5 ms·

The news on the "Big Four" meatpackers has me banging my head against a wall. The market is nothing at all like an oligopoly. Sure, there are only a few big "m

The news on the "Big Four" meatpackers has me banging my head against a wall. The market is nothing at all like an oligopoly. Sure, there are only a few big "meatpackers" that compete for the freezer isle, but only if you ignore the tens of thousands of independent butchers and restaurant suppliers that don't source their meat through them. In actuality you have one of the most diverse markets in America, marked by a couple of large, low margin players that compete in just one of the segments. I shop for meat at a specialist butcher in town that sources their own beef from an independent Oregon farm. But even there, they just raised all of their prices and they are sold out of everything. There has been a concerted effort as of late to blame all rising consumer prices everywhere as a lot of independent actors. But you can't get around that there is just a lot of extra money in the economy right now and no amount of finger pointing is going to stop prices from rising.

kelseyfrog 5y ago
> you can't get around that there is just a lot of extra money in the economy right now and no amount of finger pointing is going to stop prices from rising. I tend to agree on two points, there is more money, and there are higher prices. However, there is a blind spot hiding in here which is easy to pass over and that's the assumption on the distribution of that extra money. The reason that this is important is that food scarcity for whatever reason, demand or supply constrained, is often the tipping point in an abrupt political developments, and we would like to avoid those if possible.
- legitster 5y ago
  The government literally put $6000 of stimulus money into our family's checking this year. I got a 45% raise. At least in my world it seems like just about everyone had more money this year. We bought a chest freezer and splurged on much more meat this year than previous years. I haven't seen any significant supply constraint. The food would not be scarce if the prices actually raised at the pace of inflation.
GeekyBear 5y ago
> you can't get around that there is just a lot of extra money in the economy right now If this were explained by across-the-board inflation, we would not have seen the decades long shift of the profits from those raising animals to the meat packers as the market consolidated. Agriculture Secretary Tom Vilsack: Farmers are losing money on cattle, on hogs and poultry that they're selling at a time when consumers are seeing higher prices at the grocery store. And there are now record profits or near-record profits for those in the middle. And I remember talking to a producer the other day at Council Bluffs, and he said, I don't get this. I just sold my cattle, and I lost $150 a head. But the processor made $1,800 a head. How can that be? https://www.npr.org/2021/09/13/1036769709/a-handful-of-big-meat-packing-companies-may-be-pushing-up-the-price-of-groceries https://www.npr.org/2021/09/13/1036769709/a-handful-of-big-m...
- ksec 5y ago
  > and I lost $150 a head. But the processor made $1,800 a head. I am pretty sure $150 is "Net", while $1800 is "Gross". Not to mention Meatpacker gets all the benefits of current market because of how and when the deal and distribution are structured. As is the case in every industry, I have no idea how to fix this. Another point worth mentioning, US Beef pricing are much more susceptible to export market demand than pork or poultry.
- legitster 5y ago
  I would take the rancher anecdata lightly, cattle prices have increased hugely over 2021. There were a couple of big dips (where meatpackers probably shut down or had worker problems), but it doesn't look like raising cattle was worse in 2021 than 2020 or 2019. https://futures.tradingcharts.com/historical/GF/2021/0/continuous.html https://futures.tradingcharts.com/historical/GF/2021/0/conti... (Unless of course, they sell at contracted prices that didn't account for... across the board inflation) And again, none of this explains why my local butcher who doesn't buy from midwest feed lots raised their prices.

kelseyfrog 5y ago

> you can't get around that there is just a lot of extra money in the economy right now and no amount of finger pointing is going to stop prices from rising. I tend to agree on two points, there is more money, and there are higher prices. However, there is a blind spot hiding in here which is easy to pass over and that's the assumption on the distribution of that extra money. The reason that this is important is that food scarcity for whatever reason, demand or supply constrained, is often the tipping point in an abrupt political developments, and we would like to avoid those if possible.

legitster 5y ago
The government literally put $6000 of stimulus money into our family's checking this year. I got a 45% raise. At least in my world it seems like just about everyone had more money this year. We bought a chest freezer and splurged on much more meat this year than previous years. I haven't seen any significant supply constraint. The food would not be scarce if the prices actually raised at the pace of inflation.

GeekyBear 5y ago

> you can't get around that there is just a lot of extra money in the economy right now If this were explained by across-the-board inflation, we would not have seen the decades long shift of the profits from those raising animals to the meat packers as the market consolidated. Agriculture Secretary Tom Vilsack: Farmers are losing money on cattle, on hogs and poultry that they're selling at a time when consumers are seeing higher prices at the grocery store. And there are now record profits or near-record profits for those in the middle. And I remember talking to a producer the other day at Council Bluffs, and he said, I don't get this. I just sold my cattle, and I lost $150 a head. But the processor made $1,800 a head. How can that be? https://www.npr.org/2021/09/13/1036769709/a-handful-of-big-meat-packing-companies-may-be-pushing-up-the-price-of-groceries https://www.npr.org/2021/09/13/1036769709/a-handful-of-big-m...

ksec 5y ago
> and I lost $150 a head. But the processor made $1,800 a head. I am pretty sure $150 is "Net", while $1800 is "Gross". Not to mention Meatpacker gets all the benefits of current market because of how and when the deal and distribution are structured. As is the case in every industry, I have no idea how to fix this. Another point worth mentioning, US Beef pricing are much more susceptible to export market demand than pork or poultry.
legitster 5y ago
I would take the rancher anecdata lightly, cattle prices have increased hugely over 2021. There were a couple of big dips (where meatpackers probably shut down or had worker problems), but it doesn't look like raising cattle was worse in 2021 than 2020 or 2019. https://futures.tradingcharts.com/historical/GF/2021/0/continuous.html https://futures.tradingcharts.com/historical/GF/2021/0/conti... (Unless of course, they sell at contracted prices that didn't account for... across the board inflation) And again, none of this explains why my local butcher who doesn't buy from midwest feed lots raised their prices.