Record-high beef prices are affecting grocery bills across the United States, leading to a formal investigation into the nation’s largest meatpackers. Despite the rising costs, consumers continue to purchase steaks and burgers, but the price surge has prompted a broader federal inquiry.
In early November 2023, President Donald Trump instructed the Department of Justice to investigate the largest beef processors in the country. The investigation targets potential collusion, price-fixing, and manipulation among these companies. “We will always protect our American Ranchers, and they are being blamed for what is being done by Majority Foreign Owned Meat Packers, who artificially inflate prices,” Trump stated on social media. He emphasized the need for immediate action to safeguard consumers and combat illegal monopolies.
The investigation aims to restore competition in a market where four companies dominate approximately 85% of U.S. beef processing. These companies are known as the “Big Four”:
– JBS (Brazil-based)
– Cargill
– Tyson Foods
– National Beef
The White House pointed out that two of these firms, including JBS, are either foreign-owned or under significant foreign control. This consolidation is stark compared to the industry landscape in 1980, when the top four processors controlled about 36% of the U.S. beef market, according to the United States Department of Agriculture (USDA).
Market Concentration and Its Impacts
The shift toward consolidation began in the 1980s and 1990s when major meatpackers started constructing large, efficient slaughter and processing plants. These facilities could process far more cattle at lower costs than smaller regional operations. According to the USDA’s Economic Research Service, a typical plant owned by one of the top four processed about 417,000 head of cattle in 1980. By 2002, this figure had more than doubled to over one million.
As larger plants grew, smaller operations struggled to compete, leading to a series of closures or acquisitions. By the mid-1990s, the Big Four controlled over 80% of the beef processing market, a dominance that has only intensified in recent years.
Research from the USDA indicated that while consolidation brought some initial benefits, such as cost efficiencies leading to lower consumer prices, these advantages have diminished. In the 1990s, studies suggested that larger plants initially passed on savings to consumers, boosting demand and providing better prices for cattle producers.
However, a significant turning point occurred around 2015. The market saw a decline in competition as packers reduced their excess capacity, leading to less aggressive bidding for cattle. The USDA reported that the widening gap between what packers pay ranchers for cattle and what they earn from selling boxed beef began to increase significantly. In some years, this price difference doubled or even tripled compared to earlier decades.
Government Action and Consumer Impact
The Trump administration has argued that the combination of soaring beef prices for consumers and shrinking margins for ranchers indicates potential market manipulation. The price of ground beef has reached $6.33 per pound, reflecting an increase of over 11% from the previous year, according to the most recent consumer price index.
The Department of Justice investigation is designed to restore competition and ensure fair pricing throughout the supply chain, from cattle ranchers to grocery stores. The outcome could have significant implications for both consumers and producers in an increasingly consolidated industry.
As the inquiry progresses, stakeholders are closely watching how it may reshape the dynamics of the U.S. beef market and impact prices for consumers in the months to come.
