does.”

Arrowood shared on a recent AgriTalk episode about how the system provides a way for wholesale buyers to connect with smaller producers who can offer local, differentiated and value-added products.

“If a set of producers match the parameters of what the bid of the buy side is looking for, we start to show them these opportunities that they can participate in,” Arrowood says. “We show them the price point at which the customer is looking to purchase. We show them the target product and volume that they’re looking for, and then we aggregate that supply into an order and route it to one of our processing facilities for manufacturing.”

Finding a market for the entire carcass has remained a challenge to the smaller, regional producers who want to sell meat. Until now.

“Big packers have become these efficiency machines where they’ve been able to create all these different market opportunities to balance the carcass and create, good returns across the entire animal. That doesn’t exist on a small scale,” Arrowood says. “It’s really hard for any given producer to go out and create similar opportunities for the entirety of their carcass. That is what we’re doing.”

By using artificial intelligence, Arrowood says the company creates pricing models and yield distribution models to price optimize the entire animal for the end producer. If one buyer claims the ribeyes, the system figures out additional buyers for the strips, tenderloins, ground beef, etc., he says.

“It’s our responsibility to create a diversified set of customers on the buy side that we can move this product to, school systems, hospitals, really good targets for us in terms of moving that ground product,” Arrowood explains. “There’s a lot of restaurant groups that are looking for a different product than they might be able to get through the institutional food service companies. So, that’s where we’re moving some of that prime product.”

The idea for Farmshare came to Arrowood when he experienced the challenges in the beef supply chain firsthand.

“During the pandemic, I left San Francisco and moved out to a cattle ranch in Montana, and that’s where I am right now. And it didn’t take me long, when I got to this seventh-generation cow-calf operation, to realize there were some pretty deep inefficiencies in the supply chain and that of every dollar that I or any other city slicker was spending on meat in the grocery store, only 14 cents was making its way back to a producer’s pocket.”

As a tech pro, Arrowood began imagining what could be done to create more streamlined distribution that would give fair financials back to the end producer and help independent processors.

“I think that technology serves a very unique and interesting opportunity to rethink the way in which meat travels throughout the value chain, and the money that ultimately gets back into the hands the people who do the work,” Arrowood says.

Farmshare works with processors in more than 25 states across the country and is ready to expand its reach.

“We like to think of ourselves as bringing modern tooling to the independent processor,” Arrowood says. “For maybe the first time, we’ve built a set of tools for the independent processor that help to increase efficiency and maximize the throughput of their plant and ultimately drive them towards doing greater capacity within their facility.”

By automating and streamlining several manual processes and complexities that exist for processors today, Arrowood says the system can mitigate the amount of phone calls, paper pushing and filing that an independent locker has to go through in order to successfully manage their business.

“Our customers are saving five to seven hours per day on all the administrative sort of burden and complexity of their business,” he says.

He says packers have a lot of efficiencies, technology and staff to help them future proof their businesses.

“What we’re doing is building that as a shared resource and shared set of infrastructures that we can then sort of co-op out into the ecosystem for the independent processor,” Arrowood says.

This management system creates opportunities for efficiency throughout the supply chain while keeping the marketing between the buyer and the seller. Within the Farmshare system, the animal does not change ownership to the processor and the restaurant connects directly with a group of independent processors.

“We’re facilitating the transaction between those two parties,” Arrowood says. “We’ve used this network of independent processors as the manufacturing layer to actually turn that animal into a consumable product.”

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This 87-Year-Old's Powerful Business Sense Helped Create a Booming Meat Processing Business in Iowa

Thu, 07 Mar 2024 14:44:10 GMT

Tom and Joan Kerns

(Edgewood Locker)

“We were on his dad’s farm for five years when his dad announced he was going to sell the farm. He wanted us to buy it, but we could not afford to buy a huge farm back then,” Joan explains.

So, they found a farm to rent three miles outside of Edgewood, until an accidental fire on that farm sparked another change.

“Talk about an act of fate. We knew the lady who owned that farm was going to make us move, because she believed those stories that we started the fire,” Joan remembers. “Tom came home one day and said, ‘The locker in town is for sale.’ So, we bought it.”

It was that decision that changed the course for the Kerns family. Neither Joan nor Tom knew anything about running a meat locker, but they had the tenacity to make it work.

