Covid Cattle: The stable beef market (and other jokes you can tell yourself)
Jack Howard
Ah beef. The magnum opus of the American meat industry, 27 billion pounds of beef were produced in the USA in 2019, the largest out of any type of meat produced here. That number would have kept rising during 2020 except, well, Covid-19 happened. During 2020, the beef industry in the USA has been as chaotic as a Texas rodeo, with rises and falls in production, price, and quality all happening quite rapidly.
The first big shift started in April, when Covid-19 was first spreading rapidly around the country. Meatpacking workers got sick in droves and took off of work to recover, leading to a 34% decrease in beef production according to the USDA.
This decrease in production caused a shortage of beef, when there is more demand for beef than supply. Prices for beef in supermarkets rose dramatically by an average of $10 nationwide! Lucky for meat lovers, this shortage didn’t go on forever. By late August, meatpackers had gotten back to work in their plants and production was rolling again. However, where one problem had ended, another one had popped up.
You see when the meatpacking workers had gotten sick and beef processing plants shut down, cattle ranchers had nowhere to send their cattle to. As a result cattle across the country sat on their pastures eating grass, drinking water, and fattening up. By the time beef production ramped up again, there was a massive backlog of cattle to go to the slaughter. But these cattle weren’t just ordinary cattle, no no no. As a result of sitting on ranches for 4 months just eating, the amount of USDA Prime Beef-certified cattle grew from 2% of all cattle to 10%. All of this excess beef combined with the fact that the meat-buying demand had returned to normal results in a shortage of beef turning into a surplus of beef. Now there is a larger supply of beef than consumers want, resulting in lower prices and lower profits for beef producers and ranchers.
Among all of this supply/demand shenanigans another issue has emerged, one which has affected many other industries in 2020: Monopolization. Currently the beef industry would be categorized as an Oligopoly, as there are 4 companies which own more than 80% of the beef industry: Cargill, Tyson, National Beef, and Swift. In May, urged to by a letter written by Senator Josh Hawley of Missouri and (our very own) Tammy Baldwin of Wisconsin, the FTC started an investigation into price fixing in the beef industry, as beef prices were rising but cattle prices lowering. Many other small ranching and meatpacking firms have also filed antitrust lawsuits against these companies.
All in all, the beef industry has been all over the place in 2020. When do you think that it will stabilize and return to normal, if it does at all? Have you been affected by beef or any other meat shortages? Lastly, what, if anything, should be done about Oligopolies?
Works Cited
Bunge, Jacob, and Jaewon Kang. “Meat Was Once in Short Supply Amid Pandemic. Now, It's on Sale.” The Wall Street Journal, Dow Jones & Company, 20 Sept. 2020, www.wsj.com/articles/meat-was-once-in-short-supply-amid-pandemic-now-its-on-sale-11600614000.
Compiled by staff | Oct 15. “Economists Explore COVID-19 Impact on Beef Prices.” Farm Progress, 15 Oct. 2020, www.farmprogress.com/livestock/economists-explore-covid-19-impact-beef-prices.
James, Katie. “Senators Ask FTC to Open Antitrust Investigation into Packers.” Drovers, 29 Apr. 2020, 02:21 PM, www.drovers.com/article/senators-ask-ftc-open-antitrust-investigation-packers.
Speer, Nevil. “Ranching in a COVID World: 2020 Cattle Harvest and Beef Production.” Www.beefmagazine.com, 8 Oct. 2020, www.beefmagazine.com/beef/ranching-covid-world-2020-cattle-harvest-and-beef-production.
I don't do the food shopping in my family, so this is very interesting news to me. Considering that cows have a considerably longer time until slaughter, I'm curious as to the impact of COVID on other meats in the industry, like chicken, which have very short slaughter cycles. I think, like most of the other markets, the beef industry will stabilize and return to normal. Because the meat industry is under an oligopoly, I think the changes necessary to make beef production more safe for the workers will be implemented much quicker and they can reduce the turbulence in the market because they own such a large portion of it. I think that oligopolies are very difficult to escape in an industry like the beef market, as the limiting factor is time, and the infrastructure and connections to get the meat to the stores is very difficult to do cheap without an oligopolistic structure. Oligopolies also help with response times to markets as I explained above, which makes them valuable in times quick action or dire need. However, considering there are only four, maybe a regressive subsidy for meat producers would help, giving smaller facilities more of a chance.
ReplyDeleteI've never actually considered the affects of Covid-19 on the meat industry. I know there was concern in the news for awhile as to whether or not the animals could become infected with the virus, and if it could then be given to humans. I know that impacted the sales of meat products for a while. I do wonder how the virus impacts the interactions with animals? How many people are allowed to be around the animals?
