ALBUQUERQUE, N.M. — Gerald and Claudio Chacon continue a tradition their family started in the late-1800s – raising herds of cattle in rural Rio Arriba County.
Both men had careers outside agriculture, but now spend their retirement maintaining a herd of a little over 200 cows and calves.
Rugged northern New Mexico is not easy on cattle ranchers. Mountainous terrain, harsh winters, cattle thieves and an extended drought make it difficult to squeeze out a profit in an extremely tight market.
That was before the COVID-19 pandemic.
Since then, prices for beef in grocery stores have skyrocketed as many packing plants across the country – almost all of which are managed by such large corporations as Tyson Foods – attempt to manage outbreaks that infect employees and reduce production.
But while consumers pay more for beef, corporations are paying ranchers around 30% less for calves, New Mexico ranchers’ main product. The sudden drop in prices has left many unsure how they will finance the massive costs of running a cattle operation in New Mexico.
Most ranchers in New Mexico sell the bulk of their calves in the fall, one paycheck for a year’s worth of work.
Gerald Chacon said his family has seen plenty of years where profits weren’t as good, but that this year is something different.
“This one may be one of the worst, because of the prices and the uncertainty of it,” he said.
Gerald Chacon’s nephew, Matt Reitzel, works for his uncle on the ranch year-round and guides herds across 20,000 acres of the Carson National Forest, just north of Ojo Caliente. It’s not yet summer, but the ground is already bone dry and the dirt feels like sand.
“This is shaping up to be a nasty summer,” Reitzel said. ‘We’d still be in the mud, usually.”
A man then drove up to the cowboys in an all-terrain vehicle and told them a mountain lion had killed one of their calves. A look of tempered frustration swept over their faces.
“We’ve always had something difficult to face,” Gerald Chacon said. “That’s just the nature of living here and being in this industry.”
That experience shows in how they maintain their herd. They manage to find their cattle across a vast landscape, guiding them to various wells and pastures, using only memory and tracks. So far, the virus has not impacted their work.
But Gerald Chacon fears that if prices don’t rise by October, he may not be able to pass on the herd to his nephew and their operation won’t continue.
“Nobody really knows where it’s going to end up,” he said.
‘Not the whole story’
Few essential businesses have been as affected by the coronavirus as the meatpacking industry.
Several outbreaks have popped up in larger packing plants across the country. One Tyson Foods plant in Iowa saw 60% of its workers get infected.
Tyson, along with fellow meat corporations Smithfield and JBS, closed some of their packing plants in response, before President Donald Trump ordered them on April 28 to remain open. However, USA Today reported on May 6, that plants continue to close despite the order.
As a result, production at meatpacking plants has slowed to a crawl, leading to a backup of cattle waiting to be processed. The price has, therefore, increased for consumers and declined for producers.
However, ranchers say prices for their cattle, which have dipped to around 90 cents per pound, don’t justify the soaring meat prices at the store.
“That’s not the whole story,” said Tom Spindle, who runs a large ranch near Stanley. “When our cattle are selling for 30% less than they were, but then the meat is marked up 30% at the store, somebody’s getting really rich there and it’s not us.”
Most ranchers make only around a 1% profit on their cattle. Even before the pandemic, many ranchers lived on slim amounts of money or got second jobs.
A rancher, Spindle said, can have millions of dollars’ worth of land and still be broke.
“Most guys stay poor and keep their ranches,” he said.
Spindle takes pride in his cattle – he wears a belt buckle he won for having the best heifer at the New Mexico State Fair – but even his comparatively large operation is facing its share of pandemic-induced challenges.
“We sold some cattle in January that we made some money on. … then COVID-19 came in and we lost money on the next 10 loads of calves,” Spindle said.
While farmers growing fruits and vegetables can negotiate prices, cattle farmers have to sell their stock at certain times of the year, meaning they have to take whatever price corporate-run feed lots offer them.
This situation, Spindle said, puts ranchers in the difficult position of accepting prices they can’t live on.
“If somebody came to me and wanted to buy a bunch of cows, I’d dang sure sell them, but there’s not a market for them,” he said.
The federal CARES Act, meant to assist economically struggling businesses, reserved $9.5 billion for those raising livestock and specialty crops. But Spindle said most ranchers haven’t seen that money yet, and many will receive $100,000 when it arrives.
“In the grand scheme of things, that’s not a whole lot of money,” he said, adding a new tractor alone costs $160,000.
Meanwhile, Tyson Foods secured $1.5 billion in loans from such large banks as Morgan Stanley.
Tyson maintains it offers reasonable prices for its products, despite the notable increases in store-bought meat prices.
“Although some raw material costs have decreased, many operational costs have risen significantly,” Tyson spokeswoman Liz Croston wrote May 7. “In some cases, this has meant idling our plants, which has resulted in a reduction in production volume.”
Lowering production has resulted in a smaller amount of meat entering supermarkets and restaurants, fueling fears of a nationwide meat shortage and driving up prices.
In Springer, a small town in the state’s northeast corner, Mayor Boe Lopez said the local grocery store is receiving only around one-third of the meat it orders.
Himself a cattle rancher, Lopez said many ranchers believe the handful of meatpacking corporations are intentionally lowering payments to producers to make a larger profit and that plants have been taking less beef to drive up prices for years.
“That’s how they’re trying to justify the price,” he said.
Lopez said that if beef prices do not increase, it could devastate the local economy in Springer and Colfax County, which relies heavily on property taxes paid by ranchers.
For now, most ranchers are continuing operations as normal, hoping production and prices increase before the fall, where the vast majority of money is made.
Some health experts have, however, warned of a potential second outbreak in the fall even more deadly than the first, right as cattle producers get ready to sell their calves to feed lots.
Ranchers in the state agree that a second outbreak, along with a coinciding tumble in prices, would be almost too much to bear.
“That could be the demise of ranching in New Mexico,” Spindle said.