Biden Launches Plan to Fight Meatpacker Giants on Inflation
Mike Dorning
Mon, January 3, 2022
Biden Launches Plan to Fight Meatpacker Giants on Inflation
(Bloomberg) -- President Joe Biden promised to “fight for fairer prices” for farmers and consumers Monday as he announced plans to combat the market power of the giant conglomerates that dominate meat and poultry processing.
Biden joined Agriculture Secretary Tom Vilsack and Attorney General Merrick Garland to meet virtually with ranchers and farmers to hear complaints about consolidation in the industry, ratcheting up a White House campaign blaming anti-competitive practices in the industry for contributing to surging food inflation.
Biden launched a portal that will allow producers to report unfair trade practices by meatpackers. He also highlighted initiatives the administration is taking to counter meatpackers’ economic power, including $1 billion in federal aid to assist expansion of independent processors and new competition regulations under consideration.
The announcement focuses fresh attention on Biden’s fight with the meat-processing industry and helps cast him as a president willing to take on powerful business interests over consumer prices. Many Democrats are concerned that months of negotiations over Biden’s economic plan have distanced him too much from the most pressing kitchen-table problems facing Americans.
Inflation has swiftly moved to the top of public concerns as the annual rise in consumer prices hit its highest level in almost 40 years. Meat prices, which in November were up 16% from a year earlier, have been the biggest contributor to grocery inflation. Meatpacking industry representatives blame soaring prices on labor shortages, rising fuel prices and supply-chain constraints.
Shares for meat companies were mixed. Tyson Foods Inc., the biggest U.S. meat company by sales, climbed 0.7%, reversing earlier losses. JBS SA, the world’s biggest meat supplier, fell 4%.
Scott Blubaugh, president of the Oklahoma Farmers Union, praised the initiative. “Not since Teddy Roosevelt have we had a president that’s willing to take on this big issue,” he said.
But others were skeptical it would do enough. “The Administration has not announced that it will take decisive enforcement action to protect America’s cattle producers from the harms they’ve been experiencing for the past seven years, and we remain disappointed with that omission,” Bill Bullard, chief executive officer of R-CALF USA, a group that represents independent cattle producers.
Biden didn’t answer a question on whether he would seek to break up large meat-processing companies. His efforts to inject more competition in the industry run counter to decades of consolidation since the late 1970s as the industry shifted to larger plants to cut costs and courts adopted a more permissive interpretation of antitrust law.
Companies including JBS have said that a shortage of workers is affecting operations in every developed nation, limiting production increases and raising costs.
“Labor remains the biggest challenge,” Sarah Little, a spokeswoman for the North American Meat Institute, a trade group, said in a statement. “Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce. New capacity and expanded capacity created by the government will have the same problem.”
Mike Brown, president of the National Chicken Council, a poultry trade group, said levels of concentration in the sector haven’t changed much over the past 20 years.
“It’s time for the White House to stop playing chicken with our food system and stop using the meat industry as a scapegoat for the significant challenges facing our economy,” Brown said in an emailed statement.
Biden singled out the meat and poultry processing industries for scrutiny in a July executive order on promoting competition across the economy. His top economic adviser later criticized meatpackers for “pandemic profiteering.” The U.S. Agriculture Department also announced plans in June to consider three new sets of regulations on unfair trade practices in livestock and poultry markets, with officials anticipating the proposal of new rules early this year.
The president has placed critics of corporate consolidation in key positions across his administration, including Lina Khan as chair of the Federal Trade Commission and Jonathan Kanter as assistant attorney general for antitrust.
Four large meatpacking companies control 85% of U.S. beef processing capacity, according to data released by the White House. Other meat sectors are also highly concentrated, with four companies controlling 70% of the pork market and 54% of the poultry market, according to the White House.
A fact sheet the White House distributed to reporters asserts that as a result of that concentration, most livestock producers “now have little or no choice of buyer for their product and little leverage to negotiate.” Tyson Foods Inc. reported record profits on its beef processing in quarterly earnings released in November.
In November, ranchers received 36.7 cents for every dollar consumers spent on beef at the grocery store, down from 51.5 cents in 2015, according to the Agriculture Department. Fifty years ago, their share was more than 60 cents, according to the White House.
