Meat Industry Structure and Changes: A Short History

"Companies want to make a profit — only an idiot would [disagree]. And these meat companies, for example, tend to be publicly held, so the share value is being distributed throughout the national economy to individual Americans. But what drives the structure and cost performance of a big meat company had been, for decades and decades, the need to come up with a product that Americans deem acceptable in price, and that is not easy to do.”
— Maureen Ogle, author, In Meat We Trust

The U.S. meat packing industry has undergone significant structural changes in the 20th century. These changes were a response to significant social and economic changes occurring throughout the country.

In her new book, In Meat We Trust, historian Maureen Ogle details the impact that that two World Wars, a drought and a depression had on the U.S. meat and poultry industry. During wartime, the meat and poultry industry accelerated production to feed troops and starving people in war-ravaged nations. When troops returned home after World War II, most men and women did not return to the farm. Agricultural labor was in short supply and farmers, ranchers and packers were forced to find more efficient ways to produce livestock and meat.

Farmers and ranchers redesigned operations to reduce the need for labor. Automation was embraced whenever possible. Housing systems changed to make it easier to manage livestock with fewer people. During this time, there were key breakthroughs in animal nutrition, like the discovery that B12 could improve animal health and increase growth significantly. These developments helped maintain the affordability of meat products.

At the same time, large grocery chains began to emerge and so did their desire for branded goods. Eventually, the meat industry shifted away from its commodity mindset. Relationships were built and by the 1960s, the industry’s practice of shipping carcasses shifted into marketing “boxed beef,” which involved breaking down the carcasses and shipping the primals. Now, retailers could buy exactly what their particular customers wanted. In the 1970s and 1980s, we began to see companies merge and the industry’s four firm concentration ratio increased. In the beef industry, that ratio settled nearly two decades ago in the high 70 percent/low 80 percent range. In the pork industry, four firms slaughter 69 percent of the hogs.

The industry further evolved and technology made possible “case ready” meats – consumer ready products that were cut and packaged fresh at the plant. Although retailers, by and large, continued to offer full service meat cutting, case ready meats permitted retailers to be even more precise in buying only what their customers wanted, such as a package of two six ounce filet mignon or organic, boneless chicken breasts.

The challenge the meat packing industry faced was delivering a branded product with consistent quality purchase after purchase. If, for example, “Wholesome Valley Meat Company” was going to apply its name to a meat product, the company couldn’t survive by selling a tender cut one week and a less tender one the next. The company needed to establish relationships with livestock producers who could consistently provide exactly what Big Valley needed, whether it was organic, natural, grass fed, corn fed, GMO-free, free range – to name just a few options continue.

In a piece for Salon, Ogle eloquently writes about critics of “modern agriculture,” and its structure, saying:

"I think what the food reformers – and I need to make it clear, I have a great deal of sympathy with their goals — don’t understand is that the system of providing food is predicated on the fact that the vast majority of Americans don’t make food. They expect someone else to raise it for them. And in the United States, if you live in a city, you absolutely expect there to be lots and lots of food at a reasonable price. For the past century that’s in fact what has driven our economy: the ability to free up spending dollars.

I think food reformers don’t get that the reason they have the luxury of sitting around tapping out critiques on their Apple computers is because they a) don’t have to grow their own food and b) don’t have to spend very much money for the food that they do have.

Companies want to make a profit — only an idiot would [disagree]. And these meat companies, for example, tend to be publicly held, so the share value is being distributed throughout the national economy to individual Americans. But what drives the structure and cost performance of a big meat company had been, for decades and decades, the need to come up with a product that Americans deem acceptable in price, and that is not easy to do.”