“Tom wanted to do the actual meat cutting and that sort of thing, and I was going to do all the books and the book work,” says Joan.

The business started out with minimal equipment: only a saw and a grinder at the locker. That didn’t stop the Kerns from seeing phenomenal growth.

“And every year we were in business, we grew. Every year we got bigger. And so, finally, we outgrew our plant,” she says.

The growth wasn’t always easy, and it didn’t come without financial hardships. Joan says the couple borrowed money to expand and grow six different times.

“But I remember, maybe the second or third time Tom said, ‘I’m going to go up to the bank tomorrow and borrow some money for the next addition,’ and I went up to do our daily banking that day. And the girl said, ‘Oh, we can give you the money.’ So, I borrowed the money, got back home and I told him. I said, ‘Well, I got the money borrowed for our new addition.’ Tom said, ‘They let a woman do that?’ That’s the way it was back then,” says Joan.

A Force of Nature

Joan’s son Terry will be the first to tell you how much his mom was a driving force behind the scenes, if she didn’t always get the credit she deserved.

“She’s kind of a force of nature, there’s no doubt about it, and probably even more so than anybody realizes,” says Terry, who’s one of two second-generation owners of Edgewood Locker.

What makes Joan’s role so essential to their growth is the fact Joan’s husband, Tom, was dyslexic. So behind the scenes, Joan handled the paperwork and books, all while raising four kids at home.

Bringing in the Second Generation Straight Out of High School

Jim and Terry Kerns, Tom and Joan’s two sons who become the second-generation owners out of high school. Phot Credit: Edgewood Locker

(Edgewood Locker)

“It wasn’t popular with their peers that they allowed Jim and me to buy in at such a young age, you know. They gave us a huge opportunity,” remembers Terry.

“And I think that’s why we grew as we did, because they were partners. They were going to be in this, and it made a big difference,” Joan says.

The growth has been impressive over the past 60 years, including building a new facility in the late 1990s that has seen even more expansion since.

“We built this business because she paid attention to detail. And she wanted to make sure it was done right. She still keeps us on our toes,” says Terry.

At 87-years-old, Joan is sharp, and attention to detail may still be one of her greatest strengths.

“She is not afraid to tell us when she thinks we’ve done something wrong,” says Terry.

Bringing in the Third Generation

Joan with the six owners of Edgewood Locker, who represent the second and third generations of the family business.

(Edgewood Locker)

Katie and Bailli, along with Luke Kerns and Payson Kerns, are the third-generation owners of Edgewood Locker.

“They’ve got experience, they’ve got education in meat science in business. So, as fun as it was to grow with Mom and Dad adding Jim and me, this next generation really has the potential to do amazing things,” says Terry.

Third-Generation Growth

“We’re just doing what we can to take the business to a new level,” says Baili.

“We really expanded into wholesale stores and retail stores carrying our products. And we just keep going with what the second generation and first generation have been doing, as well,” adds Katie.

The growth is evident everywhere you turn. Construction in their retail and lobby area is a clear sign of even more progress.

“We had a major expansion of 19,000-square-feet that we’ve been in now a little over a year and a half, and I think it’s running well,” says Terry. “We remodeled our old processing facility and updated that, and it looks like brand new.”

The decision to expand and remodel their retail and lobby area was propelled by the busiest season for Edgewood Locker: deer season.

“I think last year, we did 3,700 whole-carcass deer, and then over 3,500 batches of boned-out deer that came in, so well over 7,000 different batches to jerky,” Terry says.

With that type of volume, Edgewood Locker has also been able to invest in bigger and better equipment.

“I’d like to say we had this great master plan, but we never had a real plan to say, ‘Well, next year, we’re going to get into wholesaling, or next year, we’re going to do this.’ We just kind of took it as it came. Something presented itself, we ran with it, and ran hard with a lot of it,” says Terry.

A Legacy Worth Sharing

With 130 full-time, part-time and seasonal employees, Edgewood Locker also offers other custom processing, and has products for sale, in more than 100 retail stores across Iowa. And it’s that side of the business the third generation has already helped expand.

“I hope we can just continue the legacy,” says Baili.

“I’m hopeful that we can just keep doing like we’re doing, keep growing where we can and keep expanding things and have it all set up for the fourth generation if they would like to join in someday,” Katie says.

