Commentary by Bill Bullard, CEO, R-CALF USA- For many years we’ve analyzed the relationship between retail beef prices and cattle prices and how the share of the consumers’ beef dollar is allocated to each segment of the beef supply chain, which includes the live cattle segment, packer segment and retailer segment.
Let’s look at how the marketplace allocated the live cattle segment’s share of each consumer beef dollar. The live cattle segment is the segment that makes by far the largest contribution to the final beef product. Now the only ingredient in beef is cattle. And it is the live cattle segment that must maintain a mother cow herd year-round, breed them and then raise the resultant calves for 15 to 24 months before they’re ready for slaughter, so the live cattle segment’s contribution to the final beef product is measured in years. The contribution made by the other two segments – the packers and retailers – is measured only in weeks due to the perishable nature of beef.
Since it makes the largest contribution to the final beef product, one would naturally assume that the largest share of the consumers’ beef dollar would be allocated to the live cattle segment. Let’s take a look.
I have data beginning from 1980, and from 1980 through 1994 the live cattle segment, as we would expect, received the majority of the consumers’ beef dollar. In fact, in 1980 the live cattle segment received a vast majority – 63% – and that means the packers and retailers together shared the remaining 37% of the consumers’ beef dollar. But since 1995, the year after NAFTA went into effect, and for the next 16 years, the live cattle segment received only a minority of the consumers’ beef dollar. It wasn’t until the widespread drought from late 2010 to early 2013 accelerated the contraction of our U.S. cow herd, which shrank supplies relative to the strong demand, that the cattle industry again received the majority share of the consumers’ beef dollar.
But this reprieve was short-lived. During only the narrow five-year period from 2011 through 2015 did the live cattle segment again receive the majority share of the consumers’ beef dollar, and it ranged from slightly over 50% until 2015 when it increased to slightly under 56%. And then beginning in 2016, it went south again.
In 2021, just four decades from when the live cattle segment received 63% of the consumers’ beef dollar, the allocation of those dollars was flipped on its head. That year the live cattle segment received only 37% of the consumers’ beef dollar, and the packers and retailers together shared the vast majority – 63% of the beef dollar.
For nine more years the live cattle segment received only a minority share, and it wasn’t until well after the more recent widespread drought, which began in mid-2020 and which again accelerated the decades-long contraction of the U.S. cow herd, that the live cattle segment once again received the majority of the consumers’ beef dollar. That was in 2024. The share then was only slightly above 50%. Data show that the live cattle segment’s share has been over 50% during the first eight months of 2025.
Let’s summarize: Before NAFTA, which was three decades ago, the live cattle segment received the vast majority of the consumers’ beef dollar. But for the three decades after NAFTA, there were only two periods when the live cattle sector again received the majority share. The first was during the five-year period following the drought that started in 2010, and the second was last year and this year, following the drought that began in 2020.
So, what does this tell us? It tells us that during the pre-NAFTA years, when there was far less market concentration and far less globalization, the competitive market allocated to the live cattle segment its competitive, majority share of the consumers’ beef dollar. But during the three decades after NAFTA, while the marketplace was highly concentrated and the U.S. was entering numerous free trade agreements, something was interfering with the overall competitiveness of the marketplace, and the live cattle segment’s rightful share of the consumers’ beef dollar was redirected to the packers and retailers.
The only two exceptions during the past three decades occurred when our U.S. cattle inventory was shocked by acute climatic conditions that accelerated the decades-long contraction of the live cattle segment.
In other words, the marketplace, from the cattle producer all the way to the consumer, is fundamentally broken, and the only time it functions properly is when it is confronted with a significant market shock – a market shock so severe that the supply-demand equation becomes extremely imbalanced.
