On March 16, around 4,000 union workers went on strike against the JBS packinghouse in Greeley, Colo.
The decision to strike came after eight months of negotiations with JBS, a multi-national Brazilian company with packinghouses around the globe. JBS did not give in to any of the union’s demands.
The union is fighting an uphill battle as there are fewer fat cattle to process, and their demands, while valid, would cost JBS more money in a down market.
The union demands more workforce safety and higher wages to keep pace with Colorado’s cost of living.
Union workers say the processing line speeds have increased to around 420 cattle per hour, up from 390 head. The union says this makes for unsafe working conditions on the processing line.
In reality, JBS has not been hurt badly by the strike. Sure, they’ve been hurt and have been losing money on every cow they’ve processed for the last couple of years, but by processing less cows, they are losing less money.
As many realize, there is an over capacity in beef packinghouses across America. Some packinghouses have completely closed down, while others have reduced hours or even shifts.
So far, there have been a number of union workers cross the line to work.
Estimated cattle slaughter for the week ending March 21 totaled 511,000 head, down from 525,000 the week before. These numbers are well below year-ago levels. This reduction has helped JBS’s bottom line.
Reduced slaughter means lighter beef supplies while pushing wholesale prices higher. For JBS, this strike is working exactly as they wanted from a supply standpoint – less production, higher prices and improved packer profitability.
For union workers, this is a high hurdle to jump over. They need higher numbers of cattle, which isn’t going to happen until the end of the decade at the soonest. It doesn’t sound like the union will get more than small victories from JBS.
To me, it sounds like JBS will be not be losing much on their margins with less cattle and their beef cutout prices will be higher.
For consumers, this will mean higher prices at the grocery store, especially for ground beef.
Cattle feeders will most likely be at the mercy of the meatpackers. Some weeks make a little and some weeks lose some.
For producers, cattle should stay similar to prices we see now. Record low numbers of cattle and ever-growing demand worldwide for American beef will drive markets higher to a price reflecting what cattle are actually worth today.
The U.S. is working with China and Saudi Arabia to open the door for U.S. beef exports.
Hopefully, talks in May between President Donald Trump and the president of China will convince China to allow U.S. beef packinghouses to process and export beef.
Saudi Arabia’s Food and Drug Authority recently announced it is no longer requiring participation in the Export Verification program, opening the door for expanded exports of U.S. beef.
The demand for U.S. beef is growing.
Dennis Sun is the publisher of the Wyoming Livestock Roundup, a weekly agriculture newspaper available online and in print.