Walls of awards are a product of what Joan and Tom started in 1966, but that isn’t what Joan is most proud of today. The greatest gift just may be the fourth generation and the chance to carry on a business that started on hopes and dreams.

Meet 87-Year-Old Joan Kerns, A True Trailblazer Who Helped Carve Out A Niche For Her Family

Mon, 26 Feb 2024 22:06:28 GMT

Cut by cut. Slice by slice. Every detail counts for Edgewood Locker , a northeast Iowa-based business that’s been spliced together for nearly 60 years in 1966.

With no master plan, it started when Tom, a farmer, and Joan, a nurse at the time, were forced to find a new place to live.

“We were on his dad’s farm for five years when his dad announced he was going to sell the farm. He wanted us to buy it, but we could not afford to buy a huge farm back then,” Joan explains.

So, they found a farm to rent three miles outside of Edgewood, until an accidental fire on that farm sparked another change.

“Talk about an act of fate. We knew the lady who owned that farm was going to make us move, because she believed those stories that we started the fire,” Joan remembers. “Tom came home one day and said, ‘The locker in town is for sale.’ So, we bought it.”

It was that decision that changed the course for the Kerns family. Neither Joan nor Tom knew anything about running a meat locker, but they had the tenacity to make it work.

“Tom wanted to do the actual meat cutting and that sort of thing, and I was going to do all the books and the book work,” says Joan.

The business started out with minimal equipment: only a saw and a grinder at the locker. That didn’t stop the Kerns from seeing phenomenal growth.

“And every year we were in business, we grew. Every year we got bigger. And so, finally, we outgrew our plant,” she says.

A Force of Nature

What makes Joan’s role so essential to their growth is the fact Joan’s husband, Tom, was dyslexic. So behind the scenes, Joan handled the paperwork and books, all while raising four kids at home.

Bringing in the Second Generation Straight Out of High School

Joan is still a true trailblazer today, as the Kerns’ unconventional ways and business decisions also helped fuel the family operation.

“The boys had come into the locker business as they graduated from high school, which really let us dream bigger,” says Joan.

That was in the early 1980s. Tom and Joan didn’t just see their sons Terry and Jim as employees, they allowed the boys to buy into the business fresh out of high school.

“It wasn’t popular with their peers that they allowed Jim and me to buy in at such a young age, you know. They gave us a huge opportunity,” remembers Terry.

“And I think that’s why we grew as we did, because they were partners. They were going to be in this, and it made a big difference,” Joan says.

The growth has been impressive over the past 60 years, including building a new facility in the late 1990s that has seen even more expansion since.

“We built this business because she paid attention to detail. And she wanted to make sure it was done right. She still keeps us on our toes,” says Terry.

At 87-years-old, Joan is sharp, and attention to detail may still be one of her greatest strengths.

“She is not afraid to tell us when she thinks we’ve done something wrong,” says Terry.

Bringing in the Third Generation

While Joan doesn’t overlook the small things, she’s also the first to celebrate how much the family business has grown. It now includes four grandkids who have become part-owners.

“Oh my gosh, I did not see that coming. And they each bring their own experience, knowledge, their forte to the business,” says Joan.

“All of us in the third generation, all I feel have a very unique skill set, which allows all of us to bring something different to the table,” says Baili Maurer, one of Joan’s grandchildren who bought in as a third-generation owner.

“None of us really overlap much. We all have our own thing that we do, and it just works,” adds Katie, who’s also one of four grandchildren who are partners.

Katie and Bailli, along with Luke Kerns and Payson Kerns, are the third-generation owners of Edgewood Locker.

“They’ve got experience, they’ve got education in meat science in business. So, as fun as it was to grow with Mom and Dad adding Jim and me, this next generation really has the potential to do amazing things,” says Terry.

Third-Generation Growth

A Legacy Worth Sharing

USDA Seeks to Limit Use of ‘Product of USA’ Label By Packers

Mon, 06 Mar 2023 23:33:41 GMT

The Agriculture Department on Monday issued a proposed new regulation restricting “Product of the USA” labels on meat, poultry and eggs to animals born and raised in the U.S. The proposal would effectively close a labeling loophole that allows products to use such a label for beef and pork that is simply repackaged in the U.S.

