Tuesday, March 22, 2011

What Percent of the Consumer Dollar Does the Livestock Producer Recieve?

  • Cattle producers received 62 percent of the retail value of a steer in 1980, but only 42.5 percent in 2009.
  • Hog producers received 50% of the retail value of a hog in 1980, but only 24.5 percent in 2009.
As Speer points out, packer share of the retailer dollar has been relatively steady over time and allocation has shifted between the retailer and the producer not the packer and the producer. However, note that during the time period covered in the above graph, packers have also lowered employment costs by hiring immigrant labor and have become more efficient due to scale, consolidation, and operation methods.
K. McDonald


  1. About the statement "... packers have also lowered employment costs by hiring immigrant labor ...", it should be noted that packers have always used a lot of immigrant labor. Even some of my immigrant ancestors worked in packing plants. So I wouldn't say that this was a new or recent development.

  2. DB
    There was a packing plant near where I grew up. In the 70's it was using most entirely local workers and by the late 80's it was mostly immigrant labor (with lower pay). I think that would represent packing plants in the Midwest quite well, I can't speak for all other regions.

  3. The transformation of the labor force in the meatpacking industry is actually a rather interesting subject. In 1910, only 19% of the meatpacking industry was white and native-born. As immigration slowed in WWI, some of the immigrant labor was replaced by African-American migrants from the South. In the interwar period, many of the large meatpackers were broken up by the federal government. This incentivized the industry to develop labor-saving techniques and to move to a more mechanized process. This shifted the mix of workers from unskilled to semi-skilled. After WWII, there was a period when collective bargaining raised the wages and benefits of workers which attracted more native born workers. Starting in the 1950’s, many of the urban packing plants moved out of the cities and into rural locations near feedlots where land prices were lower. This was made possible by the expansion of highway and rail systems as well as development of refrigerated trucks and railcars. Many of the older and less profitable meat packing plants that couldn’t afford to move simply closed or were bought out, increasing industry consolidation.

    In 1969 meatpacking wages were significantly higher than manufacturing as a whole. But by the 1970’s, this was changing fast. Competition in the meatpacking industry had greatly increased. Packing plants were lowering labor costs by shedding their labor contracts. They did this by going through bankruptcy or moving plants to right to work states. Falling wages and benefits made these jobs less and less attractive. Wages decreased significantly in the late 1970’s and early 1980’s. The result is - as far as the meatpacking labor situation is concerned - we’ve come right back to 1910. We’re back in Sinclair’s “The Jungle”.

    [Reference: “The Global Restructuring of agro-food systems” by Philip McMichael. (1994)]