Meat sector looks for opportunities amid headwinds

Beef is not sustainable: That’s what critics charge and what many consumers want to see change.

The statistics around the meat’s environmental footprint are attention-grabbing. Globally, livestock contributes 14.5% of manmade greenhouse gas emissions, with beef responsible for the largest share, according to the Food and Agriculture Organization of United Nations. The livestock industry was responsible for the second-largest share of emissions of methane — a powerful greenhouse gas said to be 25 times more potent than carbon dioxide — in the U.S. in 2019, according to the EPA. Global methane emissions from cattle, meanwhile, have risen by more than 10% since 2000, according to Statista data. 

“We all worry about what this future looks like, and we all feel extreme pressure to mitigate these impacts in a very real way,” said Kim Stackhouse-Lawson, professor of animal science at Colorado State University and a researcher of sustainable cattle herding methods.

While demand for beef remains high, with sales last June rising 12% above the 20-year average, according to Gro Intelligence, consumer attitudes may be shifting against the protein over the longer term because of its large environmental footprint. Studies have shown growing interest among U.S. consumers in limiting meat intake based on the industry’s impact on climate. According to a 2020 Gallup poll, 49% of people who were reducing their consumption of meat cited environmental reasons as a major factor. Meanwhile, the rising popularity of plant-based alternatives, whose production is said to emit anywhere from 30% to 90% less greenhouse gases than animal-based meat, has also added pressure for the beef industry to address the sustainability of its protein.

In response, beef providers have recently begun to set goals to reduce emissions by tapping approaches like regenerative farming and methane-cutting feed. And in the year ahead, these efforts and a search for other solutions are only expected to ramp up as the industry seeks to win over skeptical consumers and governments grappling with climate change. At the same time, some critics argue that meat producers are ignoring some compelling — if costly — options for addressing the problem, demonstrating the complexity of making beef truly sustainable.

Industry efforts target emissions

As a first step, many of the largest beef processors have set goals to cut their emissions, with each relying on a mix of measures to hit its target. 

In 2021, Brazilian beef giant JBS committed to achieving net-zero emissions by 2040 across its global supply chain. To do so, it is investing $1 billion on projects targeting greenhouse gases, including $100 million by 2030 to help its producers implement regenerative farming practices. It also has vowed to eliminate illegal deforestation from its supply chain by 2025. This is after The Guardian published a 2020 report that JBS was being supplied by a cattle farm linked to illegal deforestation in the Amazon. 

Cargill aims to cut beef emissions across its North American supply chain by 30% by 2030, through practices like regenerative farming. And in 2021, Tyson announced it was targeting net zero emissions across its global operations and supply chain by 2050, in part by eliminating deforestation and sourcing beef from producers verified by BeefCare, a program that audits farms and ranchers to ensure they are following sustainable practices.

As major beef processors set their individual targets, the industry is also trying to collaborate with other stakeholders on the the issue. The Global Roundtable for Sustainable Beef has a membership portfolio that includes not only big beef producers, processors and their suppliers but also retailers, environmental groups and academic institutions. 

Ruaraidh Petre, executive director of GRSB, said the entity was formed around goals that industry leaders thought were critical to stop temperatures from rising, providing specific principles for different areas of the globe that produce beef based on their climate. He said that the organization finds common ground in wanting to prevent climate catastrophe, both personally and for the beef industry’s sake.

“We won’t be able to be in business if we don't stop climate change,” Petre said. “Nobody will be in business.”

Petre said one area the industry is focused on is feed additives, which have the potential to prevent methane production in the cow. In November, JBS SA announced it was partnering with ingredients giant Royal DSM to use its new feed additive, Bovaer, which is said to suppress the enzyme that produces methane in beef cows and reduce emissions by up to 90%.

Hugh Welsh, president of DSM North America, said the company is currently working with JBS to see how the additive can best be implemented in its supply chain, but did not indicate how long this process could take. However, he noted that the FDA has not approved Bovaer for use as a feed because it determined that the additive does not offer nutritional benefits to the animal. Instead, the agency has classified it as a drug, which means it will likely go through a potentially longer approval process.

“There’s no regulatory pathway for a feed ingredient with an environmental benefit,” Welsh said, adding that the company is currently trying to figure out if the feed provides a nutritional benefit to cattle. “It might improve the energy efficiency of the animal,” he said.