President Joe Biden called for a reassessment of the labeling regulations as part of a 2021 executive order on Promoting Competition in the American Economy, and a commitment made in the Administration’s Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.

The White House says the increased clarity and transparency provided by this proposed change will prevent consumer confusion and help ensure that consumers understand where their food comes from.

“American consumers expect that when they buy a meat product at the grocery store, the claims they see on the label mean what they say,” said Agriculture Secretary Tom Vilsack. “These proposed changes are intended to provide consumers with accurate information to make informed purchasing decisions. Our action today affirms USDA’s commitment to ensuring accurate and truthful product labeling.”

The present labeling standard has been in effect since congress voted in December 2015 to repeal mandatory country-of-origin labeling laws for beef and pork. That action was forced by Canada and Mexico when the two countries challenged the COOL laws as a trade restriction before the World Trade Organization.

As part of its review, USDA commissioned a nationwide consumer survey . The survey revealed that the current “Product of USA” labeling claim is misleading to a majority of consumers surveyed, with a significant portion believing the claim means that the product was made from animals born, raised, slaughtered and processed in the United States.

Regarding the new proposal, Vilsack does not think it would run afoul of trade rules because the labels are voluntary, nor will it impose undue burdens on meatpackers.

“They don’t have to put the label on there,” Vilsack told Bloomberg. “But if they choose to put it on there, then they better be able establish that the animals were born, raised, slaughtered, processed in the US.”

About 12% of all meat, poultry and egg products sold in the US currently claim US origin on their labels, the agriculture department estimates.

U.S. Cattlemen’s Association president Justin Tupper said in a statement his group is “thrilled that the proposed rule finally closes this loophole by accurately defining what these voluntary origin claims mean. If it says, ‘Made in the USA,’ then it should be from cattle that have only known USA soil.”

However, the North American Meat Institute said the new regulations for meat products are again likely to result in trade retaliation from Canada and Mexico costing American consumers and businesses billions of dollars.

National Cattlemen’s Beef Association NCBA Executive Director of Government Affairs Kent Bacus released the following statement:

“There is no question that the current “Product of USA” label for beef is flawed, and it undercuts the ability of U.S. cattle producers to differentiate U.S. beef in the marketplace. For the past few years, NCBA’s grassroots-driven efforts have focused on addressing problems with the existing label, and we will continue working to find a voluntary, trade-compliant solution that promotes product differentiation and delivers profitable solutions and for U.S. cattle producers. Simply adding born, raised, and harvested requirements to an already broken label will fail to deliver additional value to cattle producers and it will undercut true voluntary, market-driven labels that benefit cattle producers. We cannot afford to replace one flawed government label with another flawed government label.”

A statement from R-CALF USA said the organization supports the proposed reforms to the “Product of USA” label, but “it stands firm that only Congress can create labeling reforms that will restore the entire truth to beef consumers and create the market reforms deserved for domestic cattle producers.”

Vilsack Lists USDA's 4 Policy Objectives for 2023

Wed, 11 Jan 2023 14:16:20 GMT

USDA Secretary Tom Vilsack has a history of making key announcements during visits, and that was the case during his appearance at the American Farm Bureau Federation’s annual meeting in Puerto Rico.

Some of them include:

1. ERP Phase 2

Vilsack announced Phase 2 of the ERP, which will provide help to producers for production and quality losses of eligible crops, utilizing calculations of a producer’s decrease in gross revenue.

Those were about to be released months ago but were pulled back at the last minute due to lawmaker and farmer complaints. USDA eventually announced anyway.

USDA said in documentation on file at the Federal Register that using that approach will reflect the losses “without requiring the more extensive calculations and documentation required under previous programs” for disaster-related crop losses. USDA said this streamlines the aid to minimize the burden on producers and processing of applications by county FSA offices. Using that process also means it will address losses for a qualifying disaster event whether it happened before or after harvest.

ERP Phase 2 will be available for a decrease in gross revenue in 2020 or 2021, primarily to those with losses not covered by Federal Crop Insurance or the Noninsured Assistance Program (NAP).

The application period is Jan. 23-June 2. USDA has already paid out $7.31 billion under ERP Phase 1 as of Jan. 8, up from $7.28 billion the prior week, including $6.23 billion for non-specialty crops ($6.21 billion prior) and $1.09 billion for specialty crops ($1.08 billion prior). A total of $10 billion was earmarked for ERP.

