US President Joe Biden will tackle consolidation in meat packing to reduce retail prices – a move condemned by some in the sector.
A White House statement said the administration will enforce antitrust laws to boost competition in meat-processing, as this should redress “pandemic profiteering”.
The US Department of Agriculture (USDA) will provide financial and technical support for new meat and poultry processors “that will compete with the big guys, forcing them to lower prices”.
While all four giant meat processors are not explicitly named, they are Cargill, Tyson Foods, JBS and National Beef Packing Co.
The White House said price increases for beef, pork, and poultry account for half of the overall grocery price hikes since December last year. Prices for beef have risen by 14 per cent, pork by 12.1 per cent, and poultry by 6.6 per cent.
“The administration will spend $1.4 billion in pandemic assistance for small producers”
It said increases are partly driven by “a lack of competition at a key bottleneck point in the meat supply chain: meat-processing.”
The administration will spend $1.4 billion in pandemic assistance for small producers, processors, distributors, farmers markets, seafood processors, and food and farm workers.
The USDA and the Department of Justice are investigating price-fixing in the chicken-processing industry, already landing a $107 million guilty plea by Pilgrim’s Pride.
The USDA will also pursue a more robust Packers and Stockyards Act enforcement policy to protect farmers and ranchers.
And it is issuing new market reports on what beef processors pay for improved price transparency.
Mark Dopp, Chief Operating Officer for the North American Meat Institute, denied the accusations saying the meat and poultry markets are competitive and dynamic. “American consumers of most goods and services are seeing higher costs, largely due to a persistent and widespread labour shortage.
“Beef price rises are due to unprecedented market conditions”
“The meat and poultry industry is no different,” he said.
Tyson issued a statement saying it “categorically rejects the conclusions.
“As we explained to the US Senate Committee, in testimony here, the increase in the price of beef, in particular, is due to unprecedented market conditions.
“Multiple, unprecedented market shocks, including a global pandemic and severe weather conditions, led to an unexpected and drastic drop in meat processors’ abilities to operate at full capacity.
“This led to an oversupply of live cattle and an undersupply of beef, while demand for beef products was at an all-time high. So, as a result, the price for cattle fell, while the price for beef rose. Today, prices paid to cattle producers are rising.”
“These middlemen have the power to squeeze consumers and farmers”
The White House said the four firms control up to 85 per cent of the market for beef, pork and chicken, and “that reflects dramatic consolidation of the industry over the last five decades.
“In 1977, the largest four beef-packing firms controlled just 25 per cent of the market, compared to 82 per cent today. In poultry, the top four processing firms controlled 35 per cent of the market in 1986, compared to 54 per cent today. And in pork, the top four hog-processing firms controlled 33 per cent of the market in 1976, compared to 66 per cent today.
“That consolidation gives these middlemen the power to squeeze both consumers and farmers and ranchers.”
The White House said its action “will make the food system fairer and more equitable, more competitive and transparent, and more distributed and resilient against shocks.”
