Meatpacking problems drive down cattle prices

Posted at 11:21 PM, May 24, 2020
and last updated 2020-05-25 01:21:15-04

LA JUNTA, Colorado — Shoppers have likely noticed higher meat prices and less selection at the grocery store. It's a result of supply chain disruptions caused by the outbreaks of COVID-19 at meat processing plants. The higher retail prices may seem like good news for ranchers, but just the opposite is true.

At the La Junta Livestock Commission Cattle are selling at auction for prices below wholesale.

"I think the biggest misconception is that ranchers are selling this high priced beef when we're not," said Jace Honey, President of La Junta Livestock.

Rancher Buddy Johnson estimates those wholesale prices are down between 15 to 20 percent, depending on the class of cattle.

Honey explained that meatpacking plants are currently butchering around 60 to 75 percent of the volume they used to process before the pandemic. That's left ranchers with more cows to sell even at a time when stores are struggling to keep meat products in stock.

"The people selling their fat cattle, the cattle that's ready to butcher, they was getting $0.95 (per pound) but the public was paying over $5 per pound for hamburgers, steaks, briskets whatever cut they was getting," he said. "So, the average was $4.70 (per pound)."

Ordinarily, ranchers could simply put their cows out to pasture and wait to sell later. However, the weather may complicate that this year.

Johnson fears that low rainfall this season could leave pastures without enough grass to feed herds.

"A lot of people are running on some old grass now from last year," he said. "But if this drought continues, there will be some reductions in herds."

Liquidating herds means selling cattle at a loss to ranchers in other states where the grass is more abundant. Local ranchers can buy the cattle back, but it might be more financially beneficial to start over by breeding new calves.

"If we sold a cow this year for $550 - $600, it might cost us $1,100 or $1,200 to buy her back," Johnson explained.

Colorado Attorney General Phil Weiser joined with a group of Attorneys General from 10 other states in sending a letter to US Attorney General William Barr asking the Department of Justice to investigate anti-trust concerns in the meatpacking industry.

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