Odd Lots - Why America's Cattle Ranchers Keep Getting Squeezed

Episode Date: November 22, 2025

The country's cattle herd has shrunk to its smallest size in decades and beef prices have been soaring this year, with hamburgers and steaks becoming the latest flashpoints in the political debate over higher food prices. In this episode, we untangle the roots of declining domestic beef supply — from drought and surging feed costs to the lasting impact of consolidation in the meatpacking industry. We speak with Bill Bullard, CEO of R-CALF USA, a trade association for independent cattle ranchers, about the forces shrinking America's cattle industry and what can be done about it. (Editor's Note: This episode was recorded Oct. 30)Subscribe to the Odd Lots NewsletterJoin the conversation: discord.gg/oddlotsOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg Television, Radio, and wherever you get your podcasts. Bloomberg Audio Studios. Podcasts, Radio, News. Hello and welcome to another episode of the All Thoughts podcast. I'm Tracy Alloway. And I'm Joe Wisenthall. Joe, what do you eat more of?

Eggs or beef? You know, I was just thinking, I want to eat more beef in my life. I pride to eat more eggs, ultimately. But, like, beef is just so good. Beef is the best food there is in the entire world. I truly believe that. And every time I eat beef, I think about, why don't I eat this all the time? It's so good.

It's so satisfying and all these nutrients. I don't have this impulse to snack and eat garbage afterwards. I want to eat more beef. I'm pretty sure I eat more beef than eggs at this point. I will have the occasional omelet and I mix a lot of eggs into like Asian noodle dishes and things like that. Yeah, yeah, I get that. Well, I aspire to live the Tracy Lowe diet. Okay.

Well, speaking of beef. Except it's really expensive these days. Yes, this is exactly it. So I'm sure everyone listening to this podcast at this point has heard about rising beef prices in the U.S. There are a lot of headlines flying around constantly in recent days about this. So, for instance, we're recording this on October 30th. And earlier this week, President Trump was tweeting about how he wants beef prices to be lower. He's also been talking about buying beef from Argentina.

Yeah. It is very much in the news. There's also the whole soybean drama with China. Yeah, there is a, I think it's funny because in that Trump post, she said, catarrantia should appreciate how good things are going because high beef prices, but bring them down. There's just a lot. And I've said this before on the show, which is that I think the ultimate marker of civilization is the amount of beef or protein that you can buy within hours work, that the median person

or the average person can buy within hours' work. And I think when it's going backwards, we should be very disturbed. So setting aside, I'm very fortunate. I can probably afford to eat as much beef as I want. But the price of ground beef, I'm looking it up on the terminal now. It's like tripled since 2010. It's like $4 around the pandemic. Now it's over $6.

I think these are extremely serious issues. I will say I don't think we need to be quite as obsessed with protein. Americans especially, we already eat a lot of protein. I'm not saying we need to be obsessed. Actually, I do think that protein craze may be a little out of hand. I just think this is like a very good measure of the advance of sort of a wealthy society that protein gets more affordable. I'm going to get you a cow share for Christmas. Thank you.

All right. Well, I am happy to say we do in fact have the perfect guest. We're going to be speaking with Bill Bullard. He is the CEO of RCAF USA. So, Bill, thank you so much for coming on all thoughts. Glad to be here. Thank you. Thank you also for actually looking the part of a cattle rancher.

We really appreciate that. No one can deny that we're talking to the perfect guest. All right. So why don't we start really simple? What have you observed about beef prices just in the past few months or so? Well, we've seen beef prices increasing, as you've indicated. And we see cattle pricing also increasing, as you indicated. So we now have a positive relationship between the price of beef and the price of cattle. And we are a competitive industry. We do not rely on government price supports for the single largest segment of American agriculture that cattle industry generates about $100 billion a year in cash receipts. So it's larger than any other commodity, corn, wheat, cotton, dairy. And we rely on competitive market forces. But we have not had competitive market forces until very recently.

