The meat industry has been highlighted in the past several months by the Biden administration, along with Congress. With higher costs of food for consumers but higher profits for meat packers, the administration is scrutinizing larger companies and taking a closer look at consolidation.
In its latest move, the Biden administration has announced an action plan for a “fairer, more competitive and more resilient meat and poultry supply chain.” The White House released a fact sheet on the morning of Jan. 3 and followed with a roundtable meeting with industry stakeholders later in the afternoon.
In its action plan, the administration said it has four core strategies for creating a more fair and competitive meat sector, with better earnings for producers and affordable prices for consumers. These include:
• Dedicating $1 billion in American Rescue Plan funds to expanding independent processing capacity.
• Strengthening rules that protect farmers, ranchers and consumers, which includes the Packers and Stockyards Act and issuing new “Product of USA” labeling rules.
• Promoting stronger enforcement of competition laws and ensuring all of government works to promote competition.
• Increasing transparency in the cattle markets.
Expanding capacity
USDA plans to increase competition and create more options for producers and consumers by providing gap financial grants totaling $375 million for independent processing plants. This spring, USDA will publish a request for proposals for phase one of the initiative and will invest $150 million to jump-start about 15 projects. An additional $225 million will support projects in phase two, which will open in the summer.
The department also plans to allocate up to $275 million to partner with lenders to provide loans and other support to independent processors. Applications will open by the summer. A total of $100 million in American Rescue Plan funds has already been deployed to make more than $1 billion in guaranteed loans available immediately. To apply, visit www.rd.usda.gov/food-supply-chain-guaranteed-loans.
USDA also plans to invest in workers by dedicating $100 million to support development of a well-trained workforce, safe workplaces and good-paying jobs. To help independent processors, the department will invest about $50 million in technical assistance and research and development, along with $100 million in reduced overtime inspection costs.
USDA has already paid $32 million in grants to 167 existing meat and poultry processing facilities to help them become federally inspected through the Meat and Poultry Inspection Readiness Grant program. An additional round of funding will be made available in the future.
Strengthening rules
The administration said it will issue new, stronger rules under the Packers and Stockyards Act. USDA has begun working on three proposed rules to strengthen enforcement and has also been working with the Federal Trade Commission to prepare a report on access to retail and competition’s role in protecting new market entrants in the processing sector, the fact sheet said.
USDA will also issue new “Product of USA” labeling rules, “so that consumers can better understand where their meat comes from.” Currently, meat may be labeled with a USA label as long as it was processed in the country, which could be confusing for consumers. USDA is currently reviewing the current labeling rules, with the goal of having a new rule-making.
Fair enforcement
The Department of Justice and USDA announced a new joint initiative to work together to promote fair enforcement of existing competition laws, and they will launch a new portal within 30 days for reporting concerns about potential violations.
“As appropriate, USDA will make reports or refer potential violations of the Packers and Stockyards Act to the Justice Department to better enable its Antitrust Division to pursue meritorious competition-related cases and to allow the agencies to collaborate on issues of mutual interest,” a statement from the two agencies read.
Increasing transparency
Finally, the administration said it will work to increase transparency in the cattle markets. The administration said USDA has been working to address this issue by releasing new market reports in August to provide insight on formula trade, and USDA is reviewing to see what more can be done.
The administration said it will also work with Congress to make markets fairer and more transparent and also said it was encouraged to see bipartisan legislation by Sens. Chuck Grassley (R-IA), Deb Fischer (R-NE), Jon Tester (D-MT), and Ron Wyden (D-OR) and Reps. Cindy Axne (D-IA-03) and Randy Feenstra (R-IA-04).
“We look forward to working with Congress on these important issues, and we hope that they will also look for ways to ensure farmers and ranchers have fair access to processing capacity,” the fact sheet concluded.
Roundtable
The White House also hosted a virtual roundtable meeting later in the afternoon, where participants described how lack of competition impacts their businesses. Participants included President Joe Biden; USDA Secretary Tom Vilsack; Attorney General Merrick Garland; National Economic Council Director Brian Deese; Scott Blubaugh, president of the Oklahoma Farmers Union; Kelsey Ducheneaux-Scott, director of programs for the Intertribal Agriculture Council; Corwin Heatwole, CEO of Farmer Focus; Brent Johnson, president of the Iowa Farm Bureau Federation; and Handy Kennedy, Jr., owner of HK Farm.
“For too long, we have seen the multinational meatpackers suck out all of the wealth of rural America and put it in their corporate coffers, and in some cases even overseas,” Blubaugh said at the roundtable.
Reactions
In response to the action plan, the North American Meat Institute defended its members and said the largest issue in meat and poultry production was labor shortages.
“For the third time in six months, President Joe Biden and his administration announced the same plans to spend $1 billion to fund government intervention in the market in an attempt to increase prices livestock producers receive while blaming inflation on private industry,” said Julie Anna Potts, president and CEO of the North American Meat Institute.
“The administration wants the American people to believe that the meat and poultry industry is unique and not experiencing the same problems causing inflation across the economy, like increased input costs, increased energy costs, labor shortages and transportation challenges,” Potts said.
Cattlemen’s groups had mixed responses.
“We are hopeful that the action plan unveiled today will help bring transparency and true price discovery to the cattle marketplace, bring back truth in labeling through the closure of the Product of the U.S.A. loophole, and invest in a stronger—and more American—meat industry,” said U.S. Cattlemen’s Association President Brooke Miller in a statement.
Bill Bullard, Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America CEO, said the group was appreciative of the plans to write rules regarding the Packers and Stockyards Act, correcting the “Product of USA” beef label and increasing market transparency.
However, “The fact remains that 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.” — Anna Miller, WLJ managing editor
