Meat industry consolidation creates a costly cookout

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Consumers will pay 17 percent more — or about $10 — for their Fourth of July cookouts this year, according to a marketbasket survey completed by the American Farm Bureau Federation.

The largest year-to-year price increase is for the ground beef Americans will use to shape their hamburger patties. The survey found that the retail price for two pounds of ground beef is currently at a staggering $11.12, up 36 percent from last year.

Ongoing supply chain disruptions, the war in Ukraine, and inflation were all cited in the survey as drivers of the rising costs, but there’s another factor to consider: corporate consolidation.

Today, the “Big Four” meatpacking corporations — Tyson, JBS, Cargill, and National Beef Packing — control around 85 percent of U.S. steer and heifer slaughter, more than twice the market share that spurred Congress to enact antitrust legislation in 1921. A White House memo published in December 2021 stated that these companies have enjoyed an increase in their net margins of over 300 percent since before the pandemic. This cash surplus has allowed them to announce over a billion dollars in new dividends and stock buybacks, on top of the more than $3 billion they paid out to shareholders in the past two years.

While multinational meatpackers marinate in their record earnings, Americans get burnt. In an oligopoly like we have today, companies have little incentive to compete for either consumer market share or for the livestock they need for their finished product. This means that producers get paid less, and consumers have to pay more — all while corporate shareholders reap the benefits.

On the first business day of 2022, President Joe Biden announced his administration’s Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply ChainIt outlined four core strategies to create an industry that delivers “better earnings for producers and more choices and affordable prices for consumers.”

One of those strategies is to work to increase transparency and true price discovery in the cattle market. Two bills currently introduced in the House and Senate seek to accomplish that goal: the Meat and Poultry Special Investigator Act of 2022, and the Cattle Price Discovery and Transparency Act of 2022.

Led by Chairwoman Debbie Stabenow (D-Mich.), the Senate Agriculture Committee recently advanced both bills nearly unanimously with bipartisan support. They now await approval by the full Senate.

Let’s be clear. Producer-led organizations — like the U.S. Cattlemen’s Association and the National Farmers Union, along with state cattlemen groups such as the Iowa Cattlemen’s Association, Nebraska Cattlemen, the Independent Cattlemen’s Association of Texas, and others — support these bills. Packer-allied groups — like the North American Meat Institute and others — are opposed to these bills.

This Independence Day, let’s turn up the heat on corporate consolidation. It’s time to pass the Meat and Poultry Special Investigator Act and the Cattle Price Discovery and Transparency Act.

Jack Payne currently serves as the regional director for California and Nevada at the U.S. Cattlemen’s Association. He owns and operates Nevada Livestock Marketing in Fallon, Nevada.

Tags Joe Biden meat industry consolidation

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