Biden plans to crack down on meat pricing

UPDATE: September 8, 2021: The Biden administration plans to crack down on pricing in the meat industry, announcing details of its new plans in a blog post. As food prices for consumers rise, he says, half of those higher prices come from meat. According to the publication, only four companies control 55 to 85% of the market for these products.

The U.S. Department of Agriculture will invest $ 1.4 billion in pandemic assistance to smallholder producers, processors, distributors, farmers’ markets, seafood processors, and food and farm workers affected by the pandemic, says the post. The post also touted measures taken by the Justice Department to crack down on price fixing, USDA’s assistance programs for producers affected by global warming, and the administration’s work with Congress to make the more transparent livestock markets.

The North American Meat Institute rebuffed the White House statement, saying meat price increases were caused by the same supply and demand issues as other industries.

“Issuing inflammatory statements that ignore the fundamentals of how supply and demand affect markets does nothing,” said Mark, chief operating officer. Dopp in a report. “The meat and poultry markets are competitive and dynamic, with no one industry sector systematically dominating the market at the expense of another. “

Tyson also hit back with a statement, saying the company “categorically rejects the conclusions” drawn by the White House on the meat industry. The meat processor writes that prices have been high due to unprecedented market shocks and that inclement weather has impacted companies’ ability to process livestock into meat as demand increased. Consolidation, the company argued, did not increase prices, but did improve quality.

“Tyson’s scale allows it to operate efficiently, which lowers costs for consumers,” the statement said. “At Tyson, we rely on independent farmers and want them to be successful because without a stable pipeline of livestock we cannot run our business.”

Dive brief:

  • The federal government has committed more than $ 655 million and promised changes to federal laws to help small meat processors compete with bigger competitors and succeed in the aftermath of industry challenges during the COVID-19 pandemic. The measures are part of a broad executive order issued by President Joe Biden on Friday that aims to promote market competition in areas ranging from food to healthcare to technology.
  • The order provides $ 500 million to support new market entrants and ease supply chain bottlenecks by creating new meat and poultry processing facilities. More than $ 155 million will be used to help the smaller existing processing plants. And Biden has promised updates to the Packers and Stockyards Act, which he says was originally passed to ensure competition but was weakened in favor of the larger producers.
  • The meat industry has been severely strained by the COVID-19 pandemic, which has forced several large processing plants to temporarily close or scale down their operations last year. But accusations of large companies plotting to keep their businesses – and their profits – to themselves have been filed since before the pandemic, with recent criminal prosecutions, antitrust civil suits, and federal inquiries into market price disparities. and the payment of small processors.

Dive overview:

The meat industry has long been dominated by a few large players, a system that has been exposed in the recent past both by pandemic-related shortages and by the litany of investigations, prosecutions and prosecutions of many. many different sectors. This executive order is the start of the Biden administration’s efforts to develop a potential fix for the industry.

According to the White House fact sheet on the executive order, four large meat packers control over 80% of the beef market. Over the past five years, farmers’ share of the price of beef has fallen by more than a quarter – from 51.5% to 37.3% – while the price of beef has increased, according to the agency, citing USDA data..

USDA Secretary Tom Vilsack traveled to Iowa on Friday to discuss the executive order.

“I think this sends a strong message to those who are currently in the business that they won’t necessarily have that ability and that they need to be responsive to the needs of producers,” Vilsack said, according to Iowa Capital Dispatch. “It is not in their best interest, it is not in the best interest of the nation, to seek future consolidations or to kick people off the farm.

“We need to expand the transformation in this country. We can no longer count on four packers. We are innovating today, ”added Vilsack.

Joe Maxwell, president of the Family Farm Action Alliance, an organization that opposes agricultural monopolies along the supply chain, said in a written statement that no president since Franklin D. Roosevelt has hired companies That much.

Because our government has not done its job, a handful of transnational corporations and their overpaid CEOs are controlling our agriculture and food system, driving family farmers off their land, abusing workers, degrading our environment and leaving consumers with no food choices. healthy and safe, ”Maxwell said in the release.“ Order today is one of the many recent signs that the tide may be turning. “

But the North American Meat Institute, a trade association representing most beef, pork and poultry producers, doesn’t think it’s necessary. Spokeswoman Sarah Little told Agri-Pulse that strengthening small processors is unlikely to make a difference.

“In the end, the current level of concentration of four companies has been around for over 25 years and it has not ensured the profitability of packers at the expense of producers,” she told the trade publication. “No industry – cow-calf, feedlot or packer – has achieved positive margins every year.”

The new funds, which come from the USDA portion of the US bailout, are just one part of the reforms Biden is working on. He also intends to strengthen the Packers and Stockyards Act, passed in 1921 to ensure competitive practices in agriculture. Because of changes made during the Trump administration, the rule has lost much of its force. The independent office that enforced the rule was quietly integrated into the USDA’s Agricultural Marketing Department, which administers marketing programs funded by direct debit. A rule under this office that would have established legal protections for small suppliers contracting with large agricultural producers, which was established at the end of the Obama administration but scuttled by the Trump administration before it took effect, is likely to be restored. The Biden administration’s new attention to this law was previously announced in June.

The executive order also reiterates the Biden administration’s intention to clarify country-of-origin labeling on meat products. After the Federal Trade Commission voted earlier this month to crack down on companies improperly using the “Made in USA” label on products, Vilsack pledged to do the same at the USDA for products made from it. meat labeled “Product of the United States” with meat that was not nationally high.

Although this decree includes several major actions, it will take some time to determine how they will be taken. There will be several federal rule-making processes – and opportunities for stakeholders to comment – before any changes are made. But while it may take a while, the Biden administration is clear it wants to use competition to correct long-standing problems in the food system and is ready to make a big commitment to the meat business.

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Rene M. Ladner

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