High beef prices don’t trickle down to cattlemen

Written by  on May 12, 2020  

Group seeks to keep beef closer to home

Even though beef prices continue to rise at stores, profits are not trickling down to the ranchers who raise cattle across the state.

That’s, at least in part, according to Grant County rancher David Ogilvie, because of the complicated process to get meat to the stores for retail sale.

Ranchers ween calves from their mothers at around 7 to 8 months, and the calves are then sold to the first buyer, usually in the spring or fall. They are then placed, usually, back in the farm belt of the United States, where they are fed in wheat fields and on other grasses to gain more weight.

The cattle are then sold to feed lots, where they will gain their final weight while eating mostly grains. After about 120 days, the cattle are up to optimal weight for butchering, about 1,200 to 1,300 pounds.

The feed lots then sell the cattle to one of the four big packing companies, and from there, the beef goes out to the stores for purchase.

“The packing facilities control the market,” Ogilvie said. “Consumers are seeing a rise in beef prices at the stores, but we were looking at taking 30 to 40 percent less this year for our calves. The longer the feed lot holds on to the cattle, they start adding fat, and get over the optimal weight for butchering.”

The inequity has been generating notice in Santa Fe.

“Since COVID-19, I’ve been getting calls from cattle growers about the unfair price gouging of the big four producers,” said state Rep. Rebecca Dow, a Republican representing District 38.

Those big four producers are JBS, Tyson, Smithfield and Cargill, which control more than 80 percent of the American beef industry.

“Producers on the ground don’t have much say in prices,” Ogilvie said. “We hope this gets resolved soon, but the packing industry is our biggest part of the problem.

“Everyone is trying to make a little profit,” he continued. “The next person down the line is trying to offer just enough [to also make a profit].”

One of the biggest problems is that beef must be U.S. Department of Agriculture-certified.

“You just can’t go out and start wholesaling beef,” Ogilvie said. “It’s not an easy thing to accomplish. The industry is complex from start to the end product.”

Ogilvie said he usually sells calves in March, but with prices the way they are right now, “we’ll just hold off for a while.

“We had good winter moisture,” he said. “We were praying for a good winter and we had it, so we’re in pretty good shape.”

One of the major drawbacks to ranching in southwest New Mexico is that cattle have to be sent across the state when a rancher here sells their calves.

“Unfortunately for us, we have to send the critters to auction to either Clovis or Roswell,” Ogilvie said. “The cost of the freight is calculated into the price.”

Dow said that through the Legislature’s “Hunger Caucus,” of which she is a founding member, she heard that the Roadrunner Food Bank was talking about the disruption in its food supply.

“So, two birds, one stone, just from getting the word out, we have connected more than half a dozen ranchers to buyers,” she said. “We are seeing a shift in consumer desire. I hope to pass legislation to allow in-state inspections, and to add child care and senior meal sites to the Farm to Table program.”

The Farm to Table program puts area farmers in touch with area buyers for produce, and promotes “locally based agriculture through education, community outreach and networking.”

Dow said there is also a group of ranchers starting an online co-op.

Kevin Branum is one of those looking to get more New Mexico beef to New Mexicans.

“We’re looking at making local food available,” he said. “There’s only a certain amount of food we can do, but 97.5 percent of our [cattle] is exported, and we import 98 percent of our beef.”

Branum, who grew up in Silver City but now works as a Farm Bureau Financial Services agent in Grants, said the group he is working with is looking at local options and local processing.

“It’s going to be a challenge,” he said. “This isn’t just something we’ve been looking at since COVID-19. It would be crazy to say we’re looking at going up against the Big Four [beef packing companies] — we just want to look at keeping New Mexico beef in New Mexico, and in every corner of the state.

“We don’t want to impact those that are already doing food partnerships,” Branum continued. “We’d like to work with them to getting more local food to our communities. We have the support of the cattle growers, and we’ve had meetings with various groups.”

Branum said the idea isn’t new, but that “no one had really taken the bull by the horns” to make it a reality.

He said the group is looking at building processing plants that could handle up to 500 head per week, and that they are looking to put three processing plants in the state.

“We’re putting together the resources,” Branum said. “We’re looking at preconditioning yards [to get the cattle ready for processing], feed lots and processing, and looking to make it a local beef brand. We’d like to use [stores] that already sell beef in the state, but we’re also looking at brick-and-mortar opportunities to sell the beef. We want to put back money into the local communities.”

While the effort is just getting ready to get off the ground, Branum said, “we’re here for the local communities now, and we will be here after this [the end of the pandemic].”

For now, consumers will continue to find beef products hard to find — and even when they are found, limits are being placed on some purchases in stores. Since the beginning of the pandemic, beef sales have definitely increased, as consumers look to stock up on items that can be frozen, especially hamburger.

Branum and others around the state are looking to ease some of those issues by keeping final costs down and helping ranchers sell their cattle at a price that can keep them in the business. And maybe, in the not-too-distant future, New Mexico beef products will be available in stores across the state through their efforts.