As reported in High Plains Journal, the Joe Biden administration started off the new year by dedicating $1 billion toward the Biden-Harris Administration’s Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain, which is designed to support independent meat processors, improve cattle prices for producers and combat inflation.
According to a fact sheet released by The White House briefing room, four large meat-packing companies control 85% of the beef market; four top processing firms control 54% of the poultry market and four processing firms control about 70% of the pork market.
“The meatpackers and processors buy from farmers and sell to retailers like grocery stores, making them a key bottleneck in the food supply chain,” a White House statement read. “When dominant middlemen control so much of the supply chain, they can increase their own profits at the expense of both farmers—who make less—and consumers—who pay more. Most farmers now have little or no choice of buyer for their product and little leverage to negotiate, causing their share of every dollar spent on food to decline. Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared to about $0.39 cents today. Similarly, hog farmers got $0.40 to $0.60 on each dollar spent 50 years ago, down to about $0.19 today. Even as farmers’ share of profits have dwindled, American consumers are paying more—with meat and poultry prices now the single largest contributor to the rising cost of food people consume at home.”
The Biden administration’s plan includes four strategies it believes will rectify some of the major issues facing the meat industry and promote fair competition among producers and processors as well as provide affordable prices for consumers. According to the first strategy will allow the U.S. Department of Agriculture to finance up $375 million in grants for independent processing plants, which will diversify processing capacity. Secondly, the USDA will provide up to $275 million in loans and other support to strengthen financial systems for independent meat processing businesses. The third strategy will be to spend $100 million to fund workforce training in the meat processing sector. Finally, the plan will provide $100 million in reduced overtime inspection costs to help small processing plants keep up with unparalleled demand.
In addition to the American Rescue Plan, USDA has made $32 million in grants to 167 existing meat and poultry processing plants to help them become federally inspected through the Meat and Poultry Inspection Readiness Grants Program. Furthermore, the Biden-Harris administration also promised to issue stronger rules under the Packers and Stockyards Act and new “Product of USA” labeling rules that will allow consumers to better understand where their food comes from.
“The Biden-Harris administration will also work with Congress to make cattle markets fairer and more transparent,” the statement read. “The administration is encouraged to see bipartisan legislation in the Senate by Sens. 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. 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.”
However, some organizations—including the North American Meat Institute—have voiced opposition to The White House’s plan, saying it only throws more money at inflation and does not address labor issues.
“Press conferences and using taxpayer dollars to establish government-sponsored packing and processing plants will not do anything to address the lack of labor at meat and poultry plants and spiking inflation across the economy,” 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. Consumers know better.”
Other groups, like R-CALF USA, see the Biden-Harris proposal as a step in the right direction toward improving competition in the meat industry; however, they are unconvinced the plan will enforce U.S. antitrust laws and the 100-year-old Packers and Stockyards Act.
“Our nation’s cattle industry is in a serious crisis and while we appreciate the administration’s plans to write rules with which to implement portions of the Packers and Stockyards Act, correct the exploitive ‘Product of USA’ beef label, and increase market transparency by requiring more information, as well as its attempt to identify any new, potential violations of competition laws, 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,” said Bill Bullard, R-Calf USA CEO.
It remains to be seen if the Biden-Harris administration’s aggressive plan will be the antidote to issues that have festered for decades, but one thing is for certain, there will be plenty of opinions voiced on the matter as the plan unfolds.
