A Few Thoughts by John Nalivka: Recently introduced legislation to study meat industry consolidation
Significant liquidation of cattle herds has brought U.S. cattle numbers to a 70-year low and pushed prices and subsequently, cow-calf returns, to record highs. At the same, Sterling Marketing’s estimate for beef packer margins is to average – $191 / head during the 1st quarter of 2026.
Legislation has been introduced to study the economic impact of consolidation in the livestock and poultry industries. Consolidation has become a top news headline in livestock and meat industries quite often lately and as I read about this, I once again become concerned about the information that leads to this research effort. I am not sure where to start in my assessment, but perhaps a good starting point is the current 4-Firm Concentration Ratio in the beef packing industry. The quoted figure is 85%.
Packing capacity is a significant factor in the market. Consequently, I maintain a rather significant database of plants and their capacities for both the beef and pork industries. This database goes back to the late 1980s when I started focusing on capacity and its impact on the market. I adamantly point out that the importance of capacity in the beef and cattle market goes beyond the packing industry to include all aspects of the supply chain from production to packing and processing to the retail meat case.
I have often pointed out in articles that I have written on this topic that consolidation in any industry is the result of businesses growing larger to achieve economies of scale. This is extremely important as it has a direct and beneficial impact on the cost structure of a business and ultimately, its financial success. It is related to and has an impact on production capacity and ultimately, the ownership of capacity across the supply chain.
With Tyson’s closure of the Lexington plant and reducing Amarillo to one shift, my estimate of total U.S. beef packing capacity (including both fed cattle and cows) is 36.7 million head. The strike at JBS’s Greeley plant would bring annual fed cattle plant capacity down to 27.3 million from 28.9 million. This leaves my estimate for the 4-Firm (Fed Cattle Plants) Concentration with the Greeley plant included at 75.7%. That is a notable difference from the quoted figure of 85%.
I would submit that a study such as the one proposed through Congressional legislation should not be taken lightly considering the definite potential for increased regulatory activity. For those who do not believe that increased government oversight leads to greater government regulations, in 2025, there were 243 volumes in the Federal Register (proposed and final rules and regulations) which begs the question – is this too much government oversight?
