A tough cut
To Grand County residents driving past Middle Park’s many ranches, it may appear that it’s business as usual for ranching families during Colorado’s stay-at-home order.
Calves are being born and sheltered from spring storms. Tractors are still circling fields making daily feeds. Nights are still spent checking for pregnant cows in distress and keeping predators at bay.
But for the ranchers who rely on the sale of calves for their livelihood — and the survival of their ranches — this year has been anything but business as usual. Despite their tough exteriors, many ranchers are worried their ranches won’t survive. To appreciate their concern, it’s important to understand the economics behind the cattle business.
What’s for dinner?
In 2019, Americans consumed an average of 217.3 pounds of meat per person. This was down from 2018’s record consumption of 218.6 pounds per capita. While American households consume lots of beef, restaurants and schools are what sustain the beef industry.
According to a study in The National Provisioner about the state of the beef industry in 2019, beef is America’s protein of choice. With retail sales of beef projected to reach an all-time high of $110 billion last year, it’s no secret to restaurants that having steak on the menu drives revenue, and a good steak dinner often contributes to the purchase of high-profit menu items: cocktails, appetizers and desserts.
And that’s just steak cuts. According to the website Statista, ground beef sales account for 39 percent of total beef sales in the United States. Statistics about how much ground beef is sold to American public schools are difficult to find, but with 57 million U.S. school children to feed every week, that’s a lot of tacos, hamburgers and other cafeteria mainstay dishes made from beef.
While exact shut down dates vary from state to state and district to district, most restaurants and schools have been shuttered since March 15. Many school districts throughout Colorado and the nation have already announced they don’t intend to bring students back into the classroom for the duration of the school year.
And as for restaurants, while many have scrambled to offer to-go meals, nightly specials and delivery service, the number of meals purchased at restaurants and food retailers has dramatically diminished in the last month, leaving the supply chain stagnant.
A calf born in Middle Park in the spring typically gets sold to a feedlot in Colorado’s Eastern plains or other Midwestern states for delivery in the fall. The calves stay at the feedlots until they’re nice and fat.
“Our calves will leave the area weighing between 400 and 650 pounds,” said Tim Ritschard, whose family owns and operates Ritschard Cattle Company. “These calves then sit in a feedlot or on a pasture until they are ready for slaughter.
“Feedlots hedge or sell their fat calves to the packing plants, where they are slaughtered and sent out as boxed beef to stores for human consumption,” continued Ritschard, who is also president of the Middle Park Stockgrowers Association.
According to Ritschard, with a radically reduced demand for packaged beef, packing plants aren’t buying as much from feedlots, who in turn are at capacity with fat calves and won’t be buying new calves from ranchers like his family.
“Where the problem will be this year, is feedlots are still full of cattle that are ready for slaughter, and feeders will not be able to buy calves because they are losing money on their fats that are being sold,” Ritschard said. “The only thing we have going is that people have to eat.”
That glut of supply is forcing prices lower.
Pat Pryor, whose family owns and operates Pryor Cattle Company, has been keeping a close eye on the price for “fats” — calves that have reached the desired weight to be sold by the feedlot to the meat processor.
“Fat cattle .85 lowest in 40 years,” Pryor wrote in a message on Monday.
The translation: Meat packing plants are now buying slaughter-ready cattle for 85 cents per pound, a 40-year low.
The packing plants, and tight regulations surrounding beef packaging, are where Ritschard sees a significant part of the problem right now.
“My biggest fear in the cattle industry is how the packing plants are running,” he said. “There are four major packers in the U.S. that control 80 percent of the slaughter world.”
Having tight control of the market at the top can put financial strain on producers at the bottom. With a small number of packing plants buying fats for slaughter, the plants have considerable purchasing power.
“Packing plants are buying fat cattle right now for anywhere from 95 cents to $1.05 per pound,” Ritschard said on Sunday. “Boxed beef is going out the door, as of April 17, at $238.99 per 100 pounds for choice meats, and $227.20 per 100 pounds for select meats.
“What they are making on boxed beef is crazy. We, as cow-calf producers, don’t see that profit back in our pockets.”
While regulation changes won’t come in time to help the feedlots sell their fats this summer or the ranchers sell their calves this fall, changes at the national level could be the key to survival for family owned ranches.
“We need more packers that aren’t just controlled by four major companies,” Ritschard said. “Having the option to have cattle killed will hopefully allow feeders to make money. This allows more money for the cow-calf producers, such as my family, to survive through times like these.”
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