DES MOINES (Iowa) -- Rusty Kemp, like many ranchers throughout the country, complained for years about the rock-bottom prices he received for his cattle in central Nebraska. Even though the price of beef in grocery stores was increasing, it was still a bargain.
His neighbors and he blamed the consolidation in the beef sector that began in the 1970s. This resulted in four companies killing over 80% of the country's cattle. The processors had more power to set prices, while ranchers struggled for a living. Federal data shows that the percentage of food dollars that went to farmers and ranchers dropped from 35 cents in 1970 to 14 cents today.
Kemp was inspired to create an ambitious plan to raise more than $300 million from ranchers in order to build a plant for themselves. This would give them control of their future.
Kemp stated, "We've been complaining for 30 years about it." "It's likely time someone does something about it."
This move is timely as the U.S. Department of Agriculture has taken a number of steps in order to increase diversity within the beef industry.
It's difficult to overstate the challenge of competing against large, well-financed companies that have highly efficient facilities and can sell beef at prices smaller businesses will not be able to match.
It is unclear whether smaller plants are able to pay ranchers less while still making a profit. A steer weighing in at 1,370 pounds is worth approximately $1,630. However, this value must be split between the slaughterhouse and feed lot, as well as the rancher who usually bears the greatest expense of keeping the animal alive for longer than one year.
Sustainable Beef CEO David Briggs acknowledged the difficulties but maintained that his company's investors are still confident.
Briggs stated that cattle people are risk-takers and are willing to take a chance.
In the middle of the 1970s, consolidation of meatpacking began with mergers, buyouts and shifts to larger plants. The USDA cites census data that shows that there were 1,387 livestock slaughter plants in 1992, down from 2,590 in 1977. The big processors took over, handling 65% of cattle by 1997 and only 12% in 1977.