Beef industry woes may mean poorer meat

AINSWORTH, Neb. (AP) - In this Great Plains ranching town, cowboys still lasso steers as part of their daily routine and cattle producers like Bob Sears still take pride in the long tradition of raising American beef.

But Sears and many other ranchers say the market for domestic meat has withered to the point where they often receive only a single reasonable bid for their animals - a trend that could eventually mean lesser-quality meat on dinner tables across the United States.

The struggle to get a competitive price, they say, is helping to push thousands of producers out of business and might put pressure on others to sell sicker, weaker cows with less tender, less flavorful meat and smaller rib-eyes, for example.

"When the marketplace is not profitable, the only recourse a producer has is to cut the cost and try to produce more pounds with less money," said Bill Bullard, chief executive officer at R-CALF USA, a Montana-based trade group that represents cattle producers.

The cash market for domestic beef has been declining slowly for years.

Producers almost never criticize the industry's leading meatpackers because the companies are valued customers. An AP analysis of shipping logs and sales receipts confirmed their accounts.

"There's actually no market. You either give them to these guys, or you have no market," said Sears, who ran one of Nebraska's biggest feedlots until declaring bankruptcy in March.

The complaints also have drawn the interest of federal regulators, who are investigating possible antitrust violations in the meatpacking industry.

Sears and other cattle producers suspect meatpackers are quietly cooperating to keep prices low in an area that stretches from Kansas to Nebraska and South Dakota, the region that dominates U.S. cattle production.

Industry representatives insist there is no collusion and that the dwindling number of bids reflect broader changes in the way beef is bought and sold throughout the nation.

Without a competitive market, experts say, cattle producers could lose the motivation to raise high-quality meat. Some of them might cut corners on medicine, feed and veterinary care.

"Food animal husbandry requires substantial expenditures," said Peter Carstensen, a law professor at the University of Wisconsin and former Department of Justice antitrust attorney. "If you're not going to be compensated for that, your incentive as a farmer to produce the quality just isn't there."

American beef production has remained almost stagnant between 1985 and 2009, growing just 6.4 percent, while the amount of beef from imported cattle has nearly tripled in that time, according to an analysis of USDA figures conducted by R-CALF USA, the trade group that represents cattle producers.

The trend will speed up if meatpackers are able to depress prices on the cash market, Bullard said.

"As the packers consolidate, they are able to maximize their market power to leverage down prices. It's become uneconomical for domestic producers to stay in business," Bullard said.