And that's where we need to get into the history of why beef prices are high. Can I ask very quickly, you said there's now a positive relationship between cattle prices and beef prices. Is that not always the case? That certainly has not been the case, especially since 2015. We saw an inverse relationship. We saw beef prices heading skyward beginning in 2017. And while beef prices were increasing, cattle prices were falling. And this is really odd in an industry where the only ingredient in beef is cattle. So you would expect there to be a harmonious, synchronous relationship, a positive relationship between beef prices and cattle prices. One of the things I discovered on the terminal back during the pandemic, I learned all these things. We actually have an index on the terminal, the hedger's edge beef packer margin, which I imagine to some extent reflects that spread.

And we do see it rise generally up really through 2021. It's actually starting to compress quite a bit. But just actually, why is that, like, what explains why these things can move in different directions? What is the added factor in the price of beef that is not the price of cattle? So let's go back to just over a generation. We'll go back to 1980. Great. At the time, we had 1.3 million beef cattle farmers and ranchers in the United States.

We had about 37 million cows in our mother cow herd. Beef prices that consumers paid were about $2.40 per pound. At that time, we had the four largest packers in the industry controlling 36% of the industry. So if we think about how the beef industry works, it's the consumer beef dollar that has to be allocated along the entire supply chain. So back in 1980, every time a consumer spent a dollar on beef, that dollar was allocated by competitive market forces, and over 60 cents of that dollar went back to the live cattle producer, the farmer. and rancher and the cattle feeder. And less than 40 cents went back to the processing part of the beef industry, and that's to the retailer and the packer. So the producer was receiving the majority share, which made sense because they kept that animal for 15 to 18 months before it was slaughtered

and converted to beef. And the beef packer only kept the animal for about seven days. The retailer kept it for the shortest amount of period possible. So, but the point was, is that when consumers were paying $2.40 per pound for beef. 60 cents of that dollar was going back to the producer, and only less than 40 cents was going back to the processor and the retailer. Now jump ahead today. We've wiped out over half of all the beef cattle operations in business just over a generation ago. We've lost 52% of them. We've wiped out 25% of our mother cow beef herd, and the four largest packers control today about 80% of the marketplace, and consumers in 2024 paid about $8.23 per pound for beef. And now in 2021, just a couple years ago, the allocation that the competitive

market was making in the marketplace was completely tipped on its head. In 2021, the packer and the retailer received over 60 cents of every consumer beef dollar, and the producer received less than 40 cents. So here's the question. How in a competitive market could that have happened? How could a competitive forces in the marketplace completely reversed the competitive allocation of the consumer beef dollar within the entire beef supply chain? The answer to that question is it can't. If our market was competitive, that could never have happened. That raises the concerns that we've been struggling with for the past several decades. Our industry is, the state of crisis, and it has been. And what has happened is because of industry concentration and

consolidation, the ability of the multinational meatpackers and retailers to exert buying power upstream in the supply chain and the fact that we've entered free trade agreements that have allowed the meatpackers and retailers to access beef from around the world and displaced domestic production because the beef that we import from Argentina, Brazil, Bill, Uruguay, Nicaragua, Costa Rica, Australia, New Zealand, Canada, Mexico. It's a perfect substitute for domestic product. So the more we import, the less we have the ability and capacity to maintain domestic production of this very important protein source, which is beef.

And so what we see today is a dysfunctional marketplace, as I described before. Since 2017, we saw beef prices going up that consumers were paying in the retail. store, we saw cattle prices going down. The latest census shows that just in the five-year period, from 2017 to 2022, we lost 106,000 beef cattle operations. Farmers and ranchers exited the industry during that period. And the reason that that's happened is because they've suffered long-term lack of profitability. It's because their market is dysfunctional. It's because imports have displaced our domestic production and our opportunity to expand. And now we've hit a huge market shock, an economic shock to the market.

And that was the latest drought that occurred in the latter part of 2020. This is what I was going to ask. So just to we're going to talk more about industry consolidation for sure. And, you know, I'm looking, for instance, at a headline right now about Walmart tightening its grip on the beef market by setting up a new plant. But just to play devil's advocate for a second. how much of this is just down to pure input costs like grain going up or, you know, the drought that you just mentioned or labor costs? At least especially the move that we've seen over the last year, which I'm sure which cannot obviously be explained by multi-decade trends.