Petre with GRSB also pointed to genetic research being conducted to identify which cows have a lower residual feed intake, which could lower emissions. In July, Cargill announced it was participating in the Dairy Beef Accelerator, a three-year program that will examine the benefits of crossbreeding beef and dairy cows to create hybrids that have improved feed efficiency.

“There’s a lot of promise, but those things are really just coming to the stage of commercialization now,” Petre said.

Regenerative agriculture rises

As these longer-term efforts roll out, one common approach that many big beef processors and producers have embraced to address emissions is regenerative agriculture. Broadly speaking, these are farming practices that restore the soil and water used for food production by sequestering a critical mass of carbon dioxide from the atmosphere, according to nonprofit Regeneration International. They include the use of cover crops, for example, that prevent the release of carbon from land that is being used to raise beef cattle or grow ingredients for feed. 

In September 2021, Cargill announced it would pay farmers to expand or implement regenerative agriculture practices. The beef giant said it will involve sustainable grazing practices to “harness the potential of cattle,” and restore soil to remove carbon from the atmosphere.

The adoption of regenerative agriculture by meat companies has happened very rapidly, according to Petre with GRSB. While there is research pointing to the positive benefits of sequestering carbon, he said they are not fully known because “regenerative” practices are defined differently by various companies.

“It’s kind of being used as a panacea in a way,” Petre said. “Regenerative [agriculture] has become really popular, almost before we have the evidence to say, ‘These are the things to concentrate on.’ ”

In its 2021 investigation into the meat industry's sustainability claims, environmental group DeSmog argued that regenerative practices are not guaranteed to neutralize beef’s climate impacts, and cited a New York University study that found limited evidence that the practice can effectively sequester more carbon than the industry produces.

However, some small beef producers see regenerative farming as a key part of the solution to raising the sustainability profile of the meat.

The owners of Stemple Creek Ranch, a grassfed beef company based in Northern California, are used to dealing with a difficult growing climate because of the trend of yearly droughts in their home state. Lisa Poncia, who runs Stemple Creek with her husband Loren Poncia, said the company has prioritized sustainability since its founding in the 1970s, embracing practices like rotational grazing, which confines cows in one section of a pasture to let the plants in other parts recover.

The company, which sells whole-cut steak, hot dogs, jerky and ground beef on its website, believes in the potential of regenerative agriculture, Poncia said. She noted that the improved soil that results from these practices supports more biodiversity and allows more moisture to be extracted by plants, which are eaten by cows, for greater growth.

“The more carbon we have in our soil, the more water it absorbs,” she said.

New Zealand-based Silver Fern Farms has embraced some regenerative agriculture practices for its own grassfed beef. It sees the approach as a comprehensive effort that involves the entire process of growing beef, including lowering its overall carbon content, maintaining water quality, as well as the social impact of beef production, according to Matt Luxton, director of U.S. sales.

In July 2021, the company announced it would launch its Net Carbon Zero Certified Beef in the U.S. The company told Food Dive its retail launch is "imminent," but that there is not yet a release date. To earn certification, Silver Fern Farms had to track the lifecycle of its products from the cow’s birth to its processing phase to the consumer. It arranged carbon offsets to negate the emissions produced in the process.

“So all of those things had to be investigated, and that was a long, arduous journey, making sure that we had all those numbers right,” Luxton said. The product will be available in whole cuts to U.S. consumers through the company’s website, as well as various grocers, he said. 

He noted that ultimately, Silver Fern is working to sequester more carbon than it produces overall. It wants its practices to serve as a wider example for the beef industry.

“If we're coming to market with this carbon-zero beef and there's 20 others within two months, that's a good thing,” Luxton said.

Are certain measures just greenwashing?

Despite the goals set and approaches that beef producers have taken to address the sustainability of the meat, critics have called many of these efforts greenwashing. They fear that producers are simply announcing sustainability efforts but have no plans to follow through on them, or that they will not in fact lower emissions.

Poncia with Stemple Creek acknowledged that there is greenwashing in the industry from both big and small players. However, she said that her company is focused on prioritizing sustainability as it expands in the years ahead.

“This is not just puffery,” Poncia said. “This is truly who we are as individuals and as a business.”

Companies may not “intentionally” be greenwashing, but sustainability goals must provide a roadmap for farmers to actually implement their practices more widely, according to Stackhouse-Lawson, who also serves as the director of AgNext, Colorado State University’s agricultural research center. These roadmaps could differ, she added, based on locale and at different points in the supply chain.

