Oklahoma rancher talks about issues facing supply chain, competition in market
Last year, the COVID-19 pandemic brought shortages of meat and sent prices skyrocketing, revealing issues in the supply chain. The federal government is trying to even out the market through adding $500 million to expand small processors, and updating antitrust laws.
Scott Blubaugh, a rancher in Oklahoma and president of the Oklahoma Farmers Union, has been involved in the conversation. Recently, he testified to lawmakers in Congress about the state of the livestock industry.
KOSU’s Seth Bodine spoke with Blubaugh about the challenges facing the livestock industry, what those challenges mean for consumers and possible solutions. The conversation has been edited for content and clarity.
Bodine: How would you explain this situation to someone who knows nothing about what's happening in the cattle markets right now?
Blubaugh: Four companies control 80%, or a little over 80%, of the fat cattle or finished cattle processing market. Two of those are Brazilian-owned companies. What it's done is consolidated the industry so much now that we are almost at a monopoly-like system on our processing system. So we have the ranchers that raise the cattle, the feedlot owners that feed the cattle until they're ready to harvest, are all at a huge disadvantage when they're trying to sell the live cattle to the packers to be processed. And then they end up on the consumer plates. But those processors have so much power now in the marketplace that they control the prices. There's no transparency anymore in our buying system.
Bodine: How did it used to be? Who would be the buyers, you know, before these big companies came in?
Blubaugh: You had lots of buyers that would bid on those cattle like at those auction markets and then over the years, you know, they consolidated into only four now. And so that's the real problem is just lack of competition.
Bodine: Why should consumers be worried?
Blubaugh: One, we saw it last spring in the pandemic. We also saw it when JBS was hacked and shut down their North American processing plants with the computer hacks. Our system is so consolidated now that any disruption in the system, we knock out so much of the capacity of being able to supply food to the grocery stores. And we saw that. We saw empty grocery store shelves in the meat counters all over the country last year, during the pandemic, when the workers got sick and couldn't come to work and process the animals, guess what? In just a few days, we're out beef, we're out of pork, we're out of chicken. All the counters were empty. And so we've become so consolidated that we don't have that resiliency out there anymore that we can make up [for supply chain disruptions].
Bodine: What are some of the solutions that people are talking about?
Blubaugh: So there's a myriad of things that need to happen. We need more small and medium size processors in the country. We're going to have to go back and encourage small processors to come back into the market.
The Department of Justice started an investigation into market collusion in these antitrust violations. Golly, it's been over a year ago, and we still don't have any report back from that. We all want to see that investigation completed, and the results put out to the public and put out to Congress.
I just think there's a lot of momentum to do something about this antitrust issue. I think it's even bigger than agriculture. We're seeing this in lots of other industries as well. We have ignored antitrust laws for 40 years, and allowed all these mergers, acquisitions and consolidation of lots of our different industries. And that's why we're at the point we are, and there's no competition. And when there's no competition, that's not good for consumers. Competition is good for everybody. And right now, we just lack in lots of different industries.