“This is a decades-long trend that we are seeing,” said Bharat Ramamurti, Deputy Director of the National Economic Council, in an interview with Bloomberg Television. “The result, based on the economic literature, is higher prices for folks, fewer options for workers, which means that there’s downward pressure on wages. It also means that there’s less innovation and productivity.”
The aid for independent meat and poultry processors, which will come from Covid relief funds, includes $375 million for gap financing grants and $100 million for guarantees of loans made through private banks, according to the fact sheet.
Ted Schroeder, a Kansas State University agricultural economics professor who specializes in livestock markets, said it’s difficult to forecast the overall impact of Biden’s efforts, but expressed doubt the federal aid for independent processors will alter the market much.
Meatpacking is a cyclical business and processors may soon be squeezed again as droughts and higher feed grain prices drive up cattle prices, he said.
“How can smaller, higher cost, highly leveraged new plants hope to survive through such a market environment in the next few years? I am concerned many will not,” Schroeder said.
Mike Dorning
Mon, January 3, 2022
Biden Launches Plan to Fight Meatpacker Giants on Inflation
(Bloomberg) -- President Joe Biden promised to “fight for fairer prices” for farmers and consumers Monday as he announced plans to combat the market power of the giant conglomerates that dominate meat and poultry processing.
“Capitalism without competition isn’t capitalism, it’s exploitation,”
Biden said. “That’s what we’re seeing in meat and poultry.”
Biden joined Agriculture Secretary Tom Vilsack and Attorney General Merrick Garland to meet virtually with ranchers and farmers to hear complaints about consolidation in the industry, ratcheting up a White House campaign blaming anti-competitive practices in the industry for contributing to surging food inflation.
Biden launched a portal that will allow producers to report unfair trade practices by meatpackers. He also highlighted initiatives the administration is taking to counter meatpackers’ economic power, including $1 billion in federal aid to assist expansion of independent processors and new competition regulations under consideration.
The announcement focuses fresh attention on Biden’s fight with the meat-processing industry and helps cast him as a president willing to take on powerful business interests over consumer prices. Many Democrats are concerned that months of negotiations over Biden’s economic plan have distanced him too much from the most pressing kitchen-table problems facing Americans.
Inflation has swiftly moved to the top of public concerns as the annual rise in consumer prices hit its highest level in almost 40 years. Meat prices, which in November were up 16% from a year earlier, have been the biggest contributor to grocery inflation. Meatpacking industry representatives blame soaring prices on labor shortages, rising fuel prices and supply-chain constraints.
Shares for meat companies were mixed. Tyson Foods Inc., the biggest U.S. meat company by sales, climbed 0.7%, reversing earlier losses. JBS SA, the world’s biggest meat supplier, fell 4%.
Scott Blubaugh, president of the Oklahoma Farmers Union, praised the initiative. “Not since Teddy Roosevelt have we had a president that’s willing to take on this big issue,” he said.
But others were skeptical it would do enough. “The Administration has not announced that it will take decisive enforcement action to protect America’s cattle producers from the harms they’ve been experiencing for the past seven years, and we remain disappointed with that omission,” Bill Bullard, chief executive officer of R-CALF USA, a group that represents independent cattle producers.
Biden didn’t answer a question on whether he would seek to break up large meat-processing companies. His efforts to inject more competition in the industry run counter to decades of consolidation since the late 1970s as the industry shifted to larger plants to cut costs and courts adopted a more permissive interpretation of antitrust law.
Companies including JBS have said that a shortage of workers is affecting operations in every developed nation, limiting production increases and raising costs.
“Labor remains the biggest challenge,” Sarah Little, a spokeswoman for the North American Meat Institute, a trade group, said in a statement. “Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce. New capacity and expanded capacity created by the government will have the same problem.”
Mike Brown, president of the National Chicken Council, a poultry trade group, said levels of concentration in the sector haven’t changed much over the past 20 years.
“It’s time for the White House to stop playing chicken with our food system and stop using the meat industry as a scapegoat for the significant challenges facing our economy,” Brown said in an emailed statement.