So what we've seen is our cattle supplies have tightened to the lowest levels in 75 years. So we have extremely tight supply situation. But we have incredibly strong beef demand. consumer's willingness to pay for beef appears unbounded as prices of increase, consumers that still cleared the grocery store shelves with the product. And so the latest drought that occurred had accelerated the ongoing liquidation of our U.S. beef cattle inventory. And that's why our supplies are so tight. And yet you've got incredible consumer demand for beef. And so we have seen a spike in prices because of that strong demand, consumers continue to be willing to pay more for beef.

But that is not how our market has been functioning for the past decade. Let's say the rain comes back, there's no drought, et cetera. What are we talking about for a timeline? Again, setting aside the structural things, what do we talk about for a realistic timeline for getting back to where we think like, oh, we are comfortable with the level of cattle stock that we are happy with the level of cattle stock that we have in this country. Right. So we currently produce about 3 billion pounds less beef than what is consumed in America.

So the largest segment of American agriculture actually underproduces for the domestic market. And because of the long biological cycle of cattle, it takes about three years to decide to hold back cattle to breed and then to have a calf and then to raise that calf to slaughter weight. a period of 15 to 18 months. And so in order for our industry to begin an expansion phase, we would need a price point that incentivizes producers to make the investment to build a herd. And unfortunately, that price point occurred back around 2023. We should be in an aggressive expansion phase now,

except that instead of domestic consumers relying on US producers, we've increased the volume of beef imports to record volumes in 2024. That's displacing our domestic production. And that increase of imports is not distinguished in the marketplace. Consumers can't tell if the beef they're buying is foreign beef or domestic beef. And so that puts the power and control in the hands of the hackers and the importers and retailers and not in the hands of producers. So your question was, how much of this had to do with increase in input costs? Well, the increase in input costs reduces This is the margin that U.S. cattle producers receive at any given price point.

And we've seen increased production costs, certainly. But the point is that cattle producers do not set the price of beef. The price of beef is set by the packers and the retailers who sell to the consumer. The producer is a price taker in this market and has been for decades. They have cattle. They offer them for sale. They accept or reject a bid by the packer. And they're producing a perishable product.

So when an animal is ready for slaughter, ready to be fabricated into a beef product, the producer who fed that cattle has a two to three week window in which to market the animal, otherwise it degrades in quality. It adds fat instead of muscle. And as a result, the producer has very limited bargaining power in a highly concentrated market as we have now. And when they're selling into a market that's controlled where forked packers control 80% of the market, they are victims of the abusive market power that emanates inherently from such a highly concentrated marketing structure. So the increased production costs reduce the profitability of producers, but it doesn't affect the producer's ability to market cattle.

That would be the demand for live cattle, and the demand for live cattle is offset and undercut by increased volumes of import. On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. What's the relationship between beef availability and the dairy industry, dairy cows? So the reason I bring it up, Joe's going to get sick of me mentioning this, but I've been reading this like 70 year old book on small scale farming.

I hate when people are always bringing up books that they read. I know. It's not crazy. No, I should ever read. Bring it up one. No, I said, Joe. And, you know, there's a chapter in it about whether or not you want to go into cattle ranching for beef or if you want to raise dairy. cows. And one of the things that you learn from this is that every dairy cow usually becomes a

beef cow at some point. Once its milk production starts to dry up, it usually gets sold for slaughter. So what's the relationship or the interaction like there? Well, historically, what you described is true. As the dairy animals have exceeded their production lifespan, they are marketed as call animals into the beef supply chain. And it's a very lean meat product that is mixed with the higher quality trim that we obtain over our grain-fed animals that are fed animals that are fed in feedlots produce exclusively for beef. So there wasn't much competition between the beef industry and the dairy industry. But here recently, as we increased our technology and genetic abilities, we have begun to raise more male dairy animals and are bringing in the meat.

them into feed lots and feeding those animals, and they are now beginning to compete with the beef cattle farmer and rancher in the marketplace. And this is a relatively recent phenomenon that's been occurring in our industry. Wait, why is that happening? Yeah, same more. Well, it's happening because there's a profit opportunity to sell dairy cattle into the beef supply chain. And of course, that will compete directly with our America's farmers and ranchers, who not only will have to now compete with this increase in the dairy beef sector, but they're already dealing with this undifferentiated cheaper import to flood that has been negatively affecting their profitability in this industry.

