Follow the Money: The beef with US beef

Pipsy podcast on suurin jälkeen. Aloita ilmainen kokeilu shopifaippiste komsi bustolla. - What do Beatles member support McCartney? - YouTube Megastar Mr Beast. - And former Facebook executive Cheryl Sandberg, all having common. - They're all being discussed in the new season of Good Bad Billionaire. The podcast which explores the lives and fortunes of the world's super rich. - That's Good Bad Billionaire, from the BBC World Service. - Listen now at such a Good Bad Billionaire, wherever you get your BBC Podcasts. - The big dive is in the water and there is the anyway you see the stuff that happens. - Somewhere in America tonight, someone's cooking burgers in the backyard. And whoever it is has probably noticed something. The beef costs more. A lot more. Beef and veal prices in America are up almost 13% on a year ago. Stakes are nearly 15%. Overall, inflation isn't even a third of that. I'm Sam Fennik, this is Business Daily from the BBC World Service. Today we're following the money from the rancher to the restaurant and grocery store. Why a price is so high and who's actually making money out of what you eat? Pick up three things from a US meat counter this week. Pack of mince, steak and a burger. All three cost much more than they did a year ago. And behind every one of them is the same chain and it starts with a cow. Now there are fewer cows in America right now than at almost any point in living memory. Because what you're seeing at the meat counter is really the end of a much longer chain. There are four links, the rancher, the feedlot, that's basically a giant cattle fattening yard. Packer and the restaurant that finally puts the burger on your plate. And we're going to follow the money through all four and find out who's actually getting richer and who's getting squeezed. Eric Groper is a fourth generation cattle rancher in South West South Dakota, a native American who leases his land from the Ogla-Lasou tribe. His farm is remote, seven miles from the nearest paved road, two and a half hours drive in each direction to the closest towns. He sells his calves once a year at a local sail barn. As a cattle rancher, you are a price taker. You get what's given, right? I don't get to set my price. I sell at a local sail barn. My calves are open to the world, we'll say. Anybody can bid on them and that's what I get. Once a year, that's my calf crop. Just give us an idea of what the price is that you're getting. It's a rough figure, but about $2,500 a head for a 600 pound steer at the sail barn right now. $2,500. Yep, we're record cattle prices right now. The year before that, they were 18 to 2000. So for once it seems like the rancher might be holding the cards. The US cattle herd stood at 86.2 million head at the start of this year, the smallest since 1951. And fewer cows means higher prices because there's a short supply and therefore people are willing to pay more for them. So is Eric better off? Yes and no, I mean it feels really good. You're able to pay your bills, but your inputs are still so drastically high that if we didn't have these record prices, we'd all be broke. So I sit down to do my taxes and it feels like I made a lot more money, right? I'm playing with a lot more money, but in the end, I really didn't make any more. Because pickup trucks, I have to have them very essential to my operation. They cost 80 to 100,000 for a new one now, where they used to be 30 to 40. A roll of barbed wire. It's went from $60 for a quarter mile roll to 130. Even though Eric's running costs have risen, the price he's getting for his cows has gone up by a lot. And that's because of shrinking cowherds. But how has that happened? Well, producer Gideon Long is here and he's going to explain. Yes, Sam, so this is partly to do with the cattle cycle. So roughly every eight to ten years, the herd builds up as ranches keep cows for breeding. And then it declines again and then it builds again. But it's been exacerbated in the last couple of years by drought. Well over 60% of the cattle in the US are now grazing on land, which has been impacted by drought. And what does that mean? It means that ranches have to buy feed instead and that makes it much more expensive. And when they're facing these tough conditions and when prices are high for their calves, the temptation is to sell now, rather than keep their cows for breeding. That means fewer cows for breeding and fewer calves in the years to come. So expensive feed for those calves, but it isn't just the weather, is it Gideon? No, it's not just the weather, they're also facing a threat from a flesh eating parasite called screw worm. Now the US hasn't had screw worm in its herd for decades, but it was detected in Mexico a couple of years ago. And it is moving north, so the Americans have effectively shut the border with Mexico to cattle. And that's quite a big deal because before this outbreak, around a million animals were moving north annually