In the Omaha World Herald’s September 26, 2021 article “Supply and demand or meatpacker consolidation — who is right in beef over beef?” AAI President Diana Moss shared how beef packer margins have dramatically increased.
From the article:
Most university economists and analysts who follow the industry say they see nothing fundamentally wrong. They trace the current conditions to an oversupply of cattle, a loss of animal-processing capacity due to plant closures, COVID-19 disruptions and recent labor shortages.
“We have had more cattle than we’ve had the ability to comfortably process,” said Glynn Tonsor, a beef industry economist from Kansas State University. “That’s a new development in the history of the industry.”
But experts in antitrust law say they’re not so sure anti-competitive behavior among packers can be ruled out.
Diana Moss, president of the American Antitrust Institute, called the increase in the packers’ share of the beef dollar “oddly high,” and it continues to rise this year.
“It’s concerning,” said Moss, who is also an economist. “There are more predictable market dynamics, and then there is the exercise of market power by powerful market players. You can’t rule out the role of anti-competitive pricing.”
Moss, the antitrust expert, said she’s not surprised that industry economists would defend the status quo. Many may focus narrowly on supply and demand factors rather than consider the role of market power.
And while cattle markets indeed are heavily influenced by cattle numbers, Moss said, that does not mean that’s the sole driver of cattle and beef prices.
She noted that both the packer and retail sectors have seen their share of the beef dollar grow significantly since 1980, corresponding with a period that saw major mergers and massive consolidation in both sectors.