A Few Thoughts by John Nalivka: Breaking up meat packers – oversight or interference?

Packers break carcasses – politicians break companies. It should not surprise anyone, but
the politicians have produced an answer to lower food prices and that is to break up companies into smaller entities.

Though he did not ask for my opinion, I would tell Senator Schumer – that plan goes against the one thing that allows a company to compete, including meat packers, and that is economies of scale.

This is an important economic concept in agricultural production and many other industries for that matter. Think about when the government broke up the big telecommunications (phone) companies. Did it help anything?
Companies in the food industry have grown larger to capture economies of scale to lower per unit costs of production. Some (including Senator Schumer, I suspect) would say this only allows those companies to capture a greater profit. I would not argue that point. Anyone in business must make a profit to stay in business. While costs are one part of the equation, the other part is having a competitive sales price. Both are key to business success.
Certainly, our Sterling estimates for margins across the red meat industry would not support any contention that packers are taking advantage of producers or consumers for that matter. For 2025, my Sterling margin estimates indicated that beef packers had an average loss of $138 / head. Feedlots realized an average profit of $498 / head last year while cow-calf producers made $897 / head on cattle sales during 2025. Record-high cattle prices certainly benefited feedlots and cow-calf producers over the last year. However, those same record-high fed cattle prices more than offset the record-high wholesale beef prices paid to packers last year, thus leading to significant packer losses.

The argument for “too big” might begin with packers, but where does it go from there? Does it extend further to the government needing to regulate the size of feedlots and cow-calf ranches in the U.S.? That might sound unlikely, but what might seem like an appealing argument can often spiral further. Initiating an investigation is only the beginning. I have seen this with federal lands grazing in the western U.S.
The meat industry competes in a global market. The U.S. meat industry has an advantage in many aspects of producing and marketing beef, pork, and poultry with part of that advantage being the structure of the industry. As a result, U.S. consumers have access to a wide variety of safe and wholesome red meat and poultry meat products.

Is beef affordable?
I would answer yes, and consumer demand would support that! If consumers were unwilling
to purchase beef at record-high prices, prices would fall.
Does the structure of the packing industry need interference by politicians? My answer is, NO!