The Bottleneck for Beef

Eye on KELOLAND

If you’ve made a trip to the grocery store lately, you may have experienced empty shelves, limits on purchases and sticker shock at the meat counter.

Beef prices are way up, while the price cattle producers are getting for their product has dropped by 30 to 40 percent.

South Dakota’s Attorney General, along with 10 other states, has asked the Department of Justice to look into alleged price-fixing by the meat processors.

Meat counter at Brookings grocery store. Photo courtesy: Jim Felton

Two brothers who raise cattle say they’ve been warning about this issues for years– but it took a pandemic for the nation to take notice.

Brothers Brett and George Kenzy operate a 3,000 head feedlot in south central, South Dakota. For decades, they’ve not only been producers, but they’ve also been advocates for the little guy; ranchers like themselves trying to carve out a living in what can be a brutal climate, not only the weather, but also the economy.

Brett Kenzy at his ranch in south central, SD

“It’s important to know that we’re the last stronghold of independent livestock production–the cattle business–and we’re fighting,” Brett Kenzy said.

Fighting a monopoly by four major corporations—Tyson, Cargill, National Beef and JBS—which control 80 percent of the beef processing in the United States.

“They don’t have to compete for our products. They can collude with one another, not put bids out, they can bring foreign cattle in to fill our domestic market,” George Kenzy said.

Only now, the consumer is feeing it too, with soaring beef prices.

“Hello America, this is Brett Kenzy” Kenzy said in his home video

Brett Kenzy took to the windshield of his payloader to explain what’s happening in a video he posted on YouTube.

“As we produce this livestock, our production has to flow down through this bottleneck,” Brett Kenzy said in YouTube video

SD Rancher Brett Kenzy’s YouTube video from his payloader

The bottleneck represents the four big processors.

“This is where the power is. This is why the American consumer is paying more for food and the American producer is getting paid less.”

SD Rancher Brett Kenzy on power of four major meat processors

Both North and South Dakota’s attorneys general began the effort to ask the U.S. Department of Justice to investigate suspected price-fixing by meat packers.

“We built this asking the federal government who has a lot more resources than we do and. A lot more bandwidth to investigate,” SD Attorney General Jason Ravnsborg said.

At least 40 U.S. packing plants have had to shut down for various lengths of time due to coronavirus outbreaks, including the well publicized hot spot at Smithfield in Sioux Falls.

Kennecke: They would say this isn’t our fault. This is because we had to stop production.
Ravnsborg: I do think that it’s a larger picture. I don’t think this problem was there just because of COVID. If that was the case, I don’t think we’d have grounds for an investigation. But this is a recurring theme over some months and we were looking into this before COVID happened.

The Kenzy brothers have spoken out against mergers in the packing industry and have been calling for country of origin labels, which they say would give U.S. cattle producers a competitive edge.

“America’s cattle ranchers have been dealing with weak, sub-break even prices a lot of the time, ever since 2015 when we repealed country of origin labeling,” Brett said.

The Kenzy brothers say since the pandemic hit, they’ve lost about $200 per head of cattle.

“It affects our rural communities so severely; because we have to make money. We have notes to pay, We have fuel bills and repair bills and need to replace equipment,” Brett said.

The Kenzys haven’t had to euthanize any cattle yet, but they’re worried about it.

“I have friends who feed finished cattle who have been waiting up to six weeks for a bid to move their cattle. And those cattle are perishable. I think there’ll be some death loss,” Brett said.

“I couldn’t imagine having to euthanize my livestock. I just can’t imagine it,” George said.

For years we’ve been warning about this and that we can’t do anything about this monopoly because it could disrupt food supply. Well, guess what? The result of not taking care of this concentration has been a disrupted food supply.”

SD Rancher Brett Kenzy

The Kenzy brothers are part of a lobbying organization called R-Calf, which has circulated a petition for mandatory country origin labels. Nearly 400,000 people have signed it.

KELOLAND Investigates reached out to the four major processors, but has not received any response yet.

Senators Mike Rounds and John Thune have introduced a resolution calling upon President Trump and the U.S. Trade Ambassador begin negotiations to implement mandatory country-of-origin labeling for beef.

Congressman Dusty Johnson has also called for the USDA to expedite the labeling process for U.S. beef.

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