FAT Research Series — Economic Concentration / Beef Packers

In FAT’s beef supply maps, every feedlot we don’t classify as packer-owned or part of a corporate chain ends up labeled “independent.” That label is convenient. It is also misleading. Most “independent” yards are tied to packers in one of three ways: ownership, contract, or geography.

This paper was prepared with the assistance of AI.

Executive Summary

Within FAT’s beef supply-map dataset (387 commercial feedlots, ~6.83M head one-time capacity, mostly Kansas + Nebraska):

Layered on top of this, USDA Livestock Mandatory Reporting consistently shows that only 15–25% of fed-cattle volume moves through negotiated cash trade. The remaining 75–85% moves through formula, forward, marketing-agreement, or packer-owned channels — i.e., contractual captivity. This share has not been below 70% in any reporting year since the early 2000s, and it has trended higher in concentrated regions like Texas/Kansas/Nebraska.

The combined picture: in the federally-reported cattle-feeding country, a clean majority of “independent” feedlots are captive in one or more of these three senses, even when they show up on a public map as just another commercial yard. Calling them “independent” overstates the bargaining freedom of the operation and understates the real structural concentration consumers and producers are dealing with.

Why this matters for grid pricing

Grid pricing is the contractual lever that converts captive supply into packer leverage. A grid is a price formula, paid post-slaughter, that takes a base price and adjusts it up or down based on carcass quality grade (Prime, Choice, Select, Standard), yield grade (1–5), and weight discounts. The base price is typically tied to a recent USDA-AMS reported cash average — for example, the prior week’s five-area weighted-average dressed price.

Two consequences flow from that structure:

• The base price is set in a thin cash market. As more cattle move through grids and formulas, the cash market that anchors the grid base becomes thinner — fewer head, a less representative sample, and (per multiple academic studies) more vulnerable to strategic packer behavior. Schroeter and Azzam’s foundational work on cattle-procurement oligopsony and a long line of follow-on studies argue that captive supply weakens packer demand for cash cattle in any given week, depressing the cash-trade price that then feeds back into the grids that price the captive cattle.
• Quality premiums flow back to producers only through the grid. When the Choice–Select spread compresses, the per-head grid premium for verified-Choice carcasses shrinks. When the spread widens, premiums grow. Producers without grid access don’t capture either side of that swing. Producers with grid access — but only one packer to deliver to — have to accept whatever grid that packer publishes, with no comparison shop.

In practice, then, the grid is the mechanism through which the structural facts of ownership, contract, and geography are translated into a per-head dollar outcome at the kill floor.

What the FAT supply-map data show

FAT’s feedlot supply map computes, for every commercial feedlot in its dataset, the count of Big Four / key independent packing plants within 50 miles. That single number tells you a lot about a yard’s bargaining structure.

• 76 yards (19.0%) have exactly one Big Four / key independent plant within 50 miles. The dominant nearby plant by company: Tyson (38), Cargill (19), JBS (10), National Beef (9). These yards have, in any given week, one default buyer. Cattle could in principle be hauled further, but every additional 100 miles adds fuel, freight, shrink (typically 1–2% additional pencil shrink per several hours of additional transit), and stress, all of which reduce the net price received.
• 202 yards (50.6%) have no Big Four / key independent plant within 50 miles. This is the eastern Kansas / Nebraska / Texas Panhandle peripheral feedlot belt. They are not “geographically captive” to one specific packer the way the 80-yard group is, but they bear a freight penalty regardless of which plant they ship to.
• 92 yards (23.1%) have two or more plants within 50 miles. These are the genuine choice yards — they can credibly cross-shop their cattle between Cargill, JBS, Tyson, and National Beef. They are concentrated in southwest Kansas (Dodge City / Garden City / Liberal) and the panhandle stretch from Holcomb (Tyson) east to Schuyler (Cargill).