USDA projects outlays for ERP Phase 2 payments will be $1.2 billion and will likely be pro-rated as USDA projects total gross outlays at $1.5 billion.

Phase 2 Reflection

Phase I was highly successful and it worked well. Phase 2 has tons of problems. Comparing schedule F in relevant years to past years doesn’t reflect losses. A farmer may have had to sell land or livestock when they didn’t want to. They may have sold a previous year’s crop in the year in question. These and other things skew the schedule F. There is also the issue of forcing farmers to share schedule F info with local FSA offices.

2. Pandemic Assistance Revenue Program (PARP)

Vilsack announced PARP payments for producers that suffered a 15% or greater decrease in allowable gross revenue for the 2020 calendar year compared with either 2018 or 2019. This effort, Vilsack said, aims to “fill in gaps” for losses covered by either Phase 1 or Phase 2 of ERP.

The payments will have a factor of 80% (90% for underserved farmers and ranchers) and will be reduced by 2020 ERP payments, and pandemic assistance under either the Coronavirus Food Assistance Program (CFAP) 1 or 2 and other pandemic aid.

Payments will be limited to $125,000 per person or entity and USDA may set a lower maximum payment amount per person if total payments exceed available funding and USDA expects that to be the case — PARP outlays are projected at $250 million with gross outlays pegged at $2.66 billion.

USDA also will expand payments under prior efforts such as CFAP 2 and others. The total payments USDA projects under the ERP Phase 2, PARP and expanded other programs is $1.82 billion with gross amounts at $4.54 billion.

3. U.S.-Made Fertilizer

USDA will seek public comment on 21 potentially viable projects totaling up to $88 million to boost U.S. fertilizer production via the first round of USDA’s Federal Production Expansion Program, a $500 million effort announced earlier this year.

The projects are in Alabama, Arizona, Colorado, Florida, Iowa, Louisiana, Massachusetts, Minnesota, Missouri, Montana, Ohio, Oregon, Texas, Washington, and Wisconsin. USDA is seeking comments through Feb. 8 on the environmental impacts of the projects.

4. Meat and Poultry Processing

Vilsack announced three projects in Ohio, Michigan and Minnesota which will expand independent meat and poultry processing capacity via the Meat and Poultry Processing Expansion Program.

The projects total $12 million and are in addition to other recently announced efforts in the sector.

More on policy:

We Have ERP Phase II
Policy and Payments: What Producers Can Expect in 2023

Sen. Booker Proposes Industrial Agricultural Accountability Act

Wed, 23 Nov 2022 15:16:33 GMT

Sen. Cory Booker (D-N.J.) has unveiled new legislation targeting America’s large livestock “corporations and industrial operators,” seeking to hold such entities accountable for disaster mitigation and to ensure those entities are complying with animal welfare regulations.

The Industrial Agricultural Accountability Act would end line-speed increases and “meatpacker self-inspection programs” for animal slaughter, prohibit slaughter of all downed animals and require “more humane treatment of livestock transported for long periods.”

Booker announced his proposal with a news release posted to his website Tuesday.

The proposed legislation would also require large entities to register with USDA, submit a disaster preparedness plan and pay a fee to establish a fund focused on disaster events.

“This new fund, the High-Risk AFO Disaster Mitigation Fund, will be utilized to enforce disaster mitigation plans and ensure that the most humane practices are used if depopulation is absolutely necessary,” the release said.

Booker also proposes to invest resources for higher-welfare slaughter technology in meat and poultry processing facilities and establish a pilot program to train and employ more part-time inspectors for small processing plants.

“We’ve seen multiple recent crises that have shined a light on the threat that corporate meat producers and their web of factory farms represent to workers, animals, the environment, and rural communities,” booker said. “Built by agribusinesses, the industrial livestock and poultry system is designed to maximize production– while externalizing risk and liability– to ensure corporate profits even when the system fails.”

The full text of the bill can be found here. The list of supporting organizations can be found here.

