Beef, Feedlots & IBP

Beef was the king of the meat trade in the 50s and 60s. Despite the rumbling about health and diet, Americans still considered a thick, marbled steak for dinner to be as good as it gets. To keep up with the demand, cattlemen consolidated their production. It was during this period that feedlots began operations with tens of thousands of animals, and in the process sowed the seeds for major changes in meat packing.

Beef was the first meat to reach a national market, especially after the introduction of refrigerated production and distribution methods in the 1880s. By the 1950s, centralized markets and packinghouses, like the Omaha stockyards, were providing most of the nation’s meat supply. Meat cutters in the packinghouses were skilled blue collar workers. It took specialized knowledge to cut, package and distribute beef. Most of the large meat firms had unionized work forces by the 1950s.

Cattle have been the largest meat animals grown for human consumption, at least until the recent introduction of American bison or buffalo meat. A cow carcass, at 800 pounds, provides the largest number and size of meat cuts available.

Beef is also the highest priced meat. As World War II was coming to an end, producers knew that price controls were ending as well. So, cattle feeders intentionally kept their product off of the market, anticipating a price increase. They got it. At the retail level, the cost of virtually all cuts of beef doubled between 1945 and 1960, and then tripled again by 1983. Yet, beef consumption still went up and peaked during the early 1970s. Consumers were willing to pay a premium price for a soft, red, juicy steak. Even in 1948, 88 percent of American families had at least some fresh beef in their diets.

Consumers still wanted the best cuts and they turned to the government to ensure the quality. Beef grading standards had been set up in 1926, and in the 50s the standards for Prime and Choice grades were adjusted. In 1955, USDA graders stamped 50 percent of interstate beef, 40 percent of lamb, and 20 percent of veal. In response to consumer demand, supermarket chains kept increasing their proportion of graded beef. By 1960, 78 percent of all interstate red meat was graded. In 1970 the percentage rose to 89 percent and reached 96 percent by 1983. Despite pressure from some producers, the grading system still favored grain-fed carcasses with more fat, or “marbling,” than leaner cuts from cattle fed on grass.

To meet the demand for more and “better” beef, a new breed of industrial beef producer took advantage of several factors –

• Consumers wanted marbled beef, the kind of meat that you get when you fatten cattle with grain.
• Grain prices in the 50s were low, so cattle feed was cheap.
• The introduction of penicillin and other antibiotics made it possible, for the first time, to keep lots of animals in a confined space without uncontrollable epidemics.

One of the first entrepreneurs to take advantage of these factors was a Safeway supermarket executive in California, Dwight Cochran. He noticed that his firm couldn’t get enough Prime cuts, so he resigned from Safeway and organized a publicly held company, the Kern County Land Co. It didn’t grow land, but grew cattle on land near Bakersfield – 35,000 to 50,000 head at one time. It was one of the first large feedlots. The firm turned to the latest research into cattle nutrition to fatten cattle “according to rigid specifications,” as the company’s publicity put it.

Others followed into the feedlot business. Between 1940 and 1969, the number of cattle on farms nearly doubled, from 60,818 to over 106,000 head. But the number of farms producing cattle dropped by around three-quarters, from 4.85 million farms with cattle in 1940 to 1.7 million farms in 1969.

The first large feedlot on the Great Plains – a region that traditionally led the nation in cattle production – was the Lewter Feed Yard near Lubbock, Texas. Fred Lewter had been a county agent before he started the feedlot in 1955 with the help of Dallas investor. (Early feedlot operators often found it difficult to convince a bank that this new type of operation could make money.) On 125 acres, they built a feed mill, storage tanks and pens for up to 34,000 head of cattle. Their nutrition regimen included milo, some silage, mineral salt, calcium, phosphorus and the new growth hormone DES, diethylstilbestrol. (DES would later be banned as a cancer-causing agent.)

But, Lewter had trouble interesting consumers and supermarket chains in his product until he started entering his animals into livestock judging contests. When his carcasses started winning across the country, he won a contract with the A&P grocery chain on the east coast.

Other huge feedlot operations were set up. They hired their own nutritionists and full-time veterinarians. They installed computers to track exactly how much and what kind of feed produced how much weight gain in how little time.

In 1935, the USDA reported that only 5.1 percent of the nation’s 42.8 million beef cattle were being fattened in feedlots. By 1963, 66 percent of the steers and heifers slaughtered in the U.S. were being fed grain, and about 40 percent of those were from the highly automated beef factories in the West.

Packinghouses began to follow the feedlots. In 1954, the Cudahy company abandoned the Chicago Stockyards. It was the beginning of the end for these urban markets where live animals were shipped in railcars to centralized stockyards and slaughtering houses. Cudahy and other companies were figuring out it was cheaper to locate close to the new feedlots, pay nonunion workers less, and ship beef quarters to supermarkets – without all the extra weight of the head, hide and entrails. This new system took advantage of the new technologies of refrigerated trucks and the Interstate Highway system.

Then in 1960, a new company called Iowa Beef Packers (IBP) started up and figured out that it was even cheaper to cut cattle up into the steaks, chops and roasts that consumers wanted right at the packinghouse, cram the cuts into boxes and ship the frozen boxes without the wasted space between quarters and the extra weight of bones. IBP combined this “boxed beef distribution method with the idea of locating packinghouses near the feedlots and a preference for non-union labor and became one of the dominate meat companies in the industry.

We have more about the changes in beef packing in the Money section.

Meanwhile, producers at the beginning of the beef cycle – ranchers – were moving away from consolidation. Some of the largest, historic ranches were split up in the 50s. Originally, these huge ranches in the West would breed the cattle, raise the calves and even finish them on vast expanses of grassland. But as the nation’s tastes demanded grain fed beef, more and more ranchers were relegated to the breeding alone. Most ranchers ended up selling yearling calves to other feeders. Other ranchers sold out.

Of the 70,000 ranches in 1945, about 10,000 went out of business by 1980. That’s a higher rate of survival than the nation’s mixed farming operations – where 58 percent of the farms sold out during that period – but some of the largest and best-known ranches were among the casualties. For example, the Matador Land and Cattle Company had been set up in 1882 and ran 50,000 head of purebred Hereford cattle on 1.5 million acres mostly in Texas. In 1951, the company was liquidated, the land divided up and the assets sold. Other large ranches, like the fabled King Ranch in Texas, survived largely because of their oil revenues.

Despite problems, the beef industry during this period remained at the top of the American food chain and adapted to new conditions.

Written by Bill Ganzel, the Ganzel Group. First published in 2007. A partial bibliography of sources is here.