Oklahoma Cattlemen Question Local Meat Processing Plan as Answer to Beef Prices

Oklahoma Cattlemen Question Local Meat Processing Plan as Answer to Beef Prices

Oklahoma cattlemen question local meat processing as a short-term solution to high beef prices after President Donald Trump pledged to make it easier for ranchers and farmers to process and sell their own meat.

Oklahoma Cattlemen’s Association Executive Vice President Michael Kelsey says expanding local processing could create additional opportunities for cattle producers, but the economics of small processing facilities make it unlikely to significantly lower consumer beef prices in the near term.

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Kelsey says smaller processors generally face a higher processing cost per head than large packing plants. Those additional costs ultimately have to be reflected in what consumers pay for locally processed beef.

Oklahoma Cattlemen Question Local Meat Processing Costs

Trump announced plans last week to reduce federal barriers that limit how farmers and ranchers can process and sell meat. The administration has also focused on increasing competition in a beef processing industry dominated by a small number of large companies.

The federal government has already been investing in smaller and regional processors. The USDA Meat and Poultry Processing Expansion Program provides grants to eligible processors to increase capacity, strengthen competition and create additional local market opportunities.

But Kelsey says increasing local processing should not be viewed as an immediate answer to grocery store beef prices.

Large packing plants benefit from economies of scale because they can process far more cattle while spreading labor, equipment, inspection and operating expenses across thousands of animals.

Smaller facilities do not have the same scale.

That means the cost to process each animal can be substantially higher, and producers selling directly to consumers must account for those expenses in the final price of the beef.

Small Meat Processors Could Strengthen Competition

While local processing may not immediately reduce retail prices, expanding independent processing capacity could still provide longer-term benefits for cattle producers.

USDA has continued efforts to strengthen smaller processors. Its Strengthening Processing for U.S. Ranchers Program, or SPUR, provides up to $500 million to eligible independent and regional beef slaughter facilities. The program is specifically designed to help reduce the cost burden per head and preserve independent slaughter capacity.

The USDA SPUR Program says those payments are intended to maintain competition in the beef marketplace, support rural economies and strengthen the domestic beef supply chain.

USDA has also worked to expand market access for smaller processors through programs that allow qualifying state-inspected facilities to sell meat across state lines. The USDA Agricultural Marketing Service lists the Cooperative Interstate Shipment Program among its resources for local meat distribution.

For Oklahoma cattle producers, additional processing options could provide more ways to market cattle and sell beef directly to consumers without relying exclusively on the nation's largest packing companies.

The challenge is turning those opportunities into lower prices at the meat counter.

Kelsey Says Lower Diesel Costs Could Provide Broader Relief

Kelsey says the Trump administration could have a more immediate impact on meat prices by focusing on another major expense throughout agriculture: diesel fuel.

Fuel costs affect nearly every stage of the beef supply chain.

Diesel powers equipment used on farms and ranches, while trucks move feed, cattle and finished beef between producers, feedlots, processing facilities, distribution centers and retailers.

Unlike changes to processing regulations, which could take time to produce additional capacity, lower transportation and production costs can move through the existing supply chain.

Kelsey's argument is that reducing diesel and freight costs would affect a much broader portion of the beef industry than simply allowing more cattle to be processed locally.

The Trump administration has said increasing independent processing capacity is part of a larger effort to strengthen competition in the U.S. beef industry. USDA announced additional support for smaller processors Monday as the administration works to address historically high beef prices and a U.S. cattle herd that has fallen to its lowest level in decades.

For Oklahoma ranchers, local processing could become an important additional market. But Oklahoma cattlemen question local meat processing as a fast way to make beef cheaper for families when the cost of processing each animal remains significantly higher at smaller facilities.

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