President Joe Biden has declared war on Big Meat. Yup, Biden’s war. The president pinky swears new rules and a billion dollars in new funding will somehow end decades of what amounts to a meat monopoly in the beef, pork and chicken industries.
In announcing the plan, Biden noted, “Capitalism without competition isn’t capitalism. It’s exploitation. That’s what we’re seeing in meat and poultry industries now.”
Biden acknowledges that Big Meat has for years put its collective thumb on the meat scale to cheat ranchers, farmers and yes, all of us, at our local grocery store meat counter. And the president believes it's high time to do something about it.
On the surface all this talk sounds good: Financing grants, guaranteed loans and worker training to jump start the all-but-obliterated independent meat packing industry; a plan to clarify “Product of USA” meat labels that currently give multinational companies an unfair advantage to raise cattle abroad and only slaughter in the U.S.
The plan would also somehow require the Justice Department to enforce the existing antitrust rules (too little too late) and let the public behind the curtain see how meat is really priced. Presumably, that would include a Justice Department deep dive on Agri Stats … but I'm not holding my breath.
But like presidents that have gone before (most recently Barack Obama anybody?) Biden's plan as introduced in January falls short. Way, way, WAY, WAY short.
Because Biden's plan at the moment would not break up Big Meat.
- Cargill, Tyson Foods, Brazil-based JBS SA and National Beef Packing Company (controlled by Brazilian beef producer Marfrig Global Foods) account for 85% of all U.S. grain-fattened cattle that are made into steaks, beef roasts and other cuts of meat for consumers (70%if you include hamburger).
- Tyson Foods, Pilgrim's Pride, Sanderson Farms and Perdue Foods account for 55% of U.S. chicken production. And that number could rise to 60%if Cargill and Continental Grain manage to take over Sanderson Farms in a deal pending before the U.S. Justice Department.
- Smithfield Foods (owned by China's WH Group) JBS, Tyson and Hormel account for 67% of U.S. pork production.
And that is the core of the problem. Attorney General Merrick Garland summed it up: “too many industries have become too consolidated over time.” Garland also says the Justice Department's antitrust division isn't getting enough tax dollars to deal with the problem. Well duh.
Truth be told, the Feds wouldn't even be talking much about this if Big Meat wasn't making money hand over fist over the last year.
The U.S. Labor Department reports from November 2020 to 2021 (year on year) chicken prices are up 9.2%, pork 16.8%, bacon 21% and beef a whopping 20.9%. All that adds up to an overall meat increase of 16%, far outsripping a consumer price increase of 7%.
Big Meat is oh-so-happy to have its rising profits debated on inflationary grounds and stuff beyond the control of Big Meat … like labor shortages and shutdowns of processing facilities due to COVID-19.
But it's all smoke and mirrors because if Big Meat can make the debate about rising consumer prices due to factors beyond its control, then we aren't talking about the 10,000 pound elephant in the room known as market concentration.
Covering the issue through the prism of inflation just flat out ignores the power dynamics of Big Meat — a dynamic where a few humongous meat packers, for all practical purposes, dictate whatever terms they want to ranchers and farmers who have few or no other options to sell their meat.
And that's the rub. And it has been for a long time. The president recognizes this, and the solution in theory is rather easy to say — a complete rewrite of parts of the Packers and Stockyards Act. Biden and USDA said it was going to do just that last June, but thus far, there haven’t been any drafts for public consumption.
Typically, this kind of rule making takes years and years. And make no mistake about it, Big Meat will do everything in its power to kill the effort. It won't be easy — and there surely will be a political price to pay. Obama couldn't stand the heat.
In the interim a quicker solution is stand alone legislation where there may be an uncertain small window of opportunity. A few GOP Senators — notable Charles Grassley of Iowa — are suggesting ripping off ranchers needs to stop. Grassley and Montana Democrat Jon Tester have sponsored a bill designed to reign in Big Meat's competitive advantage.
The Meat Packing Special Inspector Act would give USDA subpoena power to investigate Big Meat practices that may be anti-competitive. USDA would be able to pass their findings over to the Justice Department for indictments. Needless to say for Big-Meat, this would be a nightmare.
But given how often Big Meat has gotten caught in illegal actions over the last several decades, it's long overdue.
About Dave Dickey
Dickey spent nearly 30 years at University of Illinois at Urbana-Champaign’s NPR member station WILL-AM 580 where he won a dozen Associated Press awards for his reporting. For 13 years, he directed Illinois Public Media’s agriculture programming. His weekly column for Investigate Midwest covers agriculture and related issues including politics, government, environment and labor. His opinions are his own and do not reflect Investigate Midwest. Email him at firstname.lastname@example.org.