Funding for Processors Continues into Summer 2022

Fri, 25 Mar 2022 19:52:57 GMT

On Friday, USDA shared the launch of the Meat and Poultry Processing Capacity Technical Assistance Program (MPPTA), available to applicants involved with the Meat and Poultry Inspection Readiness Grant (MPIRG) program and the Meat and Poultry Processing Expansion Program (MPPEP).

The MPRIG and MPPEP follow a slew of USDA announcements delivered under the American Rescue Plan Act in 2021 to foster a fair, competitive and resilient meat supply chain.

Rep. Cindy Axne (D-IA) and USDA Under Secretary Jenny Lester Moffitt joined forces in Des Moines, Iowa, on Friday to host a roundtable regarding the processor progress.

The need for market competition and transparency in farm country is more apparent than ever, Axne says. The grant program will not only help the processors in rural communities, but she says it will also provide producers “more options, ensuring a fair price for their cattle.”

Moffitt says her main objective is to ensure all producers have access to USDA dollars and programming.

“We know meat and poultry processing is a tough industry to break into. There are lot of complexities and it’s important to complete the pre-application process the right way,” she says. “We see there’s a need for qualified technical expertise to capture the projects for producers and MPPTA will address that need.”

A total of three technical assistance locations have been negotiated at Oregon State University’s Niche Meat Processor Assistance Network, the Flower Hill Institute (New Mexico) and the Intertribal Agricultural Council (Montana). The hubs will help applicants navigate the application process and assist grant recipients throughout their projects.

Additional Funding, Additional Opportunities

In November 2021, the USDA announced $32 million in grants set aside for processors looking to make necessary improvements to achieve a federal grant of inspection through the USDA—commonly known as Food Safety Inspection Service (FSIS) certification. An FSIS certification allows processors to ship product across state lines, opening a new door for business.

According to USDA Secretary Tom Vilsack, the program’s previous “success” with 160 processors unearthed the need for a second round of payments announced on Friday, in the range of $23.6 million.

The last few years have unearthed the “extreme” fragility in the U.S. food supply chain, according to Moffitt. She says this FSIS program will help level the processor playing field.

“Operations from Pennsylvania to California that started up pre-COVID-19 were hit hard with the pandemic. They lost their ability to move their local product to their local processor,” says Moffitt. “This program is truly about helping those operations that are looking to expand and develop new markets with increased capacity.”

Phase one of FSIS grant financing ends on April 11, with a second round following into summer 2022.

Read more on USDA processing:
> Biden Plan Directs $1 Billion To Impact Meat & Poultry Processing, Strengthen P&SA, Add New Labeling Rules

> Biden’s Action Plan Draws Mixed Reviews From Cattlemen

Biden Plan Directs $1 Billion To Impact Meat & Poultry Processing, Strengthen P&SA, Add New Labeling Rules

Tue, 04 Jan 2022 14:44:17 GMT

The Biden Administration announced Monday it will spend $1 billion in American Rescue Funds to expand independent meat processing capacity as part of a broader initiative to break up what it calls a meat and poultry processor monopoly.

President Biden’s action plan also promises new, stronger rules under the Packers & Stockyards Act, and to issue new “Product of USA” labeling rules. Included in today’s announcement was a “joint initiative” between the Justice Department and USDA to better coordinate their efforts.

“Over the last few decades, we’ve seen too many industries become dominated by a handful of large companies that control most of the business and most of the opportunities—raising prices and decreasing options for American families, while also squeezing out small businesses and entrepreneurs,” the White House said in a statement. “The meat and poultry processing sector is a textbook example, with lack of competition hurting consumers, producers, and our economy.”

In July, President Biden announced a plan to improve competition and resilience in the meat and poultry sectors. Monday’s announcement included a four-prong Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain the White House hopes will “loosen the grip that consolidated corporations currently have on the industries.” The new Action Plan also seeks to support workers and independent processors, strengthen protections for farmers, ranchers and consumers, enforce fair competition and increase pricing and market transparency.

