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story.lead_photo.caption Cattle hustle back and forth in front of bidders during Monday's auction at the Callaway Livestock Center. Local beef producer David Means said his animals are selling at 30 percent less now than they were before the pandemic. Photo by Helen Wilbers / Fulton Sun.

Cattle producers have a beef with major meat processors.

"The product that's ready for the consumer is at historic highs, but the product we're selling, we're losing money," said David Means, owner of Means Cattle Company near Fulton.

Prices for beef products are climbing steadily — for example, according to the U.S. Department of Agriculture, 80-89 percent lean ground beef is selling at an average of $4.09 per pound this week, compared to $3.74 last week or $3.87 this time last year.

The increases come amid concerns about supply. During the COVID-19 pandemic, a number of meatpacking plants have slowed production or temporarily closed due to outbreaks of the disease among staff or workers staying home to avoid getting sick. According to the nonprofit Food and Environment Reporting Network, at least 13,000 meatpacking workers have tested positive for the disease.

In late April, President Donald Trump signed an executive order instructing meat processing plants to stay open, invoking the Defense Production Act. The list of temporarily shuttered meatpacking facilities included Tyson plants in Washington and Nebraska, Aurora Packing in Illinois and a JBS facility in Wisconsin.

Despite increased consumer-end prices, local beef producers — many of whom sell cattle to feedlots, who in turn send the animals on to processing plants — are seeing margins shrink. Live cattle futures recently hit their lowest in nearly two decades.

"Those packers may own the product seven-eight days, on the beef end, and are making well over $2,000 a head, whereas the farmer has the animal for a year and is losing $200-$400 a head," Means said.

Means sells his cattle to feedlots through the Callaway Livestock Center and said he's been losing $100-$250 a head. The Sterling Beef Profit Tracker claim that in late April, feedlots were losing $262.52 per head on average, compared to a profit of $24.72 per head a month ago and $184.63 a year ago. By comparison, the average packer's margin was a positive $770.78 per head.

Anita Ellis, livestock specialist for the University of Missouri Extension, said many area beef producers are facing similar difficulties.

"Pretty much everything and everybody's hurting; there's nothing that's gone unscathed, whether in agriculture or not," she said.

Ellis said prices on dry distiller's grain, normally an inexpensive feed, have recently increased, tightening margins even further. Some of the farmers she works with are looking to adjust feed rations.

"In Missouri, one aspect that's a little more positive is that we have a lot of cow-calf producers and not as many feedlots," she added.

If farmers have the resources, Ellis said, they can hold onto those animals for a little longer in hopes the market will improve.

"The market is taking an upturn, even here in Missouri," she said. "We might be seeing a little bit of a break."

Means said he isn't optimistic about that strategy.

"It's going to take a while to clean this thing up in my opinion," he said. "We're not going to turn this thing around overnight. It's a troubling situation. The cattle industry is a major economic drive in the state of Missouri."

AG Plea

Means is far from the only one troubled by the current state of the beef market. Last week, Missouri Attorney General Eric Schmitt joined 10 other attorneys general in signing a letter encouraging the Department of Justice to investigate antitrust concerns in the beef processing industry. The Missouri Cattlemen's Association also backed the plea.

"One segment of the industry is making unprecedented profits while the rest of us are counting pennies," MCA President Marvin Dieckman wrote.

The letter claimed the four largest beef processors control 80 percent of all U.S. beef processing in the United States and alleges the concentration of the industry and the threat of increasing consolidation could create a bottleneck that hurts ranchers.

"During an economic downturn, such as that caused by the current pandemic, firms' ability to harm American consumers through market manipulation and coordinated behavior exacts a greater toll, providing an additional reason for conducting a careful inquiry into this industry," the letter added.

Means said he hasn't seen the market look this bad in a "long, long time." Normally, he explained, if cattle producers are losing this much money on their herds, it's because of weather conditions forcing a cull.

"The packers are doing this," he said. "There's demand. The consumer wants to buy beef, pork, poultry. And there's plenty of beef out there. It just looks to me like it's price-fixing at the highest level."

Ellis and Means see the situation as an opportunity for smaller local processors to connect with consumers and provide access to locally produced beef.

"I know a lot of consumers are wanting to start buying locally, get 'em processed at a local butcher shop," Means said. "I highly encourage that."

Ellis added an upcoming "Backgrounding 101" virtual class offered by the MU Extension might be helpful to local producers. It's scheduled for 9 a.m.-3:30 p.m. May 30. To sign up, visit extension2.missouri.edu/events/backgrounding-101.

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