into the US. So that's also squeezing supply. And a lot of these ranches, they're also reaching retirement age as well. They are, and that's another reason why the herd isn't rebuilding faster because the average American cattle producer is in his or her late 50s or 60s, closer retirement and some say that their sons and daughters are not necessarily willing to follow in their footsteps. Now Eric Gropers' calves don't go straight to slaughter. When they're about six months old, they go to a feed lot to be fattened on grain. Now these can be vast areas of land where cattle are penned and fed on grain instead of grass. Some of the biggest hold well over 100,000 animals at a time. Almost all of America's beef will pass through one of these feed lots. About 95% of US cattle are finished on grain in a feed lot in the last few months of their life. Brenda Patel is a professor of agricultural economics at the University of Wisconsin River Falls and she studies exactly this part of the chain. A feed lot is basically where the animals are going to go in order to be able to be finished. They are typically in a confined area. They're given and finished grains until they hit a certain weight and then once they hit that certain weight, they're taken to the packers for harvesting. They can arrive anywhere from £400 to around £800 and typically around £1,500 is what we're going to be looking at to finish. Now the US Department of Agriculture says that that process can take anywhere from 3 to 10 months depending on the animal. Cattle and beef prices are quoted per 100 weight, that's £100 and a steer is a young male on its way to being fattened up. The prices the feed lots pay tells you everything about how tight this market is right now. They are up considerably. If you're looking at feeder steers and the southern plains and you're looking at about £700 to £800 animals, they're up about 28% relative to what they were last year. Last week they averaged $381. These are record prices. So record prices again in this part of the chain. What happens then when the same animal comes out the other side ready for the packer? Are they being charged more too? July 2nd of 2026, we saw cattle for $255.25 per 100 weight. Last year on this date it was $233. In 21, they were 126. So since 21, we've had 103% increase in prices. So the price of feed lot gets for a finished animal has more than doubled in five years. So who's benefiting from those high prices? If I was looking at the industry as a whole right now, the ones on an aggregate level that would be seeing the greatest profit potential would be the cow calf producer. Then we'd look at where the cattle feeders have the next greatest potential. And then I'd say the packers and the packers are where they've been experiencing a lot of red mines right now just simply because of the high prices they're having to pay. The beef prices are 13 to 16%, but that calf that you're selling is up almost 28 to 30%. So the ones who are bearing the rent would be the packers. They're kind of getting squished right now. So Gidium, we're halfway through the chain. Where has the money got to? So far everyone is getting more money. The ranch's calf is well upon last year. We heard that from Eric. Branders told us the feed lot's finished animal has more than doubled in price since 2021. But at every step the inputs, the cost of the inputs has also gone up. Feed, fuel, equipment. Eric was telling us for example how much the price of wooden fence posts has gone up. And he needs thousands of them on the acres that he's ranching. So more money coming in but that doesn't necessarily mean that they're making more money, keeping more money. This is Business Daily from the BBC World Service. I'm Sam Fennick and today we're following the money behind your burger. Why are beef prices in the US so high? Is the American Dream still possible? I'm Asma Khalid, one of the hosts of the Global Story Podcasts from the BBC. One of the most successful exports the United States has ever sold the world is the American Dream that tantalising promise of a better, freer, richer life. But is it still attainable? I feel like the American Dream is alive but not well. For more, listen to the Global Story at BBC.com or wherever you get your podcasts. What do Beatles members support McCartney? YouTube, Megastar, MrBeast and former Facebook Executive Cheryl Sandberg all have in common. They're all being discussed in the new season of Good Bad Billionaire. That's Good Bad Billionaire from the BBC World Service. Listen now at such a Good Bad Billionaire wherever you get your BBC Podcasts. Now the third link in the chain is the Meet Packer. The plant where the animal is slaughtered and prepared ready to go to supermarkets and wholesalers. And this is where Meet Production turns political. There are four companies handle most of America's beef, Tyson, JBS, Cargill and National Beef. Between them they control around 85% of the market. One of them, JBS is