Perhaps more fundamentally, Stackhouse-Lawson said the total level of emissions resulting from beef is not even currently known because it is very expensive to measure, and it is not yet technically feasible to measure emissions from a large number of animals.

“Unfortunately we actually don't even really have a baseline of greenhouse gas emissions from livestock in this country,” Stackhouse-Lawson said. “That is some of the research we would love to do and we have continued to pitch that.” Sustainability investor group FAIRR has found that globally, only 18% of meat and dairy companies track even partial methane emissions. 

This begs the question: if the majority of beef providers are not tracking their total emissions, how can they properly achieve their goals?

Petre with GRSB said the commercial beef industry has been investing in reducing its emissions. He cited research showing that industry carbon emissions have been falling in countries like the U.S., Canada and New Zealand for decades. The industry's overall carbon footprint is rising, Petre said, due to lower-income countries increasing their herd sizes with poor nutrition, along with deforestation, referencing findings from the Intergovernmental Panel on Climate Change. 

Meanwhile, advancements like the Bovaer feed additive will take a long time for wider adoption, he said, because the regulatory process is arduous and the financial incentive is not high for farmers.

“Individual ranchers or farmers are the ones to administer such products, but if there is no financial incentive to do so and the products cost money, adoption will clearly be slow.”

One promising approach that AgNext has been studying is precision herding, which trains cows to graze on less land. It involves placing a collar on a cow and tracking its movement. The collar beeps when the animal has moved outside its desired range. 

“You could literally run cattle from your desk on your phone and move them appropriately to forage growth,” Stackhouse-Lawson said.

However, Stackhouse-Lawson said that research and execution of precision herding would be expensive, and there is limited funding in terms of private, grant and federal investments.

“We are very behind on solutions to really reduce the overall impact of animal agriculture on greenhouse gas emissions more broadly,” she said. “It just has not been prioritized at all in funding mechanisms.”

Petre said that there is virtual fencing for grasslands being developed by tech companies like Vence and supported by large investors like Rabobank. However, he said, many individual farmers enjoy the ability to check and handle their cattle physically.

“For many, beef production is not primarily an economic driver, so investments in technology are not always top of mind,” Petre said. However, he noted that commercial producers are generally quick to adopt tech that enhances returns and labor such as automatic gates, radio frequency identification tags, and weighing systems.

Stackhouse-Lawson acknowledged that it is a layered issue, as many farmers are struggling financially and may feel burdened by taking on a new method of doing their job. Finding new incentives to promote adoption of sustainable strategies, she said, is a key component of AgNext's work.

“Generally, our producers are not provided the true tools that they need to really develop an adaptive capacity to move as fast as they're being expected to move,” she said.

High meat prices are hitting consumers hard at the grocery store, with beef alone having spiked by more than 20% last year, according to the Bureau of Labor Statistics. 

In remarks to a group of farmers and ranchers in January 2022, Biden laid the blame for rising meat prices at the feet of the four biggest producers in beef, pork and poultry, while announcing a plan to increase competition in meat processing and ultimately lower prices for consumers by providing $1 billion in American Rescue Plan funds to help independent producers.

In a statement, the president said his administration aims to help small processors compete with the four industry giants who dominate anywhere from 55% to 85% of U.S. beef, pork and poultry production.

As part of the plan, USDA will offer grants totaling $375 million for independent processing projects, as well as funds to boost financing options for small producers, provide technical expertise, assist with inspection pressures and support worker safety and create jobs with fair wages in rural parts of the country. 

“Without meaningful competition… our farmers and ranchers have to pay whatever these four big companies say they have to pay, by and large,” Biden said. “These companies can use their position as middlemen to overcharge grocery stores and, ultimately, families.”

Agriculture Secretary Tom Vilsack announced an online portal, created with the Justice Department, that will make it easier for farmers to anonymously report practices in the industry that are anti-competitive. Vilsack said that $800 million of the plan’s funds will be used to address meatpacking capacity and workforce issues. This includes $375 million that will go toward grants for new facilities and expansions for smaller meatpackers, with $150 million invested in about 15 efforts this spring, and an additional $225 million this summer.