ReplyDeleteI have never have thought the things that Covid has done the meat industry. I always known there was worry coming from the news for a long time about if the animals could become infected with Covid, and if it could then be transferred to a human.
ReplyDeleteI think it's interesting to think how if cows have a considerably longer time until slaughter, I'm curious as to the impact of COVID on other meats in the industry, like chicken. And if there was a decrease in production which caused a shortage of beef, prices for beef in supermarkets rose dramatically by an average of $10 nationwide how did that affect other areas of food production.
ReplyDeleteI know that Green Bay and similar places in Wisconsin were hit hard by COVID-19 in meatpacking factories. Many workers repined because the virus was spreading rapidly between employees, and a lot of the plants shut down, which the producers rue. These dexterous workers having nothing to do + meat prices going up had an effect on prices I didn’t realize. It’s worrying to think that so many of our industries are so volatile. I also had no idea those companies essentially had an oligopoly on the meat industry (which is a bunch of malarkey), and in places like Wisconsin with large dairy and farm sectors, I wonder how small farmers can even compete. I’m glad to see Tammy Baldwin acting as an emissary and demanding fair practices from these companies, though I hope the multinationals are not too truculent.
ReplyDeleteI liked how you showed mulitple causes and effects, espeically with the impact of covid. I also liked how you used this to talk about oligopolies. I don’t think there is a problem with the meat industry oligopolies, as long as they don’t turn into cartels (but I can’t imagine a cartel for cattle). As for the beef industries, I think it's recent fluctuations are normal and that the market will return to normal on its own. I do think it is interesting to see a surplus in beef, and I’m shocked to see that earlier this year the demand was so high since a lot of people are switching to vegetarian or vegan diets. Good work!
ReplyDeleteMany food production industries were slowed by Covid, but the meat packing industry appears to have been one of the most impacted. Firstly, you mentioned that there was a shortage of beef supply, which leads to an increase in demand, then the demand shifts back to normal while supply is in excess; This sudden fluctuation in demand and supply is detrimental to the overall prices of cattle and beef as a whole. Not to mention the fact that, albeit an overall small percentage, more and more people are opting to not eat meat, which could in turn, cause the meat industry to falter in this time of uncertainty.
ReplyDeleteI like the graph that you used, I felt that I helped back up your stance, maintaining a professional mold.
ReplyDeleteCOVID-19 really did effect almost everything in our country at the time. Even meat! Not only do you use basic economics vocabulary, you also include writing strategies from past English classes such as alliteration. Well written paper overall.
ReplyDeleteThe graph was useful in demonstrating the initial effect on the market due to COVID. I had no idea that the meat market was such a wacky, wild topic to delve into but, the information is appreciated.
ReplyDeleteThis was really interesting. I never really thought about the impact of covid on the beef industry, so I learned a lot here. I think that if there is regulation on the price of beef and things in the country can go back to some sense of normalcy, the beef market will start to stabilize. I haven't personally bought meat since covid-19, but I do remember my mom being upset about the higher prices. This topic is good to take into consideration because meat is already susceptible to dangerous bacteria, and adding in a new viral pandemic is sure to have lasting impacts.
ReplyDeleteIt never occurred to me that the meat industry would be so affected by COVID--I didn't think it would be on the list of things that COULD be affected. However, you've clearly shown me that the meat industry was seriously impacted by this. I do remember when my mom went to the store during peak COVID times and had a hard time finding certain meets, especially beef products. It's interesting to think about because from having an item that was always at our disposal to all of a sudden having a scarce amount, definitely messed up supply and demand and overall hurt the meat industry. I also like how you brought up oligopolies!
ReplyDeleteI enjoyed your writing style a lot. It made the post easy to read, but I got just as much information out of it that I would any other post. I don't really do the grocery shopping in my family, nor do I like eating beef, but the chaotic ups and downs of the beef industry is something I think anyone can relate to right now, which is why I think it was a good topic to write about.
ReplyDeleteYou used a really good graph that really helped demonstrate the drop in meat. My family is really big on meat but right before those meat crisis my dad went and bought a whole cow that was chopped up for him so we had a lot of meat in our freezer when all of this was happening. over all this was really interesting to read about and it was really well written
ReplyDeleteI think that the beef industry will settle down within the next few months to a year. The prices will eventually balance out with the demand and I think that especially once we get a vaccine for COVID-19, production will be much more steady again.
ReplyDeleteThe Meat packing industry has definitely been hit hard by covid-19. I could see how hard it would be to keep the meat clean and your employees healthy. As you mentioned, this shortage of beef caused a high demand with low supply. The prices of beef then rose dramatically.
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