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Talking Beef: issues facing the industry

By Chad Hobbs

 Last week’s conversation with John Gibson, the facility manager for United Producers’ stockyard in Irvington, focused mainly around the feeder cattle sale that took place there a few weeks ago. This week we will continue that conversation, focusing more on insights from his vantage point as a self-described “middleman.”

 “I work for the farmers because, as a co-op, they are my bosses,” Gibson explained. “I work for those guys because they bring their cattle to me, and they want a fair price for their livestock. That’s my number one job.”

 As a middleman, Gibson also has to work with those on the other side of the equation who purchase the animals.

 “Then I buy cattle for people or buy for the packing plant, so I have to try and make both sides happy,” Gibson continued. “I’m in the middle, and that’s part of it. That’s just the way it is.”

 In the previous article, feeder cattle were the main discussion point. Cows and bulls are also sold in Irvington. Gibson said that he buys cows for one of the largest cow slaughterers, and that market is still pretty competitive with the amount of buyers in the seats bidding on the animals.

 “Most of our cows, they got to a packer order, and that’s where the ground beef comes from­­; the cows and bulls,” Gibson stated.

 When asked if there were any packers left in Kentucky, Gibson said there was one called the Chop Shop close to Lee City in the eastern part of the state. They process cows for hamburger and sell under the Kentucky Proud program to places such as Kroger. He said other than that the only other packers left that he knew of were Swift in Louisville, which processes fat hogs and Purnell’s, which kills sows for sausage.

 “When I was a young man, you had Reelfoot Pack in Tennessee, SMG in Owensboro, Stadler in Evansville, you had Cook Beef and Dawson Baker in Louisville, and you had Warsaw Pack in Warsaw, Kentucky,” Gibson reminisced. “They were all smaller regional packing plants, but they (the meat packing industry) have just gotten away from that.”

 In his opinion, part of the problems the country experienced with food supplies during the pandemic were a direct result of the food service industries switch from a home-based system to more of a restaurant-based one. One example he gave was the milk shortages in stores while dairy farmers were being forced to dump their milk.

 “There just wasn’t any way to get it packaged for the supermarket the way these particular plants were set up,” Gibson pointed out. “They were set up for bulk; schools, institutions and that kind of thing, and that’s the reason they dumped the milk. It wasn’t they had too much milk because we didn’t have milk in the stores. They were dumping the milk because they had no way to put it in a package that was consumer friendly.”

 Another example given was boxed beef. There are processors who slaughter fat cattle and sell a half or quarter of beef to places such as restaurants as boxed beef. During the pandemic, these major national packers only had a third of their work force at one point, Gibson says, so they could only kill so many animals. The animals already on hand that couldn’t be slaughtered continued eating and growing. A lot of these cattle reached weights 100 to 250 pounds heavier than industry standards. He says this only further compounded the problem of having more product to get rid of from the cattle they already had, and caused other problems as well.

 “A lot of the restaurant business just died. Now its opening back up, but they are used to a certain sized steak,” says Gibson. “You know, if you take an animal that’s 200 pounds bigger, the steaks are going to be bigger.”

 He says that is not conformed to what restaurants are wanting at their price point, and you can’t just take a ribeye, cut the end off of it and sell the customer 8 oz. of it. The only thing they can do is cut the steak thinner, which adds a whole new issue to the equation.

 One thing that many probably don’t think about is off falls—the hides, entrails, and other extra things sold off a cow not including its meat. Gibson says these were bringing about $100 a head prior to the shutdown. There are many products such as the innards, intestines and tongues which are sold to various countries around the world, but with shipping the way it is, that stuff is backed up and not selling because the average American consumer isn’t going to eat it.

 He says he also has friends in businesses that are connected back to the cattle like through hide sales. Most of the hides go to tanneries in Mexico or China to make leather products, but these products haven’t been selling well. As a result, they aren’t buying the hides.

 “So, it makes the fat cattle worth $30 to $40 less, and that’s something the farmer isn’t getting either,” said Gibson. “All that stuff affects the farmer’s bottom line.”

 When asked what one of the biggest problems he sees with the cattle industry today, Gibson pointed out the lack of young people. He says you can pull up what the total percentage of price the farmer is getting for their products compared to what it retails for, and it has done nothing but get cheaper and cheaper and cheaper across the board.