WASHINGTON, DC – The following is a statement released by the North American Meat Institute (Meat Institute):
The New York Times’ The Daily podcast’s examination of the beef and cattle markets is simply wrong.
The beef and cattle industry is a complex marvel of American ingenuity with innovations that have allowed the US beef industry to produce more meat with fewer cattle, while improving sustainability, food safety, affordability, worker safety and beef quality.
There are many steps in the beef value chain: cow calf operators, feeders, packers, processors, wholesalers, retailers, and food service entities. To suggest only packers have a role in determining prices is misleading.
The Times narrowed its focus to the struggles of one moment in a global pandemic and ignored that since the summer of 2021, prices for cattle producers have rebounded.
In fact, cattle producers are earning the highest prices for their animals since 2014, which was the previous highest year on record. Multiple agricultural economists have predicted in congressional testimony, op-eds, and reports that, given a black swan event such as the COVID-19 pandemic, the markets have behaved predictably. They also predict that the cattle herd in America will shrink over the next two to three years, drawing down supply.
The laws of supply and demand apply to packers as well as producers. While we cannot predict the future, we can learn from the past.
In 2014, the last year of record profit margins for cattle producers, due to drought and other market conditions, there was a shortage of cattle and beef packers lost money. This led some of them to close packing facilities or go out of business.
The podcast leads the listener to believe that beef industry consolidation is increasing when it has had the same four firm ratio for nearly 30 years.
If The Daily’s listeners would like to learn more about beef packing and processing, they can go to the U.S. Department of Agriculture’s economists for the facts.