President Joe Biden is once again taking aim at the nation’s largest meat and poultry processors, vowing to boost competition for America’s farmers and ranchers and reduce prices for consumers in a new plan rolled out Monday at the White House.
The administration's efforts include issuing new, stronger rules under the Packers and Stockyards Act and new “Product of the USA” labeling rules so consumers can better understand where their meat comes from.
Biden’s plans were announced early Monday ahead of a planned virtual meeting with farmers and ranchers this afternoon. Agriculture Secretary Tom Vilsack and Attorney General Merrick Garland will also attend.
“Over the last few decades, we’ve seen too many industries become dominated by a handful of large companies that control most of the business and most of the opportunities — raising prices and decreasing options for American families, while also squeezing out small businesses and entrepreneurs,” the White House explained in a fact sheet summarizing the administration’s plans.
“The meat and poultry sector is a textbook example, with lack of competition hurting consumers, producers, and our economy,” the summary noted. In addition, the White House also cited statistics showing four large meatpacking companies control 85% of the beef market. Four companies also hold the majority of the processing capacity in the pork (70%) and poultry (54%) industries.
Biden’s action plan includes more details on some previously announced initiatives, and several new efforts, including:
- Dedicating $1 billion in American Rescue Plan funds for expansion of independent processing capacity, including $375 million in USDA funds to provide gap financing grants for independent processing plant projects that fill a demonstrated need for more diversified processing capacity. The funding will be split into two phases; some $150 million will be provided to an estimated 15 projects this spring and another $225 million will be rolled out in summer 2022.
- Providing up to $275 million for lender partnerships aimed at providing loans and other support "at rates and on terms that increase access to long-term, affordable capital" for independent processors.
- Backing private lenders that invest in independently owned food processing and distribution infrastructure. USDA has deployed $100 million in American Rescue Plan funds for the Food Supply Chain Guaranteed Loan program. All told, the announcement makes more than $1 billion in guaranteed loans available immediately.
- To address labor concerns, the administration plans to direct $100 million toward supporting "development of a well-trained workforce, safe workplaces, and good-paying, quality jobs by working closely with partner organizations, including labor unions, with expertise in workforce development and worker health and safety."
- USDA will invest about $50 million in technical assistance and research to help create new capacity as well as $100 million in "reduced overtime inspection costs to help small and very small processing plants keep up with unprecedented demand."
In addition to the above investments from the American Rescue Plan, USDA has made $32 million in grants to 167 existing meat and poultry processing facilities to help them reach more customers by becoming Federally inspected through the Meat and Poultry Inspection Readiness Grants Program.
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Also Monday, the Department of Justice and USDA are announcing a new joint initiative to better coordinate their efforts — including launching within 30 days a new portal for reporting concerns about potential violations of the competition laws. That move follows a July executive order in which Biden pledged to address competition issues and roll out new Packers and Stockyards Act rulemaking.
The Biden administration also pledged to work with Congress to improve fairness and transparency in cattle markets and made special reference to a bill championed by a pair of Senate Ag Committee Republicans and several other lawmakers that would create regional mandatory minimum cash trade requirements.
“The Administration is encouraged to see bipartisan legislation in the Senate by Senators Grassley, Fischer, Tester, and Wyden, and in the House by Representatives Axne and Feenstra, that seeks to improve price discovery in the cattle markets and facilitate actual negotiation of prices between livestock producers and packers,” the White House statement said.
Major meat processors are among the many industries that have been hard hit by labor shortages and supply chain disruptions during the COVID-19 pandemic. The North American Meat Institute, the industry's trade association, has previously pushed back at claims that industry consolidation was driving inflation, noting that the existing market structure has been in place for longer than the current inflationary trends.
In a statement to Agri-Pulse, NAMI spokesperson Sarah Little said the announced spending is "too late for consumers and producers."
"According to USDA data, cattle producers are getting the highest prices on record since record prices they received in 2014. This is because packers have begun to clear the backlog of cattle created by the pandemic. The herd size is shrinking while demand remains high," she said.
"Labor remains the biggest challenge," she added. "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."
Little also said the Biden administration "has not engaged packer processors since the summer."
National Chicken Council President Mike Brown had a similar reaction, noting that while "we haven't seen any proposals, for the chicken industry, this looks like a solution in search of a problem."
“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," he said. "This administration should be looking at the chicken industry as a model of success, instead of creating a boogeyman to justify an unnecessary and expensive foray into our meat supply."
Story updated to include additional NAMI and NCC comment.
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