What’s the beef? The Great Range War of ’77 By Jim Hightower and Ron Butler Austin, Waco, Amarillo A hundred and sixty-eight ranchers in West Texas and New Mexico who say supermarkets are fixing prices against them organized something of a modernday posse in August and hauled 24 of the country’s biggest food retailers into federal district court in Lubbock. Their case reads a bit like the story-line of an old, Saturday morning Western melodrama: little ranchers finally get their fill of rough treatment and band together to battle landgrabbers, bankers or other intruders. Well, this time it’s supermarkets. The list of plaintiffs alone recalls characters from the flickering screennames like Crump Ferrel, Jana Posey, Dare Lock and Cloyce Box might have been lifted from the script of “The Oklahoma Kid”; the cattle enterprises of the plaintiffs bear names worthy of Zane GreyTriangle J, Half Love Partnership, Rawhide Feeders, Triple D, Kiowa Cattle Co., Tee Pee, OK, Cowboy, and Big 7. The cattle market The reality, of course, is much less romantic, but the anger and save-theranch seriousness behind the lawsuit is no less intense than that which stirred cattlemen to , protect their interests in frontier days. Since 1973, cattle prices have dropped to the point where the costs of raising a steer today actually exceed what a rancher can get for it. Not that it’s costing consumers less to buy steak or hamburger at the nation’s meat counters: retail beef prices have risen steadily over the last four years. How can this be? Because a complex marketing sector in the food industry puts a great distance between ranchers and consumers and lends itself to price manipulation. Cattle raisers generally don’t sell beef directly to consumers, or even to retailers \(supermarkets and resherds that produce calves. Those calves are raised on the ranch until they reach a weight of about 700 pounds, at which time they are sent to a feedlot for formula-feeding that brings them up to slaughter weight \(the process is approranchers sell Their calves to the feedlot for finishing, at other times they pay the feedlot for finishing their yearlings and retain title to the animals. In either case, steers are fattened and then sold, either by feedlots or ranchers, to commercial meat packers for slaughter. Packers then sell beef carcasses to supermarkets and restaurants. In terms of economic structure, there are thousands of ranchers selling to hundreds of feedlots selling to a few packers selling to a handful of supermarkets. It is a funnel-shaped arrangement that economists call an “oligopsony”many sellers confronted with few buyersand it places pricing power at the narrowest polint of the funnel. The major supermarket chains buy millions of pounds of beef each week through their own centralized purchasing systems, telling packers how much they want and what they will pay. Theirs is the dominant market power in the beef industry. Safeway, for example, had 1976 sales of $10.4 billion, making it the 15th largest corporation in America \(bigger than such industrial giants as Shell operates 2,400 stores, maintains its own distribution and warehousing network, and runs four meat processing plants. Even though Safeway and chain outfits like it may bid lower for beef than other less powerful marketers, packers prefer selling to the big firms because they deal in enormous volumes, and because it just isn’t good business to cross such customers. A price squeeze of this sort doesn’t hurt the packers any, since they enjoy oligopsonic power of their own over feedlots in ranching areas. If you were to draw a circle centered in Amarillo and with a 150-mile radius, you would en 12 NOVEMBER 18, 197
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