Concentration and competitiveness in the meat industry are once again in the spotlight at the White House.
On Sept. 9, the White House issued a notice, authored by aides Brian Deese, Sameera Fazili and Bharat Ramamurti, acknowledging “the president understands that families have been facing higher prices at the grocery store recently.” The report details how the price increases are not only from consumer demand, but a result of lack of competition in the meat processing sector, calling special attention to the Big Four processors.
The notice says the administration plans to take “bold action” to enforce antitrust laws, boost competition and push back on “pandemic profiteering.”
The White House points to the Big Four, stating: “Four large conglomerates overwhelmingly control meat supply chains, driving down earnings for farmers while driving up prices for consumers.” The report calls the meatpacking industry highly consolidated and the key choke point in the supply chain.
The consolidation of the industry gives the packers the power to “squeeze both consumers and farmers and ranchers,” the authors wrote. The report goes on to further detail how processors are generating record profits at the expense of consumers, farmers and ranchers. Wholesale prices for beef rose much higher than input prices for cattle, the authors noted, meaning the processors’ profits are increasing while the producers’ profits are not.
“While factors like consumer demand and input costs are affecting the market, it is the lack of competition that enables meat processors to hike prices for meat while increasing their own profitability,” the White House said. The report added that if processors did face meaningful competition, they would have less profits if their costs had gone up, while keeping prices lower to earn retailers’ business.
The North American Meat Institute (NAMI) criticized what they called “inflammatory statements” regarding the meat and poultry industry.
“American consumers of most goods and services are seeing higher costs, largely due to a persistent and widespread labor shortage,” said Mark Dopps, NAMI chief operating officer. “Issuing inflammatory statements that ignore the fundamentals of how supply and demand affects markets accomplishes nothing. Meat and poultry markets are competitive and dynamic with no one sector of the industry consistently dominating the market at the expense of another.”
In order to combat the competition issues, the White House says it will take on a series of actions to “crack down” on price fixing, enforce antitrust laws and add transparency. These include the Department of Justice investigations, efforts to strengthen the Packers and Stockyards Act, new market reports and rules for “Product of USA” labeling.
USDA will invest $1.4 billion in pandemic assistance to producers, processors and other sectors impacted by COVID-19. A total of $700 million in direct aid will go to small operations that have not received previous aid.
An additional $700 million will be allocated for competitive grant funding in the newly established Farm and Food Workers Relief (FFWR) grant program. The funding will aid farmworkers and meatpacking workers with pandemic-related health and safety costs. In addition, $20 million of the total amount will be set aside for at least one pilot program to support grocery workers.
The FFWR program is funded by the Consolidated Appropriations Act of 2021 and is part of the department’s effort to respond to the pandemic. Funding is intended to cover costs for personal protective equipment, dependent care and other expenses associated with the COVID-19 pandemic.
“America’s meatpacking and grocery workers have been on the frontlines since the pandemic began, risking their health every day to keep our food supply secure during this crisis,” said United Food and Commercial Workers International President Marc Perrone.
Funds will be awarded to state agencies, Tribal entities and nonprofit organizations, ranging from $5 million to $50 million. Applications must be submitted electronically at www.grants.gov. More details regarding when the application period opens are coming soon. — Anna Miller, WLJ managing editor