Details of the President’s Plan

USDA said it reviewed nearly 450 comments in response to its request for input on how best to increase independent processing capacity. Through analysis of stakeholder input, USDA identified an urgent need to:

Expand and diversify meat and poultry processing capacity;
Increase producer income;
Provide producers an opportunity to have ownership in processing facilities;
Create stable, well-paying jobs in rural regions;
Raise the bar on worker health, safety, training, and wages for meatpacking jobs;
Spur collaboration among producers and workers;
Prompt state, tribal, and private co-investment; and
Provide consumers with more choices

What the Plan Means for Farmers and Ranchers

Specifically for farmers and ranchers, the White House Action Plan promises in 2022 the administration will:

Issue new, stronger rules under the Packers and Stockyards Act—the law designed to combat abuses by the meatpackers and processors. The law was systematically weakened by the Trump Administration USDA, and in the Biden Administration, USDA has already begun work on three proposed rules to provide greater clarity and strengthen enforcement under the Act. USDA is also currently working with the Federal Trade Commission to prepare a report on access to retail and competition’s role in protecting new market entrants in meat processing.
Issue new “Product of USA” labeling rules so that consumers can better understand where their meat comes from. Under current labeling rules, meat can be labeled “Product of USA” if it is only processed here—including when meat is raised overseas and then merely processed into cuts of meat here. We believe this could make it hard for American consumers to know what they are getting. USDA has already begun its top-to-bottom review of the current labeling rules and consumers’ understanding of the labels, with the goal of new rule making to clarify “Product of USA” standards.

Plan to Promote Competition

It is the policy of the Administration to promote vigorous and fair enforcement of the existing competition, and to ensure “all of government” works together to promote competition:

DOJ and USDA are announcing a new joint initiative to better coordinate their efforts—including launching within 30 days a new portal for reporting concerns about potential violations of the competition laws. The President’s Executive Order on Promoting Competition established the White House Competition Council to coordinate a “whole of government approach” to promoting competition. In furtherance of this approach, Competition Council members USDA and DOJ will provide a new joint channel for farmers and ranchers to report complaints of potentially unfair and anticompetitive practices in the agricultural sector to them—whether under the Sherman and Clayton Acts or the Packers and Stockyards Act. This joint channel will facilitate the agencies’ ability to work together based on a common understanding of farmers’ and ranchers’ concerns. The agencies will protect the confidentiality of the complainants to the fullest extent allowed under the law.
The agencies also announced their commitment to the strongest possible whistleblower protections. DOJ and USDA further announced that they will enhance their collaboration on referrals, information sharing, and identifying areas of the law in need of modernization.

Turning up the Heat on Transparency

The Biden-Harris Administration will work to increase transparency in cattle markets so that ranchers can get a fair price for their work:

USDA is using its existing authorities to increase transparency to the extent possible. Right now, meatpackers have outsized power in setting the prices for beef. The dominance of opaque contracts and insufficient competition undermine price discovery and fairness in the independent livestock markets, which ultimately lock producers into prices that aren’t the product of free and fair negotiation. In August, USDA began issuing new market reports on what beef processors pay to provide additional insight into formula cattle trades and help promote fair and competitive markets. USDA is looking at what more can be done under existing authorities.
The Biden-Harris Administration will also work with Congress to make cattle markets fairer and more transparent. The Administration is encouraged to see bipartisan legislation in the Senate by Senators Grassley, Fischer, Tester, and Wyden, and in the House by Representatives Axne and Feenstra, that seeks to improve price discovery in the cattle markets and facilitate actual negotiation of prices between livestock producers and packers. We look forward to working with Congress on these important issues, and we hope that they will also look for ways to ensure farmers and ranchers have fair access to processing capacity.

Cattle Market Compromise Ensures Transparency, Eliminates Confidentiality

Wed, 10 Nov 2021 15:16:43 GMT

A group of U.S. senators is expected to propose the new Cattle Price Discovery and Transparency Act yet this week.

The Senators – Deb Fischer (R-Neb.), Chuck Grassley (R-Iowa), Jon Tester (D-Mont.), and Ron Wyden (D-Ore.) – joined forces to establish the new legislation ahead of the Mandatory Price Reporting Dec. 3, 2021, expiration.

Iowa had a three-year rolling average prior to the Cattle Price Discovery and Transparency Act. With this new legislation based off 18-month averages, the numbers are closer to the real, current price.

The joint press release for the Cattle Price Discovery and Transparency Act says the regional minimum level can be more than three times that of the lowest regional minimum, and no regional minimum can be lower than the 18-month average trade at the time the bill is enacted. Deppe says for a state like Iowa, this doesn’t mean your cattle inventory always has to be traded on cash negotiated, grid-type basis, rather, “It kind of hinges off of the lowest average in the country.”

