Should We Break Up "Big Beef"? How Market Concentration Has Amplified U.S. Beef Inflation

Beef prices have risen sharply in recent years, averaging roughly 6% annually under President Joe Biden — more than double the pace seen during the prior administration. A mix of policy choices, broader inflationary pressures and intense industry concentration helps explain why ranchers and consumers are feeling the squeeze.

Why Prices Have Risen

Critics point to several policy-driven and macroeconomic factors that raised costs for producers: higher energy and fertilizer expenses, supply-chain pressures from pandemic-era disruptions, and land-use disputes linked to changing agricultural messaging. Those factors affected input costs for ranchers and contributed to overall food-price inflation.

How Concentration Amplifies the Problem

The Big Beef Four — Cargill, JBS (Brazil), Tyson Foods and National Beef — now account for about 80–85% of U.S. fed-cattle slaughter capacity and boxed-beef sales. That degree of concentration exceeds thresholds where economists become concerned about oligopolistic or oligopsonistic behavior.

Concentration matters at both ends of the supply chain:

• Upstream (Oligopsony): A handful of large packers can suppress prices paid to ranchers, weaken price discovery and limit sellers’ alternatives.
• Downstream (Oligopoly): The same firms influence wholesale and retail markets, giving them leverage over what supermarkets and restaurants pay and ultimately what consumers face at the meat case.

Three Commonly Cited Packager Tactics

Industry critics and recent legal actions highlight three mechanisms by which packers may exploit their market position:

1. Control Over Capacity: Owners of most large slaughter and processing plants can schedule maintenance, slow lines, or idle operations to tighten supply and widen margins — even when cattle inventories are ample.
2. Opaque Contracts: Many regions have shifted from open cash auctions to private “formula” contracts tied to thin spot markets. Those contracts can obscure true price signals and allow packers to pay ranchers less while retail prices remain high.
3. The Cut‑Out Margin: This is the spread between the low price paid for live cattle and the much higher price collected for boxed beef. When production tightens, that margin can surge, squeezing ranchers and increasing consumer costs.

Legal and Policy Responses

A growing stack of antitrust cases and settlements underscores scrutiny of packers’ conduct. Tyson and Cargill reached a combined $87.5 million settlement in consumer claims alleging they conspired to inflate beef prices by restricting supply. JBS agreed to pay $83.5 million in a separate matter tied to allegations of suppressing cattle prices. Major buyers such as McDonald’s have also alleged similar patterns.

Federal enforcement tools are being used to investigate and, where warranted, to compel changes. The Department of Justice (DOJ) has been directed — by critics and some policymakers — to investigate alleged collusion, price‑fixing and manipulation. The DOJ Antitrust Division, working with the U.S. Department of Agriculture (USDA), can subpoena documents, compel testimony and examine capacity decisions and data‑sharing practices to determine whether conduct crossed legal lines.

Separately, policy efforts aim to rebuild competition from the ground up. The USDA’s Meat and Poultry Processing Expansion Program and related initiatives provide financing and technical support for smaller, decentralized processing plants located closer to ranchers and regional markets. The stated goal: more plants, more bidders, and lower transportation and processing costs per pound of beef.

What Could Come Next

Authorities say they will use antitrust law and the Packers and Stockyards Act to police market power. If large packers are found unwilling or unable to compete fairly, structural remedies — potentially including forced divestitures or breakups — remain on the table as options to restore competition.

Bottom line: Market concentration in beef processing appears to have amplified inflationary pressures and weakened ranchers’ bargaining power. Legal actions, enforcement reviews and investments in regional processing aim to rebalance the market — but meaningful change will take time and sustained oversight.

Opinion: The views expressed here reflect the author’s perspective. Peter Navarro is identified in the original column as White House Senior Counselor for Trade and Manufacturing.