CHICAGO, March 16 (Reuters) - Striking JBS employees took to the streets of Greeley, Colorado, before sunrise on Monday to picket against the world's largest meat company, in a rare labor stoppage at a U.S. meatpacking plant and a sign of upheaval in the beef industry.

The union representing about 3,800 employees at the beef processing facility said it was the first time U.S. meatpacking workers had gone on strike in four decades. They launched a two-week strike and will remain on the picket lines until JBS negotiates fairly with workers, the union said.

Workers have faced off with the company over wage increases they say fall short of inflation, and over charges for safety equipment. JBS has said it made a fair offer.

The dispute reduces U.S. beef production capacity at a time when consumers face record prices for hamburgers and steaks and President Donald Trump has struggled to make good on a pledge to cool costs. Prices soared after a years-long drought burned up grazing lands and drove ranchers to slash their herds to the lowest level in 75 years.

Normally, meatpackers briskly slaughter cattle to feed retail demand for beef. But tight cattle supplies have forced processors to pay steep costs for cattle, likely leaving JBS less incentivized to resolve the strike quickly, economists said. 

"Why would you be in a hurry if you're already losing money on running that plant?" said Altin Kalo, economist for Steiner Consulting Group.

Processors last month were losing more than $300 per head on each animal they slaughtered, according to Denver-based livestock marketing advisory service HedgersEdge.com. On Monday, profits were estimated at about $60 per head. Margins improved recently as the looming strike helped pressure cattle prices, while beef demand stayed strong, analysts said.

WORKERS JOIN PICKET LINE

Workers marched with red and white signs that read "Please do not patronize JBS" as they kicked off the strike, according to a video the United Food and Commercial Workers Local 7 union posted on social media. 

"We want to be treated like human beings," JBS employee Deborah Rodarte said in a statement from the union.  

JBS curtailed production at the facility ahead of the strike last week and said on Friday it planned to start running one of two shifts on Monday. The company's ability to process beef was unclear since the union said it represents all production workers. 

"This morning, many JBS Greeley team members chose to report to work rather than participate in the strike called by UFCW Local 7, and we expect that number to continue increasing in the days ahead," JBS spokesperson Nikki Richardson said.    

Meatpackers face hefty costs to run processing plants and typically seek to operate at peak capacity to keep operations efficient. JBS has said it will shift production as needed to other facilities that have excess processing capacity. 

MEATPACKERS GAIN LEVERAGE

The strike further reduced U.S. processing capacity, after Tyson Foods ( TSN ) closed a beef plant in Nebraska this year and reduced operations at a Texas facility.

The lost capacity gives meatpackers more leverage over cattle feeders when negotiating deals for livestock, analysts said. Some feeders were rerouting their shipments to other facilities during the dispute. 

The disruption in Greeley could ultimately raise costs further for consumers, according to the National Cattlemen's Beef Association, an industry group.

"Even though the U.S. cattle herd is at record lows, limiting processing capacity and reducing the number of available plants will still rattle markets, squeezing producers with market ready cattle and raising beef prices for consumers," the association said. 

The U.S. Department of Agriculture said it was monitoring the impact on the nation's beef supply.

Retail prices for 100% beef ground chuck set a record $6.70 per pound last month, up about 17% from a year earlier, U.S. government data show. 

Some consumers have shifted to less expensive types of meat, though analysts said demand for beef remained robust.