A few months ago, the Chinese government began blocking Argentine beef imports because of contamination by chloramphenicol, a dangerous antibiotic prohibited in most countries, including the U.S. It also warned Australian cattle producers that it was about to impose large tariffs to protect its domestic industry. At roughly the same time, the European Union rejected imports of Brazilian beef for food safety reasons.
Three huge meat exporting nations now have large reserves of frozen surplus beef, and not the nice kind of quality chops and steaks, but the processed remainder. And now, that huge quantity of remnant beef is headed to the United States, and it’s about to go into your hamburger.
You might be asking why that would be. Doesn’t America have its own major beef industry? Don’t Americans prefer local U.S.-raised product?
The answer is corruption and monopoly power. Because we’re not really talking nation-states, but global meat corporations, in particular a giant packer named JBS, which dominates the Brazilian and Australian industries. JBS was a small Brazilian firm, until its founders, the Batista brothers, grew it into the world’s largest beef company. How? Well many ways, few of them clean. For instance, roughly ten years ago, the brothers spent time in jail in Brazil, after admitting they bribed politicians.
The cattle industry has been in crisis for a very long time, with half the ranches disappearing because it’s just not possible to make money anymore. There are four meatpackers that control 85% of the industry, and as Callicrate observed, they don’t really compete over cattle purchases. Instead, they use a variety of tactics to punish cattle ranchers and keep their prices low.
Finally, with the shrinkage of domestic cattle, prices have started to go up for the rancher. For the first time in a very long time, ranchers are making money. Indeed, last month, a Cattle on Feed report came in showing a lack of supply, which would have given the ranchers more leverage.
But the tariff announcement, plus the border reopening to Mexican cattle despite the possibility of the screw worm disease, temporarily crashed cattle futures.
Bon appetit