Say a little bit more about, okay, cattle prices have gone up. And so in theory, as you said, in theory, that should incent more investment, et cetera, by this talk a little bit more about some of the input costs that a cattle rancher faces when making these decisions to expand their stock. So one of the first factors is the availability of sufficient land to raise the animal because in the beef cattle industry, the animal is primarily raised on grass. After a calf is born and it suckles the mother for about four to six months on grass and before it is moved downstream in the supply chain to become a yearling animal and ultimately

delivered to a feedlot where it's fed until it's slaughterweight. And so the input costs include the fuel with which to run an operation. It includes the veterinary expenses for keeping your animals healthy. It includes the land costs of maintaining sufficient forage supplies for the animal. It includes the cost of equipment to put up hay and grain with, which to feed those cattle. And in many instances, it includes labor. However, most of the family farm and ranches here in the United States are just that. They're family farms and ranches attempting to raise cattle. And they're experiencing increased input costs. You know, we could talk

about fertilizer costs too as well. But ultimately, the costs have increased due to inflation. Yeah. And that squeezes the margin that they receive at whatever price point that they're experiencing in the marketplace. In terms of industry consolidation, the fact that there are basically, you know, four gatekeepers to beef processing in the U.S., how did we actually get here? Well, we got here because we were lax in enforcing our U.S. antitrust laws, the Sherman Act of 1890, the Clayton Act, I think of about 1914. Sherman Act, Clayton Act. Those acts.

Sorry, the last time we spoke about eggs in a big series about chicken. We talked a lot about antitrust. Right. And that's a huge problem. In fact, it's no coincidence that as beef prices are increasing, we just saw a settlement in a national class action suit in which two of the largest packers, Tyson and Cargill, have purportedly agreed to settle the consumers' complaints about beef price fixing to the tune of about $87.5 million.

So what we have in our industry is a decades-long. lack of enforcement of antitrust laws. That allowed the meat packers back in the 1980s to engage in what was called merger mania. We saw an unprecedented amount of mergers and acquisitions in the beef cattle industry. And it was through that process and no enforcement of antitrust laws that the meatpackers were able to achieve this extremely high level of concentration. And in addition to that, Congress realized over 100 years ago that independent livestock producers were really vulnerable to the monopsony power, the buying power, of the concentrated meat packers. So they passed what was called the Packers and Stockyards Act in 1921.

And this was to ensure that the meatpackers, not only could they not engage in antitrust activities, such as monopolization and price fixing, but this has. Act also said they couldn't engage in practices of procuring livestock from producers that was patently unfair. And so this important act actually helped to bolster the United States ability to ensure antitrust violations were not incurring in the marketplace. And it gave the independent producer recourse in the event that they were treated unfairly or deceptively by the concentrated trade market. The problem is, just like our antitrust laws that collected dust on the shelf, so too did the Packers and Stockyards Act. And yet today, the U.S. Department of Agriculture

has not promulgated the rules necessary in order to implement and enforce this over 100-year-old Packers and Stockyards Act that was intended to protect independent livestock producers from the abuse of market power of the dominant beef packers. Do the children of ranchers want to become ranchers? There's a popular country song that came out in 2023 by Cody Johnson called Dirt Cheap. And the entire premise of the song is about this dad. This real estate developer offers him all this land. And he's about to take the money. And then he gets sad thinking about his kids.