These numbers are not the whole national feedlot population — the dataset is heavily weighted toward Kansas (255 yards) and Nebraska (120). Texas and Colorado are under-represented. The captive map at captive-feedlot-map adds the ownership-based captives. Once those are layered in, the share of mapped yards that fit at least one of the three captivity tiers exceeds half the dataset by capacity.

What the government literature says

USDA Livestock Mandatory Reporting (LMR)

The Livestock Mandatory Reporting Act of 1999 (renewed in 2006, 2010, 2015, 2020) requires packers slaughtering 125,000 or more cattle per year to report procurement type — negotiated cash, negotiated grid, formula, forward contract, or packer-owned. The data is published daily and weekly by USDA-AMS. Across roughly two decades of LMR data, negotiated cash trade has rarely exceeded 25% of fed-cattle procurement nationally, and in Texas/Oklahoma/New Mexico has often been under 10%. The Iowa/southern-Minnesota and Nebraska reporting regions have higher cash shares, in the 35–45% range — exactly the “cash market refuge” producers refer to when they argue for relocating cattle.

USDA GIPSA / RTI 2007 Livestock and Meat Marketing Study

The single most cited federal study on captive supply is the eleven-volume USDA-GIPSA-commissioned RTI International report released in early 2007, Livestock and Meat Marketing Study. The report found that “alternative marketing arrangements” (AMAs, the GIPSA umbrella term covering forward contracts, marketing agreements, formula pricing, and packer-owned cattle) made up the majority of fed-cattle procurement, with negotiated cash trade in the minority. RTI’s modeling found measurable price-discovery effects in concentrated regions: as the AMA share rose, cash prices were estimated to be modestly lower than they would have been under a counterfactual of more cash trade.

Packers and Stockyards Act and the 2024 Final Rule

The Packers and Stockyards Act (1921) is the primary federal statute regulating packer behavior, administered by USDA-AMS’s Packers and Stockyards Division. The 2024 USDA Final Rule on “Inclusive Competition and Market Integrity” attempted to clarify the PSA’s competitive-injury standard — long a sticking point in producer-vs-packer litigation, where federal appellate courts had narrowed the statute by requiring proof of “harm to competition” rather than harm to individual producers. The rule’s status remains contested in court and in subsequent rulemaking.

“50/14” cash-trade legislation

Multiple bills introduced in Congress in 2021–2024 (the “Cattle Price Discovery and Transparency Act,” and variants by Sen. Grassley and others) would require large packers to procure a minimum percentage of weekly slaughter via negotiated cash bids in a rolling 14-day window — commonly summarized as “50/14.” None has been enacted at the time of this paper. The proposals exist precisely because LMR data shows the cash share has fallen below the level at which the cash market can credibly anchor formula pricing in major producing regions.

USDA Economic Research Service (ERS) and CRS

ERS’s 2024 analysis of slaughter concentration found that the four largest packers handled approximately 85% of all fed steer and heifer purchases — a level consistent with a tight oligopsony at the procurement stage. The Congressional Research Service’s recurring “U.S. Beef Industry” report (Joel Greene) provides the cleanest non-advocacy summary of the captive-supply / cash-trade debate, and is the recommended starting point for any reader new to this issue.

What trade associations say

• NCBA (National Cattlemen’s Beef Association): Generally opposes mandatory minimum cash-trade requirements such as 50/14. Argues that AMAs deliver efficiency gains and reward verified-quality cattle through grid premium structures.
• R-CALF USA: Primary producer-side organization arguing for mandatory cash-trade minimums. Cites LMR data and the 2007 RTI study to support calls for 50/14 legislation, restoration of the PSA’s broader competitive-injury reading, and aggressive antitrust enforcement.
• USCA (United States Cattlemen’s Association): Middle position. Supports cash-trade reform and PSA modernization but is less litigation-oriented than R-CALF.
• Farm Action / Open Markets Institute: Anti-concentration advocacy. Multiple white papers on meatpacker concentration, captive supply, and the structural transformation of cattle markets since the 1980s.
• Western Organization of Resource Councils (WORC): Northern Plains coalition. State-specific reports on packer concentration; influential in MT/WY/ND/SD political conversations.
• Meat Institute (formerly NAMI): Represents Big Four packers. Opposes cash-trade mandates, supports continued AMA flexibility, emphasizes export-competitiveness arguments.

