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HISTORICAL DEVELOPMENT
OF THE U.S. LIVESTOCK
MARKETING & MEAT
PACKING INDUSTRIES
MARKETING METHODS
• BARTER - Exchange of goods and/or
services.
• PRIVATE TREATY - Direct negotiation
between buyer and seller. Still widely used
today.
• PUBLIC AUCTION - Auctioneer accepts
competitive bids from buyers and conducts
sale.
MARKETING METHODS
• TERMINAL MARKET - Commission firm
represents seller and receives a commission
for negotiating sale and selling terms.
• DIRECT MARKETING - Sale may be
negotiated by private treaty or by
commission firm before livestock moves
directly from farm to packing plant
COLONIAL AMERICA
• Early settlers bartered livestock and
products for other necessities.
• Since wild game was plentiful, early
livestock was used for draft and milk.
• Only after production ceased were they
harvested for meat, hides, tallow and other
byproducts.
COLONIAL AMERICA
• Livestock produced close to consumers and
many sales were direct to butcher or retail
market.
• Most home slaughter was done in winter
since refrigeration did not exist.
• Excess meat was preserved by smoking,
salting or pickling and“packing” in barrels.
This is the origin of the term “meat packer”.
COLONIAL AMERICA
• As settlements expanded westward from the
east coast, it became necessary to “drive or
herd” the livestock back to the eastern
population centers.
• Many of our present east - west highways
began as livestock trails. U.S. Route 40 is
an example
COLONIAL AMERICA
• First commercial meat packing plant was
established by William Pynchon in Springfield,
MA in 1662.
• As distance from farms to markets increased,
livestock dealers became important as drovers
who worked for a commission to market the
livestock. It was a high risk profession to buy and
deliver the livestock.
MARKETING IN THE 1700s
• In 1756, the market in Brighton MA, near Boston
became the first public auction market.
• Following the War of Independence, livestock
production expanded westward into the fertile
Ohio river valley.
• Cincinnati, Ohio became known as “Porkopolis”.
Meat and livestock moved down the Ohio &
Mississippi rivers.
MARKETING IN THE 1800s
• New England became industrialized, the southern
states specialized in cotton and the “Corn Belt”
became the center for grain and livestock
production.
• Canals, roads and railroads were built to move
meat and livestock back to the eastern cities.
• By the mid 1800s, Chicago emerged as the
dominant livestock assembling center.
MARKETING IN THE 1800s
• The first livestock commission firm began
in Chicago in 1857.
• In 1865, the Illinois legislature incorporated
the Union Stockyards and Transit Company
• Packing plants were soon built surrounding
the Chicago Stockyards.
• Soon, terminal markets were established in
East St. Louis, Kansas City, Omaha, etc.
MARKETING IN THE 1800s
• Prior to the Civil War, cattle ranching in
Texas expanded dramatically.
• When the coastal markets were blockaded
during the war, the cattle were trailed to the
railroad towns of Abilene, Wichita and
Dodge City, KS, to be shipped to Chicago.
• The “cowboy” era and trail drives ended
about 1880.
INVENTIONS CHANGE THE
LIVESTOCK INDUSTRY
• Barbed wire was invented in 1873 - Native
prairies and range land could be managed.
• Windmill was adapted to range land - Cattle
and sheep did not have to be near streams.
• Refrigerated rail cars - Meat could be
processed close to production units and
shipped to large population centers.
MARKETING IN THE 1900s
• Mechanical refrigeration was well
established by 1890 and meat packing
became a year around business.
• By 1903, five major meat packers emerged Swift, Armour, Cudahy, Wilson & Morris.
• The Packer & Stockyards Act of 1921
provided market regulation and oversight by
USDA.
MARKETING IN THE 1900s
• Central terminal markets remained
dominant until after World War I.
• The USDA Federal Meat Grading Service
was set up in 1926 to grade beef carcasses.
• Establishment of a market news reporting
service and an improved highway system
enabling the use of trucks to transport meat
brought change to the industry.
MARKETING IN THE 1900s
• By the end of World War II, the packing
plants moved closer to the production areas,
terminal markets declined and direct
marketing increased.
• In 1970, the Union Stockyards stopped
accepting hogs and in 1971, trading in cattle
and sheep also stopped.
AUCTION MARKETS
• Originally were used more for feeder
livestock and cull breeding animals than for
finished slaughter livestock.
• Increased as the terminal markets declined
and have remained fairly stable.
• Future is uncertain except for breeding
livestock and horses.
FEDERAL LAWS
REGULATING MEAT
• 1906 - The Meat Inspection Act provided
for inspection for wholesomeness, freedom
from disease and adulteration.
• 1958 - The Humane Slaughter Act.
• 1967 - Wholesome Meat Act extended meat
inspection to products in interstate trade.
• 1990s - Hazard Analysis of Critical Control
Points (HACCP).
MEAT INDUSTRY
TERMINOLOGY
• Slaughter, process & harvest are synonyms.
• Ante-mortem = Pre-harvest.
• Dressing percentage = (Carcass Weight /
Live Weight) x 100
–
–
–
–
Sheep = 50%
Cattle = 60%
Swine = 72%
Poultry = 78% to 83%
MEAT INDUSTRY
TERMINOLOGY
• Drop, offal, viscera or by-products are terms
used to describe the parts removed from the
carcass (head, hide, hair, shanks & internal
organs).
• “Kosher” refers to meat from animals
slaughtered under procedures approved by
Orthodox Jewish Law.
LARGEST MEAT PACKERS
BEEF 2000
• IBP - Iowa Beef Processors (div. Of Tyson)
– $ 9.3 billion in beef sales
• Excel - (division of Cargill Inc.)
– $ 7.0 billion in beef sales
• ConAgra Beef
– $ 6.0 billion in beef sales
• Farmland - $ 2.8 billion in beef sales
• Smithfield - $ 2.3 billion in beef sales
• These top 5 companies harvest 85% of the steers
and heifers processed in the U.S. each year.
LARGEST MEAT PACKERS
PORK 2000
• Smithfield Foods processes 18.8% of U.S.
pork processing. Largest hog slaughterer
with daily capacity of 78,500 head.
• IBP has 17.6% of U.S. pork processing.
• ConAgra has 10.5%
• Excel has 9.7% and Farmland has 8.0%
• These top 5 companies harvest 65% of the
U.S. pork production.
LARGEST MEAT PACKERS
POULTRY 1999
•
•
•
•
•
Tyson Foods (AR)- $ 7.5 bil. in sales
Perdue Farms (MD) - $ 2.5 bil. in sales
Gold Kist (GA) - $ 1.6 bil. in sales
Pilgrim’s Pride (TX) - $ 1.3 bil. in sales
Foster Farms (CA) - $ 1.1 bil. in sales
PER-CAPITA CONSUMPTION
RETAIL WEIGHT 2000
•
•
•
•
BEEF
VEAL
PORK
LAMB
TOTAL RED MEAT
64.4 lb.
0.5 lb.
47.7 lb.
0.8 lb.
113.5 lb.
PER-CAPITA CONSUMPTION
RETAIL WEIGHT 2000
• CHICKEN
• TURKEY
52.9 lb.
13.6 lb.
TOTAL POULTRY
66.5 lb.
TOTAL RED MEAT &
POULTRY
180.0 lb.
PER-CAPITA SPENDING 2001
BEEF, PORK & CHICKEN
• BEEF
• PORK
• BROILER
$213.43
$135.26
$116.39
TOTAL $ SPENT
$ 475.08
47.0%
28.5%
24.5%