Feedlots, where cattle are finished on grain after grazing, are becoming larger. Smaller operations are declining, while the largest feedlots continue to expand their market share, reflecting ongoing consolidation across the beef industry.
The U.S. has more than 26,000 feedlots, but just 82 – those with a capacity of 50,000 cattle and over – accounted for over 8.3 million cattle sent to slaughter, about 35% of the total, according to the latest USDA report.
That concentration has accelerated over time. In 1997, there were more than 106,000 feedlots nationwide, and 39 mega-feedlots supplied about 20% of cattle sent to slaughter.
“We already have four packers that control over 80% of the fed cattle market,” said Bill Bullard, CEO of R-Calf, a nonprofit organization of independent cattle producers. “Now we have 82 feedlots that are marketing 36% of the cattle to those large packers, so it's eliminating opportunities for smaller feeders that have literally been dropping like flies.”
Bullard said he hopes the Department of Justice’s ongoing investigation into the largest meatpacking companies will enforce antitrust laws at both the meatpacking and feedlot levels, arguing that industry consolidation is an often overlooked driver of record-high beef prices.
“We think it's a division of territory for a single feedlot to be aligned with a single packer,” Bullard said. “In this consolidation process, we reduce competition. There are fewer cattle buyers to buy cattle for feedlot. And as a result of that, there's less competition for cattle.”
While the largest packers — Tyson, Cargill, JBS and National Beef — do not currently own feedlots outright, they rely heavily on supply agreements with feeding operations.
Large commercial feedlots, not smaller family-run yards, are best positioned to meet the volume and consistency demands of the Big Four, which together control about 85% of the U.S. beef supply.
“Commercial feedlots employ professional nutritionists and veterinarians, as well as marketing and finance specialists. They usually construct their own feed mills, and buy grain by the trainload,” said James McDonald, professor of agricultural economics at the University of Maryland and former chief at the USDA’s Economic Research Service. “There are some scale economies, in feedmills and in grain transportation, that advantage the larger feedlots.”
