Processor's feedlots

[Deb]

I read somewhere that feedlot owners were lobbying to have the government put some kind of law in to stop meat processors from having their own large feedlots because the processors can then set the price lower for all finished beef. What is this all about and what has been resolved if anything?

[cakadu]

It doesn't just happen in beef, it happens with other red meats as well. I know of a processor that buys up sheep in various places and then maintains them until they need them at some point. How do I know, - because some of the sheep are kept just up the road from me.

I'm not sure why they do this. My guess would be that they want to have some available in case animals don't come in or there is a greater demand one week or something to that effect.

[smcgrath76]

This is actually fairly common among large beef processing plants and is becoming more common among smaller plants as well. An example would be Lakeside feeders at Brooks.
You can argue the motives, but a large part of the reason for large plants is simply the volume of cattle that they kill.
A large plant can kill around 4000 head per day. In order to ensure that the plant runs to capacity, they secure cattle into their own lots (or own cattle in custom lots) so they can schedule deliveries to keep the plant running at capacity.
While I am not qualified to comment, I have heard figures of what it costs for every minute a plant is not running at peak (shut down), and they are astronomical. If anyone has a better feel for this, or some more reliable numbers please feel free to insert them here.
There are definitely issues about market control and price fixing. Whether or not they own a feedlot or just control cattle on custom feed, but this also has to be balanced against delivery and as was pointed out, the ability to fill unusually large orders.