Virginia Tech research team: Ph.D. candidates Angana Chatterjee, Ajit Khanal, William McWilliams (job market candidate), and Assistant Professor Anubhab Gupta





In the U.S., the beef industry is dominated by a handful of large companies, controlling a large share of beef processing that delivers products from farmers to the consumers.

This domination can influence economic shocks, such as tariffs, according to a new study by Virginia Tech researchers in the Department of Agricultural and Applied Economics. 

The team examined how market power among beef processors shapes trade policy by developing an economic model of the beef supply chain. The model follows processors as they purchase cattle from domestic and foreign producers, process them into beef products, and sell those products to consumers, allowing the researchers to identify who pays for the costs of tariffs and other economic shocks.

To evaluate how the model performs, the researchers applied it to the U.S. beef industry, which has four large beef processors accounting for 85 percent of fed-steer and heifer slaughters.

The study finds that market concentration has a much larger effect on economic welfare than tariffs. In fact, the effects of processor market power can be about ten times larger than the effects of realistic tariff changes. This means that the structure of the market itself may matter more than trade policies when determining who benefits and who loses from economic shocks. 

The research also questions the traditional idea that tariffs can improve welfare in large countries. Under perfect competition, a tariff may sometimes benefit a country by improving its position in international trade. However, when realistic levels of meatpacker market power are included, the benefit is no longer present. At the level of concentration seen in the U.S. beef industry, the ideal tariff becomes zero, and higher tariffs reduce overall welfare.

Another major finding is that market concentration changes who pays the cost of tariffs. In a competitive market, foreign farmers may absorb much of the cost because lower demand reduces the prices they receive. However, when processors have significant market power, the burden shifts toward U.S. consumers.

Processors may pass higher import costs along to consumers while maintaining their existing market advantages. When market power interacts with the tariffs in a concentrated agricultural supply chain, the overall domestic welfare effects are exacerbated.

These results show that trade policy and competition policy cannot be considered separately in concentrated agricultural markets. A policy decision about tariffs may have very different effects depending on how much market power exists among intermediaries in the supply chain. Looking only at trade rules without considering market structure can lead to incorrect conclusions about who benefits and who loses.

The findings also support that attention be given to competition issues in the U.S. meat industry. Efforts to address processor concentration through antitrust policies may be crucial, as market power can have greater effects on consumers and producers than trade policies alone.

The results suggest that concentration of the beef processing industry is an important factor in economic shocks. Tariffs, supply disruptions, and other changes don’t affect everyone equally. The degree of market power held by large processors is an important determinant of the distribution of costs and benefits throughout the beef supply chain.



Original study and citation: Chatterjee, Angana, Khanal, Ajit, McWilliams, William, & Gupta, Anubhab. (2026). Market Concentration in the U.S. Beef Supply Chain: Welfare Implications Under Shocks. https://doi.org/10.22004/AG.ECON.404624
An accepted conference paper to be presented at the 2026 AAEA Annual Meetings

By: Melissa Vidmar
Contact: vidmar@vt.edu