Brazilian owned and National Beef is majority Brazilian owned. In November last year President Trump posted on Truth Social calling for an investigation into Meet Packing Companies. He said that they were driving up the price of beef through illicit collusion, price fixing and price manipulation. He directed the Department of Justice to carry it out. US Agriculture Secretary Brooke Rollins gave an update on that investigation in May of this year. The rate of this for firm control has accelerated since the 1970s. According to USDA data, concentration for cattle slaughter of these four was only 25% in 1977. And jumped to 71% by 1992. As mentioned today, it is an astounding 85%. This is led to a frightening landscape for cattle ranchers. Industry consolidation reduces options for our ranchers looking to sell their cattle. It weakens their negotiating power and it risks reliance upon a single buyer. So in about 50 years, four companies have gone from controlling a quarter of America's beef slaughter to controlling nearly all of it. For a car for USA, a national ranchers group has its own antitrust lawsuit against the big four. Eric Grooper, who we heard from earlier, is its vice president. Target and McDonald's have sued the Meet Packers overpricing two. We asked all four Meet Packing Companies to talk to us non-responded. The industry's trade body did, at least in part, the Meet Institute wouldn't comment directly, but centres a statement that it issued after Brooke Rollins press conference and it said that beef packers large and small have been losing money nearly every month in the last 18 months. On the ground, one of the small operators still standing has numbers to prove that. Jamie Crumbly owns Harpley's Meet Packing in Central North Carolina. One of the thousands of small operators competing for what's left outside the big four. She buys live cattle and slaughter them. She explains what she's paying for an animal now against what she was paying three years ago. A hundred to $120 live weight three years ago. And now you're talking about 165 to 180. So much of that goes into location where you're at, the type of animals you're buying. But I mean, you're definitely seeing a large increase, you know, somewhere between 30 and 60% of an increase. Can you cope with that kind of increase? You know, I think that the packing portion of the supply chain could cope with it if the actual amount that you're getting for the animal, the meat, the revenue you're bringing in from the actual sell of all the products was in alignment with that increase. Right now that is not happening. Most of the animal goes into what's called 9010 trim. The lean beef that ends up in what most of us would call mince. And although the price per pound has gone up to Jamie's still making a loss on it. Three years ago, that market would have been $2.75. Now if you look at the beginning of this year, we were hovering around $362. And this summer, we're sitting at about $4.60. Now one would look at that and say, the price has gone up. So how are you losing profitability wise? When you look at the actual cattle pricing that has increased, it has not necessarily increased at a rate to cover that. That's where you start to see that we aren't able to make the money off of all of the finished products that we need to cover the costs of the actual live animal. Tyson, one of the big four meat packers has told its own investors much the same story. It lost more than $500 million on beef across the first half of its financial year. And with meat packers and processors chasing fewer and fewer cows, Jamie says business is tough. How long do you think you can carry on? I think that's such a hard question of how long you can carry on. But we are trying to figure out how to reduce our expenses. We're trying to figure out how to be more efficient because many of us are running at a lower capacity in our plant than what it's meant for. Because we simply cannot get the cows because there's a cattle shortage. My plant can do 425 to 450 a day. I'm not operating at that level. I'm operating at 350 a day. So I am running in efficiently. We're just trying to figure out how to be more efficient and to reduce those expenses. Trying to control the things that we can control while we can't control the market. The change doesn't end on a shelf. It ends on a griddle. Paul Urban owns Block 16, a burger restaurant in Omaha, Nebraska. And they didn't set out to sell burgers at all. We opened it by accident. We took over an old Euro shop and planned on turning it into a fine dining destination. One thing led to another and now we do a lot of fun burgers and sandwiches and we do a different special. Every single day of the year we've done a little over 4,000 specials now. Using cattle country. People here absolutely love their beef. He goes through about 300 pounds of ground beef a week. That's around 28, 100 burgers a month and every one of them starts with what he pays for the meat. We're using