Biden singled out the meat and poultry processing industries for scrutiny in a July executive order on promoting competition across the economy. His top economic adviser later criticized meatpackers for “pandemic profiteering.” The U.S. Agriculture Department also announced plans in June to consider three new sets of regulations on unfair trade practices in livestock and poultry markets, with officials anticipating the proposal of new rules early this year.
The president has placed critics of corporate consolidation in key positions across his administration, including Lina Khan as chair of the Federal Trade Commission and Jonathan Kanter as assistant attorney general for antitrust.
Four large meatpacking companies control 85% of U.S. beef processing capacity, according to data released by the White House. Other meat sectors are also highly concentrated, with four companies controlling 70% of the pork market and 54% of the poultry market, according to the White House.
A fact sheet the White House distributed to reporters asserts that as a result of that concentration, most livestock producers “now have little or no choice of buyer for their product and little leverage to negotiate.” Tyson Foods Inc. reported record profits on its beef processing in quarterly earnings released in November.
In November, ranchers received 36.7 cents for every dollar consumers spent on beef at the grocery store, down from 51.5 cents in 2015, according to the Agriculture Department. Fifty years ago, their share was more than 60 cents, according to the White House.
“This is a decades-long trend that we are seeing,” said Bharat Ramamurti, Deputy Director of the National Economic Council, in an interview with Bloomberg Television. “The result, based on the economic literature, is higher prices for folks, fewer options for workers, which means that there’s downward pressure on wages. It also means that there’s less innovation and productivity.”
The aid for independent meat and poultry processors, which will come from Covid relief funds, includes $375 million for gap financing grants and $100 million for guarantees of loans made through private banks, according to the fact sheet.
Ted Schroeder, a Kansas State University agricultural economics professor who specializes in livestock markets, said it’s difficult to forecast the overall impact of Biden’s efforts, but expressed doubt the federal aid for independent processors will alter the market much.
Meatpacking is a cyclical business and processors may soon be squeezed again as droughts and higher feed grain prices drive up cattle prices, he said.
“How can smaller, higher cost, highly leveraged new plants hope to survive through such a market environment in the next few years? I am concerned many will not,” Schroeder said.
Biden to meet with farmers as he seeks to cut meat prices
President Joe Biden waves as he leaves St. Ann Roman Catholic Church after attending Mass in Wilmington, Del., Saturday, Jan. 1, 2022. (AP Photo/Carolyn Kaster)
President Joe Biden waves as he leaves St. Ann Roman Catholic Church after attending Mass in Wilmington, Del., Saturday, Jan. 1, 2022. (AP Photo/Carolyn Kaster)
By JOSH BOAK
AP
President Joe Biden will meet virtually with independent farmers and ranchers to discuss initiatives to reduce food prices by increasing competition within the meat industry, part of a broader effort to show the administration is trying to combat inflation.
The White House event occurs Monday afternoon as higher-than-expected inflation has thwarted Biden’s agenda. Consumer prices in November rose 6.8% over the prior 12 months — a 39-year high. Inflation has hurt Biden’s public approval, become fodder for Republican attacks and prompted Sen. Joe Manchin, D-W.Va., to cite higher prices as a reason to sideline the Democratic president’s tax, social and economic programs.
Biden is building off a July executive order that directed the Agriculture Department to more aggressively look at possible violations of the 1921 Packers and Stockyards Act, which was designed to ensure fair competition and protect consumers. Meat prices have climbed 16% from a year ago, with beef prices up 20.9%.
The administration is targeting meat processing plants, which can shape the prices paid to farmers and charged to consumers. The White House issued a fact sheet saying that the top four companies control 85% of the beef market. In poultry, the biggest four processing firms control 54% of the market. And for pork, the figure is 70% for the four biggest firms
Biden plans to stress the plans to distribute $1 billion from the coronavirus relief package to help independent meat processors expand. He also plans to highlight funding to train workers in the industry and improve conditions, as well as issue new rules for meatpackers and labeling requirements for being designated a “Product of USA.”
The Justice Department and the Agriculture Department will launch a joint effort to make it easier to report anti-competitive actions to the government. The administration will also seek to improve the transparency of the cattle market.
The effort is part of a broader attempt to regain control of America’s economic narrative. Besides inflation, the repeated waves of coronavirus outbreak have dampened people’s opinions about the economy despite strong growth over the past year.