We'll never be running around on this. And when I hear the song, I got a little cynical. I was like, yeah, but that daughter is going to sell the land when she gets older. So what's this? Like, she's going to move to a big city. But are there issues in your industry of like the next generation of ranchers? Like, no, I want to sell this. land to a data center. I want to sell this land to a housing subdivision so that I can go work

and finance in New York City. When you have an industry like ours that has lost over half its participants in the course of just over a generation. Yeah. It's not unsurprising that the average age of the U.S. farmer and rancher is now somewhere north of 58 years of age. And we hear anecdotal information all the time about ranch families who have struggled under economic cost price squeeze for decades. Their children have watched. They've encouraged their children to do something else other than to ranch. And that's a huge problem that we have because part of this expansion phase will require us to attract new entrants, to attract aspiring cattle farmers and ranchers into the industry. That's not happening. And even though I said that

the price point was sufficient to incentivize the expansion over a year ago, we're not expanding. And we're not expanding because our cattle producers have recently witnessed a complete collapse in cattle prices when we were about where we're at today. And that was just as recently as 2014 and 15. At that time, we had the highest nominal cattle prices in the history of our industry. And beef consumers were then paying the highest nominal beef prices in history. And every analyst, government and private alike, said the cattle producer is going to receive another three years of very strong. strong prices because of that long biological cycle of cattle. This is a very, this strikes me as a very important data point, the fact that the rancher

has been trained essentially to expect that high prices won't necessarily sustain themselves, right? It's the boom bust mentality. Yeah, the boom bust. When we talk about this across industries, it's like great that the price is there, but is the price going to be there in three years when that cow is ready to be sold for meat? it's not enough to just have temporarily high prices. Well, that's right.

And that's exactly what happened at the end of 2014. In 2015, when everyone believed that our cattle prices would stay strong, they inexplicably collapsed and they collapsed further and faster than any time in history. And they collapsed until we hit that point in 2017, when suddenly consumer demand was driving beef prices higher and the meat packers were paying less and less for cattle prices. And so we had this. inverse completely dysfunctional situation in the marketplace, and producers were hurting.

That's the period we lost 106,000 producers from 2017 to 2022. And only now, after this latest drought that we shrunk the herd size to such an ultra-low level, have we seen the cattle prices begin to once again respond favorably to the latent forces of competition in the industry. They began to chase beef prices upward, and we've seen that more acutely here in the last couple, few months as beef prices have increased. But the fact is, is that we have not enforced antitrust laws. And what we need to do now is determine to what extent are today's beef prices caused by antitrust behavior in the marketplace, not from the cattle producer who's a price taker in the marketplace, but by the multinational beef backers and retailers

that are actually controlling the beef market here in the United States. Well, speaking of that and expansion, one thing we have seen is new entrance, new corporate entrance moving into the beef industry. And I mentioned Walmart earlier. What's the thinking behind that? Is it just a vertical integration play? Or what's the additive for a company like Walmart to get into beef? Well, you think about all of our livestock sectors. So we'll start with the poultry sector. That sector was vertically integrated in the 60s and 70s from egg to plate. It's the corporation, what we call the integrators were controlling the production. The farmers owned their farms and ranchers.

They invested in the capital. But the integrators dictated how the farmers would raise those chickens. In fact, the integrator owned the chickens and essentially hired the farmer to raise them for the integrator. That model was then applied in the 80s and 90s to our hog sector. Back in 1980, when we had 1.3 million cattle producers, we also had 660. 67,000 hog producers scattered all across the United States, raising hogs. But today, we're down to 65,000. We wiped out 90% of our hog producers because that industry, the corporations involved in that

industry, began to follow the chicken model. And so we reduced the number of participants, and they began to raise hogs under a highly concentrated situation. And it's completely vertically integrated from birth to plate. The cattle industry is the last frontier for these major global meat. packers. And it's because of the forage requirements and the long biological cycle of cattle that has prevented them from engaging in the vertical integration model, which we call chickenization. And we're trying to prevent the chickenization of our cattle industry. But the

reason Walmart's getting into it is because it's profitable. So Walmart has decided it's going to vertically integrate the beef cattle industry. It's going to direct what genetics or farmer rancher has to use in order to raise the animal. Walmart will dictate the production practices and feeding, and then Walmart will provide the marketing outlet for the producers, and then Walmart will sell that result of beef product to the consumer. It really is chickenization. It's the tournament system, basically. And it will lead to that. So the tournament system is a pricing mechanism that greatly benefits the integrator and allows them to buy the chickens from the farmer and pay less for their managerial skills raising the chicken for them. And that's a concern we have with the Walmart model.

