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The Cost of Meat Is Rising. Somebody in Congress Is Working on a Solution for It!


Nobody was hurt physically when a fire broke out in August 2019 at a Tyson Foods-owned beef packing plant in Holcomb, Kansas, but lots of wallets were.

The resulting four-month closure of the country’s second-largest beef packing plant, which produced approximately 6% of the country’s total beef slaughter at the time, resulted in a 10% increase in wholesale beef prices, affecting restaurant chains, grocery stores, and individual consumers shopping in the meat aisle.

That a single fire at a single meat packing facility could have such a dramatic effect on beef prices reflects years of consolidation in the meat sector. Since 1980, an average of nearly 17,000 cattle ranchers have gone out of business each year, according to a 2019 analysis by the Open Markets Institute, a think tank focused on anti-monopoly issues.

In the mid-1990s, approximately 90% of hogs in the United States were sold into competitive marketplaces; by 2019, that figure had dropped to less than 7%, the report states. Four mega meat packers dominate 85% of the beef industry, 54% of the poultry market, and 70% of the hog processing business.

While the Holcomb fire brought the issue of meat market concentration to the forefront of customer consciousness as prices increased, the issue has been exposed repeatedly over the last three years. Due to the scarcity of meat processors, one-off incidents — such as ransomware attacks or pandemic outbreaks — at even a few meat processing plants can significantly restrict the number of animals that can be processed into consumable meat across the country.

For example, during the early stages of the pandemic, the number of pigs that could be processed decreased by 45 percent when COVID-19 spread across factory assembly lines. Pork breeders were forced to “liquidate” perfectly healthy pigs they could no longer afford to feed due to a lack of alternative meat processors. Customers either couldn’t locate their normal protein options in grocery stores or were forced to pay significantly more for them.

Cost of Meat Is Rising

Hundreds of miles away from Iowa’s cattle ranches and Texas’ meat processors, federal officials in Washington, D.C. are discussing the meat industry’s future. As prices for basic products continue to rise and an increasing number of small farmers and meat producers fail, a rare bipartisan alliance in Congress is seeking to strengthen anti-competition regulations.

The coronavirus pandemic demonstrated “how efficient the supply chain is [in normal circumstances], but also how vulnerable it is,” according to a Republican Senate aide who requested anonymity to discuss reform efforts, which include a new piece of legislation and enhanced enforcement of an existing law. “Everyone’s mind is on how we got here. And what can we do to rectify the situation?”

Reduced competition has resulted in significant price increases for customers. The White House stated in September 2021 that meat sales account for half of the total price hikes shoppers notice at grocery check out lines. Last year, beef prices increased 14% in nine months, hog prices increased 13%, and poultry prices increased 7%.

Meanwhile, the corporations responsible for market concentration, which harmed both farmers and consumers, had a financial bonanza as a result of constricted supply: The White House revealed in December that the gross revenues of four of the top meat processing companies—Tyson, JBS, Marfrig, and Seaboard—have climbed collectively by more than 120 percent since the pandemic began, while their combined net income has increased by 500 percent.

“It is to their advantage to take advantage of these market structures. It is in their best interests to reduce labour costs and petition the government for favourable food processing and safety regulations,” explains Claire Kelloway, the Open Markets Institute’s programme manager for fair food and farming systems.

“It is not in their best interests to invest in distributed and robust processing, which is what a growing number of people are demanding now in light of how these massive concentrated factories have failed and crumbled in the face of unforeseen shock.”

However, Congress intends to force them to try through the passage of two significant bipartisan initiatives currently under consideration. The Cattle Price Discovery and Transparency Act, introduced by Republican Senators Chuck Grassley of Iowa and Deb Fischer of Nebraska, along with Democrats Jon Tester of Montana and Ron Wyden of Oregon, would establish more equitable standards in the highly concentrated cattle market.

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This would be accomplished by setting regional obligatory minimum criteria for the proportion of cattle that meat packers must purchase from cattle farms in accordance with established guidelines, ensuring that ranchers are not left with an excess of supply and nowhere to unload it. Among other provisions, the bill would compel the US Department of Agriculture (USDA) to establish and maintain a publicly accessible library of marketing contracts, which would include information regarding the duration and terms of contracts between producers and meat packers.

Senate Republican aides claim they are working with Democratic Sen. Debbie Stabenow of Michigan, Chair of the Senate Committee on Agriculture, Nutrition, and Forestry, on some “slight technical improvements that will make implementation easier.”

Cost of Meat Is Rising

Following that, the bill would proceed to the markup stage, where it might be debated or altered before to being brought to a vote. These types of bills are frequently bundled together in larger, omnibus pieces of legislation. One such vehicle might be the next farm bill, which the industry hopes will be enacted before the current farm bill expires in 2023.

Cora Fox, the Iowa Cattlemen’s Association’s director of government relations, believes the adjustments cannot come soon enough. Many of the farmers in her trade organisation had only one or two customers for their cattle, thus lowering prices. “We have endured far too many market disruptions,” Fox adds. “I am aware that this will have a long-term effect on the number of independent livestock feeders we have.”

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However, pork and poultry producers would not gain from this legislation. It is not because those sectors are free of problems, but because “chicken and pork” are “too far gone,” according to the GOP Senate aide, referring to how vertically integrated these sectors are, with large companies owning and controlling multiple stages of production, from hatcheries to chicken feed mills to slaughterhouses and marketing. “They’re far too consolidated,” the aide observes. “There is no going back.”

Another law would have far-reaching consequences for the beef sector as a whole. After the Holcomb fire forced the closure of a major beef plant for months and COVID-19 forced the closure of numerous meat packing plants across the country for days at a time, a Memorial Day 2021 ransomware attack brought cattle slaughtering at JBS’s US plants to a halt for a day during one of the most popular grilling weekends of the year.

According to the Wall Street Journal, prices for bone-in pork butts increased by 25%. Once again, hog farmers were trapped with hungry pigs that were scheduled to be delivered to meat processors.

JBS, which produces almost one-fifth of the nation’s meat supply, paid a $11 million ransom to protect its consumers from additional disruptions. However, Democratic Senator Tester and Republican Senators Grassley and Mike Rounds of South Dakota contended that the interlude demonstrated the dangers of business consolidation to the country’s food supply.

They introduced legislation to establish a special investigator with subpoena authority within the USDA to work with the Department of Justice (DOJ), the Federal Trade Commission, and the Department of Homeland Security to strengthen enforcement of a law, the 1921 Packers and Stockyards Act, that imposes penalties on businesses that violate anti-competition rules. “A single cyberattack that threatens the food we eat demonstrates that something must be done, and quickly,” Tester said in June, when the legislation was announced.

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Rounds, Tester, and Grassley all live in agricultural areas, but Big Meat is grabbing the attention of legislators outside the flyover states as well. Sen. Elizabeth Warren, a Massachusetts Democrat, and Rep. Mondaire Jones, a New York Democrat, co-authored a letter to the DOJ on Feb. 16 urging it to “scrutinise” Cargill Inc. and Continental Grain Co.’s proposed $4.5 billion merger of Sanderson Farms and Wayne Farms, the country’s third- and sixth-largest poultry processors, respectively.

“This planned megamerger raises serious antitrust issues in an industry already characterised by price fixing, labour abuses, and excessive consolidation,” the legislators stated. While the Holcomb fire was contained in 2019, congressional efforts to avoid such a disaster from having a disproportionate impact on the meat sector are only getting started.

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