What the academic literature finds

The peer-reviewed economics literature on captive supply in cattle is several decades deep. A representative slice:

Foundational oligopsony work

• Schroeter, J.R. (1988); Schroeter & Azzam (1991, 1995): Modeled the U.S. fed-cattle slaughter market as an oligopsony. Some of the earliest empirical estimates of packer market power in cattle procurement.
• Azzam, A.M. (1998), Captive Supplies, Market Conduct, and the Open-Market Price: Foundational theoretical paper showing that captive supplies allow a packer to credibly threaten lower demand in the spot market, depressing cash prices below the competitive level.

Captive-supply price effects

• Anderson & Trapp (multiple, esp. 2008 update): The Effect of Captive Supplies on the Cattle Market. Empirical work using packer-level data; found small but statistically significant cash-price effects from rising captive-supply levels.
• Schroeder, T.C., Mintert, J., Brazle, F. & Grunewald, O. (Kansas State, recurring): Long line of papers on cattle-marketing channels and price effects of marketing arrangements.
• Vukina, T. (NC State, multiple): Work on captive-supply and contract structure in livestock; argues contract design itself is endogenous to packer market power.

Captive-supply efficiency arguments

• Crespi, Saitone & Sexton (2012): “Competition in U.S. Farm Product Markets: Do Long-Run Incentives Trump Short-Run Market Power?” Frame the AMA debate in terms of efficiency vs. market-power tradeoffs.
• Saitone & Sexton (2017): “Concentration and Consolidation in U.S. Food and Agribusiness.” Synthesis paper covering multiple commodities including cattle.
• Xia & Sexton (2004): “The Competitive Implications of Top-of-the-Market and Related Contract-Pricing Clauses.” Shows how specific contract clauses common in cattle marketing agreements extend the price effects of captive supply.

Geographic / spatial competition

• Spatial-competition models in oligopsony markets (Aguirregabiria and others) generally find that procurement-market competition falls off sharply with distance — formalizing the “geographic captivity” argument.
• Iowa State and Kansas State extension and academic work (Lawrence, Wang, Schulz, Mintert, Tonsor, Williams) documents freight-distance effects on price received and the basis behavior that follows.

The academic literature, taken in aggregate, is not unanimous about the magnitude of captive-supply effects on cash prices. Estimates vary by region, time period, and modeling assumption. But there is broad consensus on three points:

1. AMAs are now the dominant procurement mode for fed cattle, by a wide margin.
2. Thin cash trade weakens the cash anchor for formula pricing.
3. Concentrated procurement geography (few plants per market area) compounds the effect.

Synthesis: what should “captive” mean?

If we want a transparency-grade definition of “captive feedlot,” it has to capture all three structural ties. We propose this:

A feedlot is captive in practice if any of the following is true: (a) the packer owns the yard or owns a controlling interest in a corporate parent that owns the yard; (b) more than half of the yard’s annual finished-cattle output is committed pre-slaughter to a specific packer through formula, forward, or marketing-agreement contracts; or (c) the yard sits in a procurement geography with one or zero alternative Big Four / key independent plants within 50 miles, such that freight and shrink economics make cross-shopping economically irrational.

Under (a), the FAT supply-map dataset shows 29 yards directly. Under (c), the same dataset shows 80 single-plant geographic captives plus 205 remote yards that bear a freight penalty against the entire Big Four cohort. Criterion (b) is the largest group but the only one we cannot directly measure from public data, because the marketing-agreement, formula, and forward-contract relationships between specific feedlots and specific packers are private. LMR data shows the aggregate contractual share — 75–85% nationally — but does not name yards.

The natural and uncomfortable conclusion: when FAT (or anyone else) labels a feedlot “independent” on a public map, that label can only mean “we did not find evidence of ownership-based captivity in public sources.” It says nothing about the contractual or geographic ties. For producers reading the map to think about marketing options, that is a significant qualification.