“We’re going to need a lot of innovation in this industry. We’re going to need new business models,” Vilsack said. “And small- and mid-sized facilities need to have the opportunity to have this innovation, as opposed to the big four.” According to White House estimates, four companies control 85% of the beef market, four firms command 54% of poultry and the top four pork processing firms dominate 70% percent of that market.

Responses to the president's remarks and plan from meat industry groups were mixed. In a statement, industry group North American Meat Institute (NAMI) slammed Biden for “blaming inflation on private industry” and not prioritizing labor shortages as the biggest problem causing rising prices.

“This tired approach is not surprising because they have refused to engage with the packing and processing sector they attack, going so far as to hold a roundtable on meat packing without a single beef or pork packer present,” said NAMI President and CEO Julie Anna Potts.

The United States Cattlemen's Association, which represents 175,000 cattle producers and feeders, praised the administration’s plan. "We are hopeful that the Action Plan unveiled today will help bring transparency and true price discovery to the cattle marketplace," USCA President Brooke Miller said, " ... and invest in a stronger — and more American — meat industry."

This latest effort at boosting independent processors and industry competition comes after the Biden administration announced plans last September to crack down on alleged meat price fixing among large meat processors.

Nearly a year after the sweeping takeover was announced, Cargill and Continental finally have their prize.

Cargill and Continental Grain Company completed their long-delayed $4.53 billion purchase of Sanderson Farms, the companies said in a statement. The acquisition was announced on August 9, 2021, and creates the third-largest U.S. poultry processor. Sanderson shareholders are receiving $203 per share.

The deal had been slowed for months by antitrust review, and the buyers were rumored to be in last-minute discussions on concessions with the DOJ to clear the way for the transaction to close. 

The buyers said as part of the deal, they will combine Sanderson Farms with Wayne Farms, a subsidiary of Continental Grain, forming a new privately held poultry business. Clint Rivers, currently the CEO of Wayne Farms, will run the new venture called Wayne-Sanderson Farms.

The closing of the deal — which was expected to occur in December 2021 or early 2022 — was delayed by a Department of Justice review of the transaction. Democratic lawmakers also have criticized the transaction, citing “significant antitrust concerns.”

The DOJ has not yet commented on the merger agreement, or whether concessions were made.

Frank Singleton, a spokesman for Wayne-Sanderson Farms, said the company was “glad to have the DOJ process behind us and we're excited about moving ahead with the new company." He declined to comment further about the DOJ or any concessions that may have been made.

The combination of Wayne and Sanderson brings together two companies with different customer bases that could benefit from each other’s strengths, Rivers told Food Dive last November. Sanderson has a huge presence in retail stores such as H-E-B, Walmart and Albertsons with its trays of fresh chicken. Wayne is largely focused on foodservice and restaurants, including Chick-fil-A and Jack in the Box. 

Together, the two companies would control roughly 15% of U.S. chicken production, trailing only Tyson Foods and Pilgrim’s Pride.

“This is an opportunity that doesn’t come along very often,” Rivers said last year. “We wanted to grow [Wayne] as a business for a long time. And over the years have had many conversations about how we can do that.”

The approval of the deal comes amid a stricter stance on consolidation in the meat and poultry space by the White House. 

President Joe Biden has called out consolidation in the meat and poultry space for increasing prices for consumers and squeezing out smaller processors. In poultry, the top four processing firms — Tyson, Pilgrim’s Pride, Sanderson and Perdue — control 54% of the market, according to the administration.

The poultry industry also has been grappling with charges of price-fixing among the biggest producers, leading to significant settlements and even some criminal charges. Meanwhile, the Justice Department recently failed in its third attempt to convict former and current leaders at Pilgrim’s Pride and Claxton Poultry Farms in a price-fixing case.

Inflation has had an outsized impact on the price consumers pay for meat at the grocery store. The consumer price index for meat rose 14.8% in the 12 months from March 2021 to 2022, according to the Bureau of Labor Statistics. But while beef prices increased by 16% and pork by 15.3%, poultry's increase was slightly lower at 13.2%.

Despite higher prices, consumer demand for meat has continued to rise throughout the pandemic, according to a recent analysis from CoBank. Beef consumption has grown 1.4% from 2019 to 2021 even as combined retail prices increased by more than 20%, the report found. And for chicken, both consumption and prices hit record-high levels in 2021.

