Challenges of the Beef Industry
From the Publisher Dennis Sun
The beef industry is not unlike many other businesses – a certain amount of risk always exists, you just have to plan for it and hope for the best.
Despite what some may hear, along the beef chain there is always someone taking a loss and someone making a profit. It doesn’t matter what cattle prices or beef markets look like.
According to the Sterling Profit tracker, during the week of Nov. 29, meatpackers saw the highest weekly margin since August 2022 with Sterling’s estimated margin averaging $87.48 per head, while the feedlot margin for the week was $15.42 – the lowest since April 2024.
Major meatpacker Tyson Foods, Inc. reported a loss of $1.13 billion for the fiscal year ending in September, and they projected an estimated loss of between $400 and $600 million in Fiscal Year 2026.
These figures are due to the low number of cattle and because meatpackers cannot find the numbers of cattle to keep packinghouses running at capacity.
Exports have always played a role in the beef business, but now there are some challenges with countries like China. With U.S. tariffs, China stopped importing U.S. beef and U.S. soybeans. They have since started importing soybeans but not beef.
China canceled most of U.S. packinghouse registration, along with cold storage plants. Now they are dragging their feet in registering our U.S. plants.
China has cited issues with labeling, implants and other health requirements, along with other issues they can come up with. Really, they are doing all of this because they can. They realize their population has a growing middle class, and they have tasted U.S. beef and want more.
China also has the world’s largest hog industry, and maybe they don’t want any competition for it.
The European Union has really strict requirements to allow U.S. beef into their countries for a number of reasons. I’m not sure what they all are, but as we all know, some blame cows on climate change, some just don’t like cows and some would rather eat horse meat.
The U.S has to put up with tariff issues from Australia and New Zealand.
On the other hand, we can’t blame all of the nation’s export issues on tariffs, as there are plenty of non-tariff barriers from a lot of countries. Some are worried allowing more U.S. beef in their country will hurt their trade balance.
At some point our cattle numbers are going to be rising and the U.S. beef industry is going to have to have some strong export markets. Now is the time to develop those markets.
The one thing the U.S. beef industry realizes facing these challenges in today’s global market is people around the world want the quality and consistency of our U.S. lamb, pork and beef, and most are willing to pay for it.
Most cattle producers are quick to fault meatpackers for one reason or another. At times, meatpackers don’t play fair, and we claim they are fixing the prices. There are laws currently out there to correct these wrongs, we just need to enforce them.
The U.S. cattle industry needs large packinghouses to process their products. Cattle producers just want a fair and level playing field.