In the Cattle Price Discovery and Transparency Act, the USDA will be prohibited from using confidentiality as a justification for not reporting contracts, and the USDA must report all Livestock Mandatory Reporting information in a manner that ensures confidentiality. Deppe says this provision will hinder consolidation and ensure market transparency.

“For our producers, confidentiality often gets in the way of understanding par value based on percentage of formula marketing versus cash negotiated, or grid-type marketing,” says Iowa Cattlemen’s Association CEO Mike Deppe, who discussed the situation with AgriTalk’s Chip Flory on Tuesday. “Our association recognizes this confidentiality needs to be softened to help our producers.”

Bullet point number four in the joint press release requires timely reporting of cattle carcass weights as well as requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. Deppe says this was a hot-button topic at the 2019 Cattlemen’s Leadership Summit.

“If a steer is harvested in a plant anywhere in the country, that carcass weight does not show up on the AMS reports for two weeks,” says Deppe. “We took a position on this, did some investigating, and decided that Congress is certainly going to need to legislate this.”

The pork industry obtains market ready animal data the morning following harvest. Deppe doesn’t see the cattle industry being able to provide next-day data, but his team is certain they can minimize the current two-week gap.

Deppe says his team has been working with Sens. Fischer and Grassley since August, emphasizing the all-inclusive detail of the bill that requires every plant participate in charting currency of feed yard inventory. “That’s always been our policy position, and we certainly see other organizations like the Iowa Farm Bureau, American Farm Bureau, Farmers Union, and U.S. Cattlemen’s Association on this in terms of our endorsements,” says Deppe.

Sen. Grassley demonstrated his support for the cattle industry, stating, “I pushed for hearings in the Senate’s Agriculture and Judiciary committees to shine a light on the market unfairness and now have partnered with a bipartisan group of senators to develop a solution.”

Grassley: Beef Producers Face a “Very Unfair Situation”

Wed, 28 Jul 2021 17:36:48 GMT

U.S. Sen. Chuck Grassley (R-IA) talked with Pro Farmer policy analyst Jim Wiesemeyer on AgriTalk Monday about a host of issues, hearings and proposed policies.

Top of mind for the senator was concern about “big companies” that wield much of the control in the livestock processing industry.

“We expect to make a case that four companies having 80% of the slaughter means the spot person can’t market when he wants,” Grassley told Wiesemeyer. “There’s not enough room for Iowa and other Midwest producers to get their cattle to the slaughterhouse and get a good price. It’s a very unfair situation.”

Grassley supports legislative action, which he along with Sen. Jon Tester (D-MT) originally introduced, because of concerns that small producers are losing money on cattle due to being unable to spot market.

Grassley said he has asked USDA Secretary Tom Vilsack to “look into the situation” to see if he could support the legislation.

“I have not heard back yet, but I think the Secretary has already taken some action with money that’s already available to incentivize packers to set up more slaughter, so more markets are available for the spot producer,” Grassley said.

Wiesemeyer then asked Grassley for his take on the $579-billion infrastructure bill addressing transportation, broadband and utilities that Democrats hope to pass.

Grassley told Wiesemeyer that there is some talk that something can come together later this week in the Senate.

“I’m just speaking for Chuck Grassley now, but I think there’s a lot of unanimity on this among Republicans,” he said. “How are we going to pay for it? Is it paid for? That may make a big difference whether I would vote for it or not. But everything I’ve heard up until now, on the programs that are in the bill, I think I could vote for.”

A coalition of more than 100 business leaders on Monday penned a letter to congressional leaders, urging them to pass the infrastructure bill that was agreed to by the White House and a bipartisan group of Capitol Hill negotiators.

“We write to express strong support for your promising efforts to design and pass a Bipartisan Infrastructure Framework, a long-awaited and desperately needed program to renew and rebuild our nation’s crumbling infrastructure,” the letter, which was signed by 146 business leaders, said.

“We urge you to finalize and adopt this program to modernize and expand physical and digital assets that are a necessary foundation for our nation’s sustainable growth,” the letter added.

Wiesemeyer also asked Grassley about the potential for tax increases this year as well as his take on the outlook for ethanol. Listen here for the entire discussion.