But as beef prices continue to increase, consumers may begin to “trade down” when deciding which protein to purchase, CoBank said, with chicken most likely to benefit. The USDA is expecting a slight decline in beef consumption in 2022-23 as domestic supplies fall with shrinking cattle herds and growing exports, CoBank noted.

As meat prices continue to grow, poultry producers like Tyson Foods and Pilgrim’s Pride stand to benefit from consumers cutting back on pricier proteins, even as they face challenges such as highly pathogenic avian influenza (HPAI) and higher feed costs.

Both Tyson Foods and Pilgrim’s Pride, two of the biggest poultry providers in the United States, have each reported strong sales growth despite the higher prices. 

In Pilgrim’s Pride’s first-quarter 2022 earnings call last week, CEO Fabio Sandri said that the company is poised to benefit from changes in consumer behavior, stating that “chicken still remains the most affordable, flexible and available option relative to the other proteins.”

Meanwhile, Tyson CEO Donnie King said during the meat giant’s first-quarter earnings call in February that the company is upping its capacity to meet demand, as sales for the segment increased 37%. 

Despite high demand among consumers, poultry is still facing headwinds that could slow its momentum. The crisis in Ukraine continues to inflate the cost of grains that go into animal feed, with Wells Fargo economist Michael Swanson telling Food Dive in March that meat producers will continue to pass along higher prices “because you can’t run that sector without the higher price of corn and soybeans.”

Another problem looming over the chicken industry is bird flu, which has been detected in the flocks of poultry producers like Tyson and Hormel’s turkey brand Jennie-O. As of May 2, there were 265 commercial and backyard flocks confirmed to have HPAI, according to USDA data, affecting 36.7 million birds. With the prevalence of HPAI only increasing, however, poultry producers could be forced to raise prices if they have trouble growing supply. Sandri of Pilgrim's Pride said that the company had not yet experienced any significant interruptions from the outbreak.

Despite a seemingly endless appetite for chicken, there does appear to be a cap at which some consumers will accept higher prices. According to a consumer survey commissioned by Ingredient Communications and conducted by SurveyGoo last December, 29% of U.S. consumers said that they would stop buying meat once prices increased by a third.

The impact of California’s Proposition 12 animal welfare law was hotly debated in October as the U.S. Supreme Court heard claims from lawyers representing the $26 billion pork industry that it will cause harm to interstate commerce and pork producers.

In oral arguments that ran over two hours, Timothy Bishop, a lawyer representing the National Pork Producers Council (NPPC) and the American Farm Bureau Federation (AFBF) said the California law overstepped its bounds by placing regulations on other states over how they raise their animals.

California, the country’s most populous state, imports more than 99% of the pork it sells. The regulation approved by voters in 2018 banned the sale of pork in the state from breeding pigs — as well as veal from calves and eggs from hens — if the animals were confined in areas that failed to meet specific minimum space requirements.

“No other state makes its farmers house pigs the way that California does, and very few farmers do,” Bishop said. 

Justice Neil Gorsuch questioned whether the claims from NPPC and AFBF would be better served by Congress regulating how state laws apply to interstate commerce. He asked Bishop how his argument that harm will be done to competition or pork sales between states when several large meat companies have agreed to comply with Proposition 12 standards.

“We have other pork producers who say they’re perfectly happy to step into the void that your firms don’t wish to fill,” Gorsuch said. “We also have one of your own members attesting that prices will not increase to consumers outside of California because they won’t bear it.”

Deputy Solicitor General Edwin Kneedler with the Justice Department, arguing on behalf of the agricultural groups, said the law could have far-reaching consequences outside of pork production by allowing state laws to dictate nationwide commerce.

“Proposition 12 imposes a trade barrier based on conduct beyond California's borders. It fails to respect the autonomy of California's sister states,” Kneedler said.

Justice Amy Coney Barrett asked Kneedler how it is different from a New York state law requiring out-of-state firewood to be treated with a pesticide. Kneedler said raising pigs in crates does not create a “legitimate state interest” in preventing harm to citizens the way that allowing untreated firewood to be sold does.

 

The impact on smaller farmers and consumers

Representing California at the oral arguments was Michael Mongan, the state’s solicitor general. He argued Proposition 12 was democratically chosen by 63% of Californians in a vote, and that it protects both animals and humans from harmful diseases caused by raising pork in crates.