Biden will have an opportunity to highlight the economy’s strengths with the December jobs report being released Friday. Economists surveyed by FactSet expect that the United States added 362,000 jobs last month with the unemployment rate ticking down to 4.1%. Gains of that magnitude would indicate that the U.S. added roughly 6.5 million jobs last year, more than in any other previous year in a reflection of population growth and government spending.
President Joe Biden will meet virtually with independent farmers and ranchers to discuss initiatives to reduce food prices by increasing competition within the meat industry, part of a broader effort to show the administration is trying to combat inflation.
The White House event occurs Monday afternoon as higher-than-expected inflation has thwarted Biden’s agenda. Consumer prices in November rose 6.8% over the prior 12 months — a 39-year high. Inflation has hurt Biden’s public approval, become fodder for Republican attacks and prompted Sen. Joe Manchin, D-W.Va., to cite higher prices as a reason to sideline the Democratic president’s tax, social and economic programs.
Biden is building off a July executive order that directed the Agriculture Department to more aggressively look at possible violations of the 1921 Packers and Stockyards Act, which was designed to ensure fair competition and protect consumers. Meat prices have climbed 16% from a year ago, with beef prices up 20.9%.
The administration is targeting meat processing plants, which can shape the prices paid to farmers and charged to consumers. The White House issued a fact sheet saying that the top four companies control 85% of the beef market. In poultry, the biggest four processing firms control 54% of the market. And for pork, the figure is 70% for the four biggest firms
Biden plans to stress the plans to distribute $1 billion from the coronavirus relief package to help independent meat processors expand. He also plans to highlight funding to train workers in the industry and improve conditions, as well as issue new rules for meatpackers and labeling requirements for being designated a “Product of USA.”
The Justice Department and the Agriculture Department will launch a joint effort to make it easier to report anti-competitive actions to the government. The administration will also seek to improve the transparency of the cattle market.
The effort is part of a broader attempt to regain control of America’s economic narrative. Besides inflation, the repeated waves of coronavirus outbreak have dampened people’s opinions about the economy despite strong growth over the past year.
Biden will have an opportunity to highlight the economy’s strengths with the December jobs report being released Friday. Economists surveyed by FactSet expect that the United States added 362,000 jobs last month with the unemployment rate ticking down to 4.1%. Gains of that magnitude would indicate that the U.S. added roughly 6.5 million jobs last year, more than in any other previous year in a reflection of population growth and government spending.
Biden Unveils Plan to Boost Competition in US Meat Industry
January 03, 2022
Reuters
January 03, 2022
Reuters
U.S. President Joe Biden, U.S. Secretary of Agriculture Tom Vilsack and U.S. Attorney General Merrick Garland attend a video conference with farmers, ranchers and meat processors to discuss meat and poultry supply chain issues, on the White House campus, Jan. 3, 2022.
The United States will issue new rules and $1 billion in funding this year to support independent meat processors and ranchers as part of a plan to address a lack of "meaningful competition" in the meat sector, President Joe Biden said on Monday.
The initiative comes amid rising concerns that a handful of big beef, pork and poultry companies have too much control over the American meat market, allowing them to dictate wholesale and retail pricing to profit at the expense of their suppliers and customers.
"Capitalism without competition isn't capitalism. It's exploitation," Biden said. "That's what we're seeing in meat and poultry industries now."
A recent White House analysis found that the top four meatpacker companies – Cargill, Tyson Foods Inc., JBS SA and National Beef Packing Co. – control between 55% and 85% of the market in the hog, cattle and chicken sectors.
The United States will issue new rules and $1 billion in funding this year to support independent meat processors and ranchers as part of a plan to address a lack of "meaningful competition" in the meat sector, President Joe Biden said on Monday.
The initiative comes amid rising concerns that a handful of big beef, pork and poultry companies have too much control over the American meat market, allowing them to dictate wholesale and retail pricing to profit at the expense of their suppliers and customers.
"Capitalism without competition isn't capitalism. It's exploitation," Biden said. "That's what we're seeing in meat and poultry industries now."
