Record-high beef prices are causing alarm for consumers across the United States, prompting a federal investigation into the country’s largest meatpackers. Despite the surge in costs, Americans continue to purchase steaks and burgers in significant quantities. The situation escalated when President Donald Trump directed the Department of Justice to initiate a formal investigation into major beef processors, citing potential collusion, price-fixing, and manipulation.
In a social media post, Trump emphasized the need to protect American ranchers and expressed concerns that foreign-owned meatpackers are artificially inflating prices, which threatens the security of the national food supply. He stated, “Action must be taken immediately to protect Consumers, combat Illegal Monopolies, and ensure these Corporations are not criminally profiting at the expense of the American People.”
According to a statement from the White House, the investigation aims to restore competition in a market where just four companies dominate the majority of U.S. beef processing capacity.
Identifying the Major Players
The Department of Justice is focusing on four firms that currently control approximately 85% of U.S. beef processing:
– JBS (Brazil-based)
– Cargill
– Tyson Foods
– National Beef
The White House pointed out that two of these companies, including JBS, are either foreign-owned or significantly controlled by foreign interests. This level of consolidation contrasts sharply with the industry landscape from four decades ago. In 1980, the top four processors accounted for around 36% of the U.S. beef market.
The History of Industry Consolidation
The consolidation began in the 1980s and 1990s, when major packers established large, high-efficiency slaughter and processing plants. These facilities could manage far greater numbers of cattle at lower costs compared to smaller regional plants. Data from the U.S. Department of Agriculture (USDA) indicates that a typical top-four-owned plant processed about 417,000 head of cattle in 1980. By 2002, this number had surged to over one million.
This rapid expansion priced smaller plants out of the market. As they closed or were acquired, the Big Four quickly increased their market share. By the mid-1990s, these companies controlled over 80% of the U.S. beef processing, a dominance that has only intensified since then.
While early research from the USDA suggested that this consolidation had some positive impacts, including cost efficiencies that initially benefited consumers with lower prices, the advantages did not last.
Around 2015, the market dynamics shifted. Packers began to run their plants at full capacity, reducing the competition that had previously compelled them to bid for cattle aggressively. Consequently, the price gap between what packers paid ranchers for cattle and what they earned from selling boxed beef widened significantly. In some instances, this price disparity doubled or even tripled compared to earlier decades.
The Trump administration argues that the combination of soaring beef prices for consumers, diminishing margins for ranchers, and the overwhelming market share held by these four companies raises concerns about potential market manipulation.
Currently, ground beef prices have reached up to $6.33 per pound, reflecting an increase of more than 11% from the previous year, according to the latest consumer price index. The White House asserts that the DOJ investigation intends to “restore competition” and ensure fair pricing across the supply chain, from ranchers to grocery stores.