The two sides had differing views on how Proposition 12 will affect small farmers. Justice Samuel Alito asked Mongan whether small pork producers would bear the brunt of the financial impact as the NPPC and AFBF alleged. Mongan said that’s the opposite of what is occurring, and that farmers wishing to comply with Proposition 12 standards are actually benefiting from it.

“Smaller pork producers can choose whether to get a substantial premium for producing this type of specialty product [crate-free pork] or continue producing for the 49 other states, exactly as many of their own members, as the complaint acknowledges, have decided to do,” Mongan said.

Josh Balk, vice president of animal protection at the Humane Soceity, told Food Dive after the oral arguments that the pork industry failed to prove its case. He argued Californians should not be forced to buy pork raised in crates as it can cause foodborne illness, citing claims by scientific analysts. 

“When it comes to public health and food safety, states have always had the ability to ban certain products, and this case is no different,” said Balk. “The sale of pork from operations that confine a mother pig in a crate so small she’s unable to turn around is unsafe and it leads to public health threats.”

The agricultural groups, however, refuted the argument that Proposition 12 is about health and safety.

Jonathan Urick, associate chief counsel at the U.S. Chamber of Commerce Litigation Center and one of the lead attorneys on the case, told Food Dive it boils down to a large state trying to impose its economic weight and policies on the other 49.

“If the Supreme Court were to uphold this law, the result would be harmful interstate trade wars as other states attempt to mimic California’s regulatory strategy,” Urick said. “The results will be economically disastrous, creating a hodgepodge of conflicting state regulations and fractured U.S. markets that are precisely what the founding fathers were trying to prevent.”

Executives from some of the biggest beef processors — Tyson, JBS USA, Cargill and the National Beef Packing Company — rebuffed criticism from lawmakers this week that they manipulated the prices of their products.

At a Congressional hearing held by the House Agriculture Committee in April, beef executives were grilled about why their companies were raking in record profits while consumers are struggling. The price of beef has spiked 16% between March 2021 and March 2022, according to the Bureau of Labor Statistics. 

Their testimony took place as the Biden administration calls out consolidation in the meat industry and the impact it has on smaller competitors and meat prices. The four biggest beef-packing firms control 82% of the market, according to the White House.

When asked by Rep. David Scott, a Democrat from Georgia, if there was an agreement between large producers to fix the prices of beef, each executive denied the charge.

Tyson Foods CEO Donnie King defended his company's record-breaking earnings last quarter, saying that the meat industry is the “most transparent in the world” as producers are required to report the prices they pay for cattle and the prices at which they sell their beef twice a day to the USDA. He added that Tyson is using the additional earnings to help drive down costs.

“Tyson’s returns are also strengthened by our efforts to become a more agile and efficient company through innovation and automation,” King said in his testimony.

Tim Schellpeper, CEO of JBS USA, said that his company sells its products at wholesale prices to grocers and foodservice locations, and that those prices have actually decreased since last year.

And Tim Klein, CEO of National Beef Packing Company, said that one reason behind the higher beef prices is higher transportation costs and bottlenecks within the supply chain. 

“The biggest single factor we're dealing with right now is where we're at in the cattle cycle,” Klein said. “There are simply more cattle available every week than there is demand capacity to process and scale.”

Several Congress members probed the fairness of an industry where a handful of companies have such high market share. Rep. Randy Feenstra, a Republican from Iowa, said that the biggest meat companies are able to use their clout to control prices through contracts and line speeds at their facilities.

"The system is set up where the packers will never see a loss, creating massive guaranteed profits while rural farmers lose their livelihoods," he said.

Gilles Stockton, a Montana cattle farmer and representative of the Montana Cattlemen's Association, said in his testimony that the farm to retail price spread for beef has shrunken from 71.3% in 1975 to 36.5% in 2021, meaning for every dollar spent on the meat at a grocery store, ranchers and cattle feeders get only 36.5 cents. The big meat packers exercise their power through "captive supplies," or cattle that they either own outright or have an arrangement with producers to buy, Stockton said. He charged that these arrangements allow beef companies to control prices and block a large number of farmers from competing.

"With captive supply levels now approaching 80% of all fed cattle, you can readily see how much ranchers and feeders are losing in this rigged market system," Stockton said.

JBS' Schellpeper said the meat giant buys some cattle through these alternative marketing arrangements, which he said allow producers to recoup their investments in genetics, animal health and marketing. He said JBS also buys in cash markets as well, allowing smaller farmers the chance to compete.

