The Biden Administration recently announced moves to break up consolidation in the meatpacking industry and bring meat prices back under control.
Monday, the Biden Administration announced it will invest $1 billion to expand independent meat processors, increase competition in the market, and reduce prices for consumers by increasing options farmers have to sell.
In America, four companies dominate supply in the industry, controlling 85% of beef production, 54% of poultry production, and 70% of pork production.
Those four companies are Tyson, JBS, Cargill and National Beef, all of which have major plants in Iowa.
“Without meaningful competition, farmers and ranchers don’t get to choose who they sell to. Or put another way, our farmers and ranchers have to pay whatever these four big companies say they have to pay,” President Joe Biden said Monday.
The measures identified by the US Department of Agriculture (USDA) aim to:
- Expand and diversify meat and poultry processing capacity;
- Increase producer income;
- Provide producers an opportunity to have ownership in processing facilities;
- Create stable, well-paying jobs in rural regions;
- Raise the bar on worker health, safety, training, and wages for meatpacking jobs;
- Spur collaboration among producers and workers;
- Prompt state, tribal, and private co-investment; and
- Provide consumers with more choices.
J.D. Scholten, former congressional candidate and senior advisor for the American Economic Liberties Project, said the suggestions are a good start, but they won’t go far without efforts to break up the big monopolies.
“It seems like they’re leaning in heavily on this $1 billion to local processors and independent processors,” he said. “That’s good, but unless we break up the monopolies I feel it’s a waste.”
This is mainly because the bigger companies can still dominate the market and there’s nothing stopping them from buying the smaller processors.
Scholten said he does credit the administration with calling attention to this issue and recognizing its importance. In fact, he said this is the first time he’s heard a president emphasize this angle of the market.
“This is the first time in my generation, in my lifetime, that the president has talked about the importance of competition,” he said. “And that’s great. We need to continue to push for more, otherwise it’s not fixing the problem of market consolidation.”
One problem, Scholten said, is the lack of money available in the Department of Justice (DOJ) for the Antitrust Division.
On that note, the DOJ and USDA only said they would introduce a portal where people can report concerns about violations to antitrust laws.
“DOJ and USDA further announced that they will enhance their collaboration on referrals, information sharing, and identifying areas of the law in need of modernization,” the White House press release reads.
While meat prices have increased for consumers, pay to farmers and ranchers has decreased. The profits of meatpackers have increased 120% since the pandemic started, with a 500% increase in net income.
In November, meat prices were the leading reason for rising food costs.
“Capitalism without competition isn’t capitalism, it’s exploitation. That’s what we’re seeing with meat and poultry and those industries now,” Biden said Monday.
An industry spokeswoman has said prices were raised because of labor shortages and shipping problems, but the administration rejected those claims. The analysis pointed out that profits would not have increased so much if the industry were passing labor and shipping costs onto consumers.
Another part of Biden’s announcement included legislation to bring more transparency to cattle pricing. It was championed by a bipartisan mix, including Iowa Reps. Cindy Axne and Randy Feenstra, who were joined by Iowa Sen. Chuck Grassley.
“I’ve heard it consistently from Iowa cattlemen: we need more competition and transparency in the market,” Axne said in a press release. “President Biden and Secretary Vilsack’s announcement today will go a long way in providing more market opportunities and fairness for cattle producers in Iowa and across the country.”
The Cattle Price Discovery and Transparency Act will increase opportunities for negotiation and ensure farmers and ranchers are getting fair prices for their livestock.
“What this really is about, at the end of the day, is improving farm income. It’s about creating good-paying jobs in rural America that are so necessary. It’s about giving the consumers choice and a break at the grocery store,” said USDA Sec. Tom Vilsack Monday. “There are stories of woe out there but we are committed to making a difference and looking forward to working with AG Garland and his great team on antitrust enforcement.”
by Nikoel Hytrek
Posted 1/4/22