A recent White House analysis found that the top four meatpacker companies – Cargill, Tyson Foods Inc., JBS SA and National Beef Packing Co. – control between 55% and 85% of the market in the hog, cattle and chicken sectors.
U.S. Secretary of Agriculture Tom Vilsack speaks during a video conference on the White House campus in Washington, Jan. 3, 2022.
The Department of Agriculture (USDA) will spend the $1 billion from the American Rescue Plan to expand the independent meat processing sector, including funds for financing grants, guaranteed loans and worker training, said Agriculture Secretary Tom Vilsack, who was speaking at an event with Biden.
USDA will also propose rules this year to strengthen enforcement of the Packers and Stockyards Act and to clarify the meaning of "Product of USA" meat labels, which domestic ranchers have said unfairly advantage multinational companies that raise cattle abroad and only slaughter in the United States.
The Department of Agriculture (USDA) will spend the $1 billion from the American Rescue Plan to expand the independent meat processing sector, including funds for financing grants, guaranteed loans and worker training, said Agriculture Secretary Tom Vilsack, who was speaking at an event with Biden.
USDA will also propose rules this year to strengthen enforcement of the Packers and Stockyards Act and to clarify the meaning of "Product of USA" meat labels, which domestic ranchers have said unfairly advantage multinational companies that raise cattle abroad and only slaughter in the United States.
Attorney General Merrick Garland speaks during a virtual meeting on the White House Campus in Washington, Jan. 3, 2022.
Attorney General Merrick Garland, also speaking at the event, said "too many industries have become too consolidated over time," and that the antitrust division of the Department of Justice has been chronically underfunded.
The Biden administration issued an executive order last year that advocated a whole of government approach to antitrust issues.
A central concern in agriculture has been meat prices, which have risen at a time when the White House is fighting inflation. An analysis in December by the White House economic council found a 120% jump in the gross profits of four top meatpackers since the pandemic began.
Reaction to plan
The meat industry has said the White House analysis was inaccurate and criticized the new plan.
National Chicken Council President Mike Brown called the plan "a solution in search of a problem."
North American Meat Institute spokesperson Sarah Little said staffing plants remains the biggest issue for meatpackers and that the White House plan would not address it.
"Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce," she said. "New capacity and expanded capacity created by the government will have the same problem."
Eric Deeble, policy director at the National Sustainable Agriculture Coalition, cheered the plan, calling it a "very positive step to ensure farmers and ranchers receive fair prices."
The anticipated rulemaking under the Packers and Stockyards Act "could have a significant impact," said Peter Carstensen, emeritus professor of law at University of Wisconsin-Madison and former antitrust attorney at the Department of Justice. But he noted that investment in independent processing itself would not address market concentration.
Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, an antitrust research center, said the plan does not go far enough to tackle the power of the top meatpackers.
"I do not believe this (plan) will meaningfully change the concentration numbers," he said.
Attorney General Merrick Garland, also speaking at the event, said "too many industries have become too consolidated over time," and that the antitrust division of the Department of Justice has been chronically underfunded.
The Biden administration issued an executive order last year that advocated a whole of government approach to antitrust issues.
A central concern in agriculture has been meat prices, which have risen at a time when the White House is fighting inflation. An analysis in December by the White House economic council found a 120% jump in the gross profits of four top meatpackers since the pandemic began.
Reaction to plan
The meat industry has said the White House analysis was inaccurate and criticized the new plan.
National Chicken Council President Mike Brown called the plan "a solution in search of a problem."
North American Meat Institute spokesperson Sarah Little said staffing plants remains the biggest issue for meatpackers and that the White House plan would not address it.
"Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce," she said. "New capacity and expanded capacity created by the government will have the same problem."
Eric Deeble, policy director at the National Sustainable Agriculture Coalition, cheered the plan, calling it a "very positive step to ensure farmers and ranchers receive fair prices."
The anticipated rulemaking under the Packers and Stockyards Act "could have a significant impact," said Peter Carstensen, emeritus professor of law at University of Wisconsin-Madison and former antitrust attorney at the Department of Justice. But he noted that investment in independent processing itself would not address market concentration.
Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, an antitrust research center, said the plan does not go far enough to tackle the power of the top meatpackers.
"I do not believe this (plan) will meaningfully change the concentration numbers," he said.
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