Implications for transparency

1. The “independent” label on the FAT supply map should carry an asterisk. The map’s footer note and the captive-map landing page already acknowledge that the GIPSA captive-supply definition includes contract-based captives that we cannot show. A fourth-tier visual (“geographic captive”) that shades single-plant-radius yards differently is on the roadmap.
2. Producer disclosure rules are the lever for contract-tier visibility. Without expanded LMR coverage or a regulatory requirement that feedlots disclose the share of output committed to specific packers in advance, no public map can make criterion (b) visible. That is a policy ask, not an engineering ask.
3. Consumer labels can carry concentration information. Concentrated procurement at the feedlot level affects which marketing claims are economically viable upstream. A “Verified Source / Verified Process” claim on a retail label is much more valuable to a producer with a credible alternative buyer than to one shipping to the only convenient packing plant.

Methodology and Data Sources

• FAT feedlot dataset: 387 commercial feedlots, ~6.83M head one-time capacity, primarily KS (255) and NE (120), with 10 TX and 2 CO. Sources: Kansas Annual Feedlot Report 2026, Nebraska Cattle Feeders Directory, JBS Five Rivers public yard pages, Friona Industries, others. Captive classification adds 12 manually-curated corporate-chain yards from company yard pages where they are absent from state directories (Adams Land & Cattle, Simplot, Pinal Feeding, additional Cactus Feeders and JBS Five Rivers yards).
• Plant network: 28 active Big Four fed-beef slaughter plants plus 5 key independents as of January 2026. Reflects Tyson Lexington NE closure and Tyson Amarillo single-shift reduction.
• Geographic captivity: count of plants within 50 miles of each feedlot’s geocoded location (city centroid where rooftop geocoding wasn’t possible).
• EPA ECHO compliance overlay: EPA ECHO ICIS-NPDES data, last 12 quarters of compliance history.
• LMR data: USDA-AMS Livestock Mandatory Reporting public data, recurring weekly and annual summaries.

Sources for further reading

Primary government / regulatory. USDA-AMS Packers and Stockyards Division annual reports and PSA enforcement actions; USDA-AMS Livestock Mandatory Reporting public data; RTI International (2007), GIPSA Livestock and Meat Marketing Study (eleven volumes); Congressional Research Service, “U.S. Beef Industry: Background and Issues for Congress” (recurring); USDA Economic Research Service U.S. Beef Industry series and Cattle and Beef Outlook; 2024 USDA Final Rule, “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act.”

Academic. Azzam (1998); Schroeter & Azzam (1991, 1995); Schroeder, Mintert, Brazle & Grunewald (Kansas State, recurring); Anderson & Trapp (multiple, esp. 2008); Vukina (NC State); Crespi, Saitone & Sexton (2012); Saitone & Sexton (2017); Xia & Sexton (2004); Mathews & McBride (USDA-ERS, 2011).

Trade association and advocacy. R-CALF USA position papers; USCA policy book; NCBA position papers on AMAs and cash-trade reform; Farm Action and Open Markets Institute multi-year cattle-market series; Western Organization of Resource Councils state-level reports; Meat Institute packer-side position papers on AMAs and procurement flexibility.

Companion FAT maps

• Captivity Tiers Map — every yard color-coded by captivity tier (the headline visualization for this paper).
• Feedlot Supply Map — all mapped feedlots and their plant proximity.
• Captive Feedlot Map — packer-owned and corporate-chain yards only.
• Feedlot Enforcement Map — EPA ECHO compliance for all yards.
• Captive Feedlot Enforcement Map — EPA ECHO compliance for captive yards only.
• Integrated Map — combined supply + enforcement model.

This paper was prepared with the assistance of AI. All citations refer to publicly-available government, academic, or trade-association sources. Specific journal volumes, page numbers, and year-of-publication should be verified against the original document before quotation in policy or academic contexts.