Dale Oeschger took care of his first cow when he was just 9 years old.
That was nearly 60 years ago, but unlike some of his peers, Oeschger never left the livestock business.
In his decades of experience, as a beef producer in Bay Port and chairman of the Michigan Beef Industry Commission, Oeschger has seen consumer demand for cattle change. He’s also witnessed how past crises have impacted the beef industry, like the 1986 mad cow disease outbreak that “crippled” the livestock industry for a couple of weeks.
Shutdowns in beef production aren’t unheard of, but the pandemic forced meat packers to close facilities and slow operations for an unusually extended period of time due to worker shortages and COVID-19 outbreaks.
Last year’s processing plant closures resulted in a backlog of animals that were otherwise ready for harvest and months-long waits for “slaughter spots.”
This backlog took a toll on farmers, as they were forced to keep animals longer and bear the extended financial burden of caring for their cattle.
Initially the increased — albeit backlogged — supply at facilities decreased the consumer beef prices, but that quickly changed when panic buying and heightened retail demand left grocery stores with empty meat freezers.
Beef prices soared in 2020 and reached near record-highs across the country, but farmers weren’t seeing those prices trickle down to them.
“Livestock producers would love to have a share of (the profit), but we end our ownership and control after we send it to the processor,” Oeschger said. “Our job on the farm is to raise cattle, do the best job we can and try to make a profit during that time. What happens beyond that is out of our control.”
Kevin Gould is a beef educator for the MSU Extension service in Ionia County. He said while some farmers struggled to sell their animals, large industrial packers made record profits.
“(Packers) were buying their supply of beef from the farmer at lower discounted prices, and were able to move that to retail sales at near record prices,” said MSU extension beef educator Kevin Gould. “That gets the dander up on all the suppliers, people that are raising the beef because their piece of the pie just got smaller, and the pie got larger.”
According to Gould, there are four main packers in the country that control about 80% of the beef harvest on a daily basis. Farmers currently sell their cattle under contract — which set prices far in advance and outside of supply and demand trends.
“The farmer usually takes on most of the risk and a large portion of the labor to get an animal from conception to consumption, and a packer can purchase that animal and turn it over in 10 days and make a significant profit, where the farmer is actually losing money on their end,” Gould said.
Gould said price discrepancies are an inherent part of beef production, but the widening gap and the “Big Four” that control most processing is the issue. COVID-19 only surfaced the disparities, with large packers receiving “exorbitant” profit levels that never reached the producers.
Nationally, farmers have mobilized to advocate for more opportunities to bid on livestock prices and make sure packers adhere to competitive price discovery.
Ernie Birchmeier is a livestock and dairy specialist at the Michigan Farm Bureau. He said the Bureau has formed a task force to develop solutions to price discrepancies.
Before finalizing and implementing solutions, Birchmeier said there are still questions that need to be answered first.
“Are we realizing true price discovery for the livestock that are produced? And if we aren't, why?” Birchmeier said. “And then how do we go about fixing that? I think those are important. And I think we need to look at packer concentration, and has it gone too far? Are there too few that are controlling that industry?”
Earlier this month, the U.S. Department of Agriculture announced a $500 million investment in funds to expand meat and poultry processing capacity to provide farmers more choices in the marketplace.
Birchmeier said he hopes Michigan can also expand processing opportunities to better support small- and medium-sized packers.
“I think we have to look at the regulatory burden that is placed on processors and on farmers,” Birchmeier said. “We need to make sure that we have a good food safety inspection service in place, but is there a way to make it easier for those that own processing facilities or want to own processing facilities?”
In a June press release, the USDA pledged to better enforce the Packer Stockyard Act, a 100-year-old law meant to protect farmers from unfair and anti-competitive practices in meat markets. This promise comes with three proposed initiatives: to clarify enforcement of deceptive practices, to propose a new poultry grower tournament system rule and to clarify that parties do not need to demonstrate harm to competition in order to bring action.
Oeschger said there are still long waitlists in smaller packing plants, but beef production is looking more normal now.
As a producer, Oeschger said he’s in favor of supporting smaller packing operations, but he’s hesitant to abandon contracts entirely since they guarantee farmers a reliable source of profit.
“If the market drops on the other end (and prices drop), we might be in the loss category when we try to sell, so there's two sides to that story,” Oeschger said. “I’d like to do some contracting to ensure some profit, but I'd also like to take advantage of the market when it comes around and rises.”
Oeschger said he’s hopeful for the future of the beef industry — agriculture is essential and, he hopes, adaptable enough to survive future market changes and even pandemics.