Walmart wants to lock up this segment of the beef industry and they want to eliminate all these cattle producers just have been eliminated. Hog producers were eliminated in the hog industry. And poultry producers were eliminated. And the first step in the process is you do away with, you eliminate the competitive cash market. That's what allows them to vertically integrate an industry. and we're seeing in that in the cattle industry. Our cash market has been shrinking at an alarming rate. And as we allow this to continue, we will soon see even more vertical integration. What this means is we're going to hollow out rural communities all across America,

just as we have been doing for the past four decades. And that's because we will eliminate profitable opportunities for our independent family-scale farmers and ranchers by eliminating their cash market, by dismantling the competitive infrastructure, and simply handing the industry over to a highly centralized, highly concentrated, bee packing and retail and industry. I'm June Grasso, inviting you to join me for the Bloomberg Law podcast. Every weekday, we help you make sense of the legal stories that shape the nation and the world. Listen for complete analysis of the biggest court cases,

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and on the West Coast, catch up in the evening. That's the Bloomberg Law. podcast with me, June Grasso. Subscribe today wherever you get your podcast. I'm going to veer into some sensitive territory here. I don't know anything about how you lean politically. I also don't particularly care. It's fine. All that being said, I think that I have stereotypes and I think if I imagine what the typical

cattle ranch or how they are politically, guy wearing a cowboy hat, speaking with a country accent, would have a presumption about how they might vote in a typical, again, not you specifically, but, you know, I have my stereotypes, et cetera, and they're probably true. Has the current administration, you know, talking, he's been talking to you guys via his truth social account. You want to, to lower prices, but also appreciate him for the high prices, a little unclear. Has this current administration been a friend to the independent cattle rancher? Well, what independent cattle producers needed is they needed our imports to, to be managed, not to hand to the meat packers the ability to source whatever volume of imports

they want to displace our domestic production, to prevent our domestic production from keeping up with growth in population, which is what has occurred here. And so what we needed was the implementation of tariffs and tariff rate quotas on countries that persistently maintain a trade surplus with the United States. In other words, countries from which we buy large volumes of beef, but we sell to them very little. So we have been calling for tariffs and tariff rate quotas, and tariff rate quotas, of course, are limits on the volume of beef that any country can export to the United States. And so when President Trump took his second term, that's the first thing he began doing,

was imposing tariffs. And for an industry that underproduces in the domestic market, we need the tariffs to provide our industry the space to expand and increase production. So we were strongly supported the tariffs. When we saw Brazilian imports absolutely explode in 2025 and even last year, we were thankful that the president imposed a 50% tariff on Brazilian exports of beef because that was going to further keep our industry awash in these price depressing imports. But when the president announced this idea to lower consumer beef prices by increase in Argentina's beef import quota rate. We believe that he was misguided. He was misinformed as to how the market

structure worked. I don't think he was aware that our industry has just gone through years of depressed prices while consumers were experiencing record beef prices. I don't think he understood how severe the lack of antitrust enforcement has adversely affected our industry and caused our industry to shrink. And so producers are very, very concerned right now because we're at the price point where we should be expanding, but we're not expanding as we should be because of the concern for the market failure in our industry that has not been corrected. It's because we're not certain anymore of whether the president is, in fact, going to begin to manage these imports or if he was just going to let these packers continue to import whatever volume of beef and cattle they want to displace

