WHERE'S THE BEEF? Meat Margins Are Off and Biden's Proposed Fixes Won't Lower Prices

(AP Photo/Mike Groll, File)

Inflation can have several root causes. One is too many dollars chasing not enough goods. Americans see the effects of that problem in many areas of the economy. However, price increases can also result from onerous regulation, spikes in demand, and real shortages. Unfortunately, it can also happen because of price-fixing among a small number of powerful competitors. In a recent speech, President Joe Biden has talked about this issue several times and recently detailed the steps his administration is taking to address it. He said:

“While (the meatpackers) profits go up, the prices you see at the grocery stores go up commensurate. The prices farmers receive for the products that they are bringing to market go down. This reflects the market being distorted by lack of competition. I’ve said it before and I’ll say it again: Capitalism without competition isn’t capitalism. It’s exploitation. That’s what we’re seeing in the meat and poultry industries now.”

The administration will divert $1 billion from the American Rescue Plan to small meat processors in a bid to increase competition. He said his administration would issue stronger rules to combat abuses and implement food labeling rules so consumers can understand where their meat comes from. According to Bill Bullard, CEO of the Ranchers-Cattlemen Action Legal Fund (R-CALF), the plan may include some needed reforms, but it accepts the market as it is today and will have no near-term effects.

Biden also blamed the Trump administration for the problem. Unfortunately for Biden, the roots of the problem go back to the Obama administration. In 2016, Congress repealed the law requiring country of origin labeling (COOL) in an omnibus bill President Obama signed. Additionally, 2015 was the year cattle prices disconnected from the price consumers paid for beef.

Matt Stoller, Research Director for the American Economic Liberties Project, covered a hearing of the House Agricultural Committee in Oct. 2020. The goal of the hearing was to address a crisis in the beef industry and our food supply system more generally. Sen. Chuck Grassley (R-Kan.) had proposed legislation to address the issues independent producers face. Stoller noted:

To cattle ranchers, who actually sell the cows to packers that are turned into beef, the crisis is not high prices, but low prices. They aren’t getting very much for their cattle. This is weird, because, normally, beef and cattle prices move in tandem – the current high beef prices should result in high cattle prices. But since 2015, the ‘meat margin’, or the spread between the prices ranchers get for their cows and the prices consumers pay at the supermarket, has widened dramatically. Despite high consumer prices, independent ranchers are losing money, and going out of business.

According to Stoller, the fundamental flaws in the industry result from policies in the late 70s and 80s. In a large merger wave, an oligopoly dismantled in the 1920s reemerged. Regulations and legal precedent that prevented the packers from engaging in several anti-competitive practices, like owning their own feedlots, were repealed or thrown out. JBS, Tyson, Cargill, and National Beef, the four major meatpackers, eventually emerged. Together, they process 80-85% of all beef.

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So while it is easy to chalk up rising meat prices to COVID, supply chain issues, and the Biden administration blowing out spending, the problem has been brewing for years. It came to a head in 2015, and this graph from Stoller presents the issue in stark relief. The blue lines are the price of beef, and the red is the price ranchers receive for cattle. Those lines should move together. They disconnected in 2015.


The Trump administration certainly did not cause the disconnect and moved to address it. In the summer of 2020, President Donald Trump asked the Department of Justice to look into whether or not the meatpacking industry violated antitrust laws. According to Reuters:

President Donald Trump said on Wednesday he had urged the Justice Department to look into allegations that the meatpacking industry broke antitrust law because the price that slaughterhouses pay farmers for animals had dropped even as meat prices rose.

The investigation proceeded. The DOJ subpoenaed the four primary packers and actively investigated their pricing practices. In 2020 private plaintiffs also filed a class-action lawsuit alleging the four meatpackers conspired to fix prices in 2015. Together, the four packers provide 80-85% of all commercially available beef. So while the Biden administration is setting up a system to collect complaints, there are active investigations in the DOJ and lawsuits already in the courts.

The plaintiffs allege the companies agreed to purchase fewer cattle than a competitive market would otherwise demand and run their processing plants at less than available capacity. These agreements created a surplus of cows in the livestock market and shortages in the consumer market for beef. This agreement drove down the prices the companies paid for cattle and increased consumer prices for beef. According to the suit, the effect on the meatpackers’ operating margins was obvious:

By the end of 2018, Tyson and JBS were reporting record margins in their beef business. Tyson reported an operating margin of nearly 7%, almost double its 2014 operating margin. JBS reported a beef business increase of 10.2%.

“Given these swollen margins, it is no surprise that a leading industry reporter remarked that defendants ‘no longer compete against each other,’ enabling them to reap ‘gangbuster profits,’” the class action lawsuit claims.

A recent government analysis showed that the major meatpacker’s profits increased another 300% during the pandemic.

Bullard listed several actions the Biden administration could take now to fix what he calls a “chronically dysfunctional marketplace.” He notes how Biden talks about the consolidation in the meatpacking industry, but his DOJ is not taking any antitrust actions to address it. Because Biden has talked about meatpackers increasing their profits at the expense of ranchers and consumers, Bullard says that is a clear case of using market power to reduce competition.

Bullard also alleges the packers are committing unfair practices under the Packers and Stockyard Act. Foreign producers use the voluntary country of origin label (COOL) for U.S. producers. Bullard added that the Biden administration should take immediate action to stop this deceptive practice and pass mandatory COOL legislation.

Conservative radio host and cattle rancher Glenn Beck provided additional commentary about the status of the beef industry. In a recent special for BlazeTV, he detailed the challenges facing independent cattle ranchers from Big Beef, the federal government, and oligarchs like Bill Gates. While an oligopoly may be part of the problem in the beef industry, a whole host of incentives, green regulations, and market forces exacerbate the problem. According to Beck:

  • All four meatpackers have web pages detailing their commitment to environmental, social, and governmental (ESG) programs.
  • Three of the four companies made significant investments in lab-created meat.
  • Bill Gates is now the largest owner of private farmland. Consolidation of ownership of private farmland by ideologues can restrict the food supply by limiting grazing, reducing feed production, and other actions.
  • Biden’s tax plan would make it almost impossible for independent family farms to pass to the next generation.
  • Rising fuel and feed prices are hitting independent ranchers at the same time as falling cattle prices.

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Many conservatives mocked Biden’s comments as blaming capitalism rather than his terrible economic policies for higher meat prices. If they enjoy a good hamburger, it will behoove them to look a little deeper. The actions of the meatpackers have run in direct opposition to free-market principles for years. There is not a shortage of cows or consumer demand for beef. There is a shortage of processing in the middle.

If Republicans want to represent the independent business owner, not the Chamber of Commerce, we should be on the side of ranchers trying to bring competition back to the market. Not on the side of Big Beef. What is happening in the beef industry now looks more like central planning by four large packers to boost profits than any form of a free-market system. The independent producers in the industry are trying to reclaim a market by encouraging people to shop with local cattle farmers. If you are interested in locating a producer near you, visit

WATCH: (R-CALF) CEO Bill Bullard explains why your craving for a steak may break the bank:


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