a local farm out of Pendern, Nebraska called North 40. They're producing some amazing. It's 100% American Wagyu beef and we're paying about $6 a pound for ground, which is almost unheard of, honestly. He's still higher than it used to be, but it's great beef. When Block 16 opened, Paul sold his burgers for $8.95. Today the prices increased to 11.95 and he says even with a $3 increase it isn't enough to make a decent living. To say we added all up, we get a 25% food cost and maximize our profit. Maybe we have to charge $13 for a burger. Well we don't feel comfortable doing that. I wouldn't want to walk in here and have to pay $13 for a cheeseburger. So that's when we kind of drop it down and we don't make the profit that we would like, but you're still getting people through the door and it's not always about the money. He absorbs at least some of the difference and takes a thinner margin to keep prices down and customers coming back. 30% is our cost. We're making far less than that. We make, I would say, 5%. It's very small when you figure out all of the labor and all of your overhead and your day-to-day operational costs. 5%. So that's what's left for the man at the very end of the chain after the rancher, the feedlot and the packer have taken their cot. Now he's trying to get round the price of beef. He wants cut his patties with mushroom, 40% mushroom, 60% beef. It was fantastic. It's also great for the planet and it's healthier and it just did not go over well at all. People, at least around here, they want their beef and they don't want anything else mixed in with it. So he went back to all beef and quietly changed something else instead, the cuts of the meat he uses. We've pivoted on a lot of our sandwiches where we've been able to get pretty creative with some cheaper cuts of meat. We just got in some beef knuckle and some top sirloin and we're just using it in different ways and we're able to make a little money off of that and it's still pretty dang delicious. So that's the restaurant's answer to the record cattle price. We've got a bigger menu price but cheaper cuts and thinner margins. So Gideon, we've followed the whole way down, the rancher, the feedlot, the packer and the restaurant. Now everyone has said the same thing that they're not getting richer despite prices reaching record highs but surely someone has to be. So who is it? Well the truth is nobody really because they're all selling at higher prices but they're also buying at higher prices and that's same for the packers, it's same for the wholesalers for the restaurant. There's everyone along the chain. They're all turning over more money than they used to but almost none of them is keeping more of it. So the extra money that I'm paying for my burger, where's that actually going? It's not really going into anybody's pocket. Every link is paying more for the same thing. animal and passing most of it on. So the money isn't being made, it's being eaten by scarcity, scarcity of cows. So we're back to where we started with those small cowhards. So the 1195 that you pay for a burger in Omaha isn't a profit that someone's taking off the top, it's the price of their not being enough cattle. America has fewer of them than at almost any points in 1951. And Gideon, you can't just conjure up a cow overnight, can you? You can't, I mean, it takes the better part of three years to turn a breeding decision into a burger. And that's been exacerbated by drought that broke two years ago. And that is still setting menu prices in Omaha and in the United States. And it will keep setting them for years yet, whatever this year's antitrust investigation finds. So the president's hunting for a villain, the ranchers are suing, but the thing that's pushing up the price of the meat on your plate isn't a company deciding to take more, it's a shortage that started with the weather working its way down the chain until it reaches you. And perhaps the biggest surprise of all despite these high prices for beef is that demand from the consumer has remained fairly stable. That's follow the money from Business Daily on the BBC World Service, I'm Sam Fennick and today's producer was Gideon Long. Thanks for listening. Here's what's coming up on the next episode of Business Daily. Leana Bern will be chatting with the entrepreneur, Sumant Sinner. He left a successful corporate career to found renew one of India's largest renewable energy companies. So why did he bet on clean energy before it became mainstream? You can find that conversation in your podcast feed on Wednesday. How did the United States build the largest soft power empire in the world with the help of some tiny metal objects? I'm Tristan Redmond, one of the hosts of the Global Story Podcasts from the BBC. To mark 250 years of the United States, we speak to Roman Mars of 99% invisible. This soft power, this influence, was an incredible invention. For more, listen to the globalstory on BBC.com or wherever you get your podcasts.