"JBS is active in the cash cattle market every day, and we will compete for quality cattle in the market wherever and however producers wish to sell them," Schellpeper said.

Ranchers said that Congress can stop anticompetitive practices by regulating captive supply agreements through enforcement of the Packers and Stockyards Act, a 1921 law aimed at preventing meat industry domination by larger players.

David MacLennan, CEO of Cargill, said his company is committed to investing in the farmers that supply its beef. He said the market of supply and demand in the industry is a cyclical process, and that family farms could see higher profits in the coming years.

“We're also committed to empowering and providing the livelihoods of the people who grow and raise our food,” MacLennan said. “We know how hard and cyclical the cattle industry is.”

Tyson's King said that beef processing concentration has remained constant over the last 30 years, and that profits for cattle ranchers and producers increased in that time, calling it “the market at work." King also added that changing consumer demands for better-quality and more sustainable beef will drive change needed in the supply chain.

“Innovation in the supply chain is going to be critical going forward,” King said. “We as packers need to find ways to incentivize ranchers and producers to be able to do the things necessary to provide that end product.”

Some lawmakers did not believe that consolidation was the cause of massive profits, and questioned the Department of Justice’s investigations into price-fixing in the meat sector. Rep. Glenn Thompson, a Republican from Pennyslvania, said the hearing was a political attack on the beef industry on behalf of the Biden administration.

"If there has been collusion, manipulation, or other wrongdoing by packers, then the law should be enforced under the existing authorities at USDA and DOJ," Thompson said. "Absent such findings, it’s time to stop demonizing the packing industry out of political convenience."

The beef packers' testimony came a day after Congressional hearings on two bills aimed at addressing critics' concerns. The Cattle Price Discovery and Transparency Act aims to introduce market reforms to give producers more control and information when they sell livestock. The Meat and Poultry Special Investigator Act seeks to establish a special investigator within the USDA to investigate alleged anticompetitive practices in the meat sector.

This year, President Joe Biden also made a significant step toward addressing industry consolidation by giving smaller meat processors $1 billion in funding to drive competition. The funds will go toward independent processing projects, as well as boosting financing options, technical expertise and providing a livable wage for smaller farmers and their employees.

Executives from Pilgrim’s Pride and Claxton Poultry were found not guilty by a federal jury in Colorado of conspiring to drive up broiler chicken product prices in July 2022. The five executives include former Pilgrim’s Pride CEOs William Lovette and Jayson Penn, and former vice president Roger Austin; and current Claxton Poultry CEO Mikell Fries and Vice President Scott Brady.

The case was part of a years-long investigation by the Justice Department of alleged price-fixing among poultry companies, which began in 2016 targeting 14 executives. It went to trial twice before, and both times resulted in mistrials due to deadlocked juries.

The DOJ announced in April it would pursue a third trial against five of the executives, a move that drew skepticism among some in the legal community and even the judge himself. Lawyers for the Pilgrim’s Pride and Claxton executives filed a motion to dismiss the charges, calling them “unconstitutional.”

The department was betting that streamlining a third trial with only five executives would help a jury come to a guilty verdict. “Although we are disappointed in the verdict, we will continue to vigorously enforce the antitrust laws, especially when it comes to price-fixing schemes that affect core staples,” the department said in a statement to Bloomberg.

Targeting executives in cases like this is not without precedent. Four Pilgrim’s Pride executives, and Koch Foods, were criminally charged with a conspiracy to drive up chicken prices by a federal jury in 2021.

Jeffrey Udell, a former federal prosecutor and partner at Walden Macht & Haran LLP, said that while the government did not have a strong case in this instance, it does not speak to the potential outcome of cases with more robust evidence. 

“The jury’s relatively swift exoneration of the executives, especially after two prior juries were unable to reach guilty verdicts, speaks volumes about the strength of the government’s evidence in this case,” Udell said. “I would not, however, draw any broader conclusions about the government’s ability more generally to hold executives or employees accountable for corporate wrongdoing where there is evidence of personal culpability.”

Despite the not guilty verdict in this case, lawsuits and scrutiny from the Biden administration and lawmakers around the meat industry are only continuing. And price-fixing allegations continue to draw legal and monetary consequences for many Big Meat companies. In July, Smithfield settled for $42 million in a pork price-fixing suit filed by restaurants and caterers.