our domestic production, and they do this without informing consumers where that beef is from. There is no country of origin label on the imported beef product, so consumers can't choose to support the domestic supply chain versus the foreign supply chain. And that's why we're urging Congress to pass mandatory country of origin labeling immediately. And I think this will help to at least mitigate the negative impact that increased imports from Argentina will have on our industry, because then we can go to the consumer and ask them to choose the higher quality USA produce beef and support U.S. cattle farmers and ranchers. Look, I totally get where you're coming from, but I, you know, I live in New York City,

and I have children to feed, and one of my children loves beef a lot, and the vast majority of Americans are not cattle ranchers by any stretch. So, again, I understand that you have a constituency that you represent, you want to make your case. Why should the vast majority of the country, which are beef consumers, get no benefit from higher cattle prices, get no benefit from higher beef prices. Why shouldn't we want the either imports channel or the Walmart, which frankly has a long history of driving prices down in almost any category to enter. They're sort of famously a low-cost seller. Why shouldn't we support these trends?

Well, look at any other sector in the American economy. So we do import large volumes of goods from China, for example, and a consumer can go to the grocery store and see a China-priced product labeled as China, product or China, or they could buy a USA product, and typically the USA product is going to cost more. But consumers have a choice. They can choose to purchase the cheaper product if they want to. Now jump to the beef industry. Consumers have no choice. The product is undifferentiated. The meat packers are importing this beef from Australia, New Zealand, in these 20 different countries I talked about earlier. They're importing them cheaper than what we can produce it here. But there's no label on it. What there is on it is,

is a U.S. inspection sticker leading unsuspecting consumers to believe, well, that must be a domestic product. And so because the consumer can't choose between the cheaper foreign product and the more expensive USA produced product, there's no price saving for the consumer because the packers and the retailers will price it identical because they don't have to distinguish it. So they pocket the increased profitability of buying low and selling high in the most affluent beef consuming market in the world, and that's the United States of America. That's an example of our dysfunctional market. Consumers have not benefited from these increased volumes of imports. Instead, these increased volumes of imports have reduced demand for our domestic cattle, driving hundreds of thousands

of cattle producers out of the industry over the past four decades. Can I start a beef processing plant? Why can't I go into it? Like, it seems like a very profitable business, certainly if you're a JBS or someone like that. You seem to be making a lot of money. Why don't we have new entrants? So you have four packers controlling 80% of the fed cattle market, meaning they also control about 80% of the box beef market, meaning they've got long-term and short-term contracts with the major retailers. They have shelf space with those retailers. So if you're a small packing plant trying to get started, how are you going to market your beef? When you're marketing into such a highly concentrated, consolidated market where the retailer has long-term contracts with the

largest dominant global beef packers, how are you going to access the marketplace? So we've had lots of smaller meat packers try to start up. It requires a huge capital outlay to do so. Nevertheless, the government actually during the past administration has been encouraging their growth and development, but they're struggling. They're struggling because they have difficulty in marketing their product. Even if they're marketing a high-quality product, they're marketing into a commodity-structured marketplace and the advantage falls to the meatpackers. So until and unless we enforce our

antitrust laws and our fair competition laws, we will continue to see these upstart experiencing severe difficulty in finding a profitable marketing outlet for their product. You know, like I said, I really like beef. Everyone's into protein these days. We talked about this recently on another episode. Protein is really hot. Animal protein, in particular is really hot. There's a lot of influencers and people have podcasts and they say things like eat more red meat. And our attitudes about red meat have changed. When I was growing up, that was scary.

Oh, don't cut back on your red meat. Now it's like, oh, red meat is like the healthiest thing you can eat. I don't know if that's true, but a lot of people would say that. How much of the prices that we pay, whether it's for the price of cattle or the end price of ground beef or whatever or steak, is about the secular trend towards people wanting to have more animal protein in their diets? Sure. So I think it's a huge factor. I think there are a number of factors contributing to the consumers' increased demand and willingness to pay more for beef. And I think therein lies the answer to the problem. If we enforce our antitrust laws and let the market signals flow in our industry,

We will begin to expand, and our production will soon hit an equilibrium with the consumer demand, and we would see prices subside. In fact, if consumers are unwilling to pay current prices for beef, they would shift to other protein sources, like lamb, chicken, and pork. And you would see the price point from the retailers begin to fall, and you would see the high beef prices subside. Actually, but if the government causes us to happen, if the government interferes, and forces the demand for live cattle to decline.

