This very question has been something asked of me MANY times in the last few weeks. Think back two years, to what was happening in the world. We saw massive grocery shortages. As ranchers, we couldn’t even get our beef processed. We thought, there must be a better way to deliver high-quality beef to consumers.
Just to give you some background, roughly 85% of beef is sent to what we refer to as the “big-four” processing plants. Those are; Tyson, Cargill, JBS, and Marfrig (National Beef Packing Company). Ultimately, they control the prices of consumer beef cattle. When Covid hit, many of the plants were forced to shut down, thus there was nowhere to take beef cattle for slaughter. This inundated local butchers; forcing them to book one to two years in advance.
For many farmers and ranchers, this was the tipping point. The root cause of the beef cattle industry began to rear its ugly head. Beef prices in the grocery store reached record highs, while the purchase price of cattle dropped. In theory, this should never happen. Speculation quickly began that the “big-four” were controlling the price of beef. How does a supply chain crisis occur within such a consolidated industry?
How did this happen?
- Covid induced shutdowns created a massive backlog of beef slaughter cattle
- The backlog created price-fixing for the purchase of cattle from ranchers by processing plants
- Inventory shortage among grocery stores further stratified pricing differentials
- Subsequently, the margin of profit dropped for ranchers while the “big-four” raked in record profit margins
To make matter worse, inflation in recent years has created the lowest profit margin in recent years for farmers and ranchers. Input costs alone are double what they were this time last year. We’ve also seen record drought numbers as an industry in the past 24 months.
This is when we began to ask ourselves, what can we do to better serve consumers? How can we make an impact while creating a sustainable plan for our family and our farm? For us, direct-to-consumer is the next step. As the rancher, we are able to produce a quality product and you, the consumer know directly where your beef comes from. We are able to completely eliminate an entire step in the process, creating better value for the consumer while allowing the rancher to regain some control.
Our goal is consistently to produce prime-grade beef for our customers while passing our passion for agriculture onto our children and hopefully generations to come. We want our customers to know where their beef is coming from and to seek answers from the farmers and ranchers that produce it. We care deeply for our animals and for preserving our way of life.