What is Happening in The Beef Industry: A Packer's View on mCOOL and The Beef Shortage
Updated: May 13, 2020
The beef industry, particularly packing plants, have received a tremendous amount of attention lately. Unfortunately, the response has been overwhelmingly negative in the eyes of most Americans. Whether that anger is due to lack of knowledge about the industry or false information being spread through the media, it's important that we, as packers, address the public's concerns.
Before we can address those concerns, we have to clarify one particularly important piece of information: cattle and beef are not the same commodity. Although the two are connected, the price of one is not directly tied to the price of the other. Live cattle are extremely important to the beef industry, but there are many steps between the pasture and the plate that make beef it's own commodity. For example, a 1500 lb block of steel is not very valuable to the average consumer. However, that same 1500 pounds of steel molded into the frame of a truck is extremely valuable. In the same way, a 1200 lb live animal is not very valuable to the average consumer, but the 500 pounds of beef that are produced from that steer are extremely valuable. Due to the cost of processing and the logistics that go into transporting that beef all over the world, we cannot talk about them as if they are the same thing.
The second thing that we have to clarify is how the American beef industry works. American ranchers produce some of the finest beef in the world. Thousands of animals are rendered every single day in the United States. A supreme product is produced. However, beef is not on the menu every day in American homes. In fact, when it is on the menu, it is typically hamburger meat. Our incredible cattle do not typically produce 80/20 hamburger meat or anything leaner than that. So we import leaner cattle from different countries. Those cattle are ground to mix with American beef to make the leaner hamburger meat that feeds your family. At Mineola Packing, we have a similar process, but we do not import any beef. We buy 73/27 hamburger meat from a larger packer, which is from American cattle. Then we buy lean cattle from the Northeast Texas area to mix with it. All of this is done in American packing plants, under the inspection of our federal government. This insures that, no matter where the live animals come from, your product is safe and wholesome whenever you cook it for your family.
Now that we've cleared that up, we can talk about Country of Origin Labeling and the demand for only American beef. As far as Country of Origin Labeling (COOL) goes, there is no indication that it improves the price of live cattle. COOL was originally in effect from around 2002-2015. During that period, we experienced some of the highest and lowest beef prices on record. This can be attributed to the basic economic principles of supply and demand. During that period, Texas in particular went through the worst drought on record. Due to lack of corn and hay, cattle went to market in droves. As a result, the supply was higher than the demand and the price dropped. A few years later, there were no calves to send to market. Demand was high, but supply was low so the price sky-rocketed. COOL had nothing to do with it. Beyond that season of drought, cattle market prices were historically similar to years before COOL. In addition, when COOL was repealed, cattle prices did not drop. Furthermore, there is an argument that demanding American beef could actually hurt American producers as a whole. If we were to stop importing and exporting American beef, the market for valuable cuts of beef, like rib eyes, t-bones, and filets, would decrease, making the overall price of cattle lower. For more information, check out this article: https://www.beefmagazine.com/beef-quality/did-cool-impact-pricedemand-relationship-beef
Finally, let's talk about the beef shortage. Does a cattle shortage exist? No. Does a beef shortage exist? Absolutely. Currently, the demand for beef is outpacing the supply, so the price of beef is astronomical. Packing houses all across America have a finite rendering capacity. During the Covid-19 pandemic, their rendering capacity has been almost cut in half. Until the pandemic is over and people go back to work, the price of beef will likely remain high. While we're discussing it, the four largest packers in the United States have already been investigated for collusion and monopolizing the markets. They were found not guilty. Every single week, Mineola Packing Company is in contact with National Beef, one of the four large packers. Their outlook is just as grim as everyone else's. They aren't trying to gouge anyone, but they are trying to keep their doors open.
So what can you do?
If you are still interested in purchasing only American raised beef, one of the best things to do is find a local rancher who is harvesting his or her own beef. Buy directly from them. It is the easiest way to support local ranchers and have no doubts about how your beef was raised.
If you are interested in reversing the prices of all other beef, the best thing to do is go back to work, as safely as possible. When America goes back to it's normal routine, the price of beef will normalize.
However you feel and whatever you choose to do, please be kind. Most every person in the beef industry is just trying to make an honest living by producing a safe and wholesome product to feed the world. Although times are trying now, we can all work towards a better future.
If you have questions, ask the experts- the men and women in the beef industry.
As always, thanks for keeping our family feeding yours and come see us.