We're not going to increase the size of our U.S. cattle herd, and America will become increasingly dependent on foreign sources for the beef. Right now, at 2024, about 22% of all the beef available in the U.S. market was imported product. And if we look at our sister industry, the sheep industry, which is the direction our cattle industry is going, In 2004, 73% of all the lamb consumed in America came from Australia, New Zealand. We've decimated our domestic sheep industry. Now government has its sights on the cattle industry, and increasing imports without any product differentiation in the marketplace

will simply exacerbate the ongoing shrinking of our cattle producer in terms of the number of participants, number of cattle, and the number of marketing outlets. All right, we're going to have to leave it there. Bill Bullard, I just realized, Bullard. Nominative determinism, right? Oh, yeah, excellent. You had to go into cattle ranching. Thank you so much for coming on Oposs. My pleasure. Thank you very much. Joe, that was really interesting and definitely closely related to the chicken series that we did.

And again, it seems to be that chickenization theme running through agriculture. I hadn't realized that cows, cattle ranching, were basically like the last. last frontier in agriculture. And I, to be honest, I would have already assumed it had been more or less on that. I actually think the Walmart thing is very interesting because on the one hand, people look at an entity like Walmart and it's like, here's this monopsony player, it's going to drive so much power. On the other hand, you say, here's a new market entrance. This is like, oh, here is that the market has just gotten more competitive. I think it's an interesting gun. But check for people who want to think about like market competition that when you read a headline, Walmart is going to get into beef processing.

Do you read that as like bad or good? Because you asked, why aren't there more entrants? Well, here's a new entrant coming in. I have to say, I shop at Walmart. I buy beef. I buy those big, have you ever seen the big like long packages of ground beef? Oh, yeah, yeah. Yeah, yeah.

They're pretty good, actually. I am kind of floored that there's no country of origin label on these. I never thought about that. I am a little skeptical would change much. Like, would you... It might not. Like, would you spend meaningfully more or less on beef, presuming you expect that it was like healthier,

that it was safely arrived? Yeah. Well, what I would say is I do shop at Walmart, but I shop at Walmart generally for bulk beef. And if I'm looking for the really good stuff, I will go to an independent farmer of which there are many in Connecticut. And I realize, like, not everyone has that luxury.

And I will try to get the good beef. I might try to get the good beef, too. It might come from Japan. Don't they, like, treat their cows really well? Like, they, like, give their cows, like, beer and all that stuff. Massages. Yeah. No, I think I love talking about animal industry economics.

There's a lot of tension. I will say one other thing, which is, you know, I ask that question about, like, why should we care? The beef consuming part of the world, which is the, of the country, which is the vast majority of the country. the U.S. used to run a very big trade surplus in food stuff. Only very recently in the last couple of years has that turned into deficit. It's probably a source of some concern to me that we no longer can domestically satisfy all of our food needs. If you're worried about domestic semiconductor capacity, then you probably should be worried about food capacity. I think there some overlap issues. We can't eat the chips, Joe. Oh, except for potato chips. Except the other chips

that we can eat. I don't know, I think there are some, I think there are some things to worry about or think about with food that are a little different, a little similar that maybe we should talk about more at some point. Absolutely. All right. Shall we leave it there for now? Let's leave it there. This has been another episode of the Alldots podcast. I'm Tracy Alloway. You can follow me at Tracy And I'm Jill Wisenthall. You can follow me at the stalwart. Follow Arcaf USA. It's at Arcaf USA. Follow our producers, Kerman Roderick, Dashel Bennett, at Dashbot. And Kail Brooks at Kail Brooks. For more Oddlots content, go to Bloomberg.com slash oddlots for the daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord. Discord.g.g. slash oddlots.

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