Biden aims to help small meat packers as prices skyrocket
US President Joe Biden speaks at a virtual meeting on cutting meat costs through increased competition in the meat processing industry in the South Court Auditorium of the Eisenhower Executive Office Building on January 3, 2022 in Washington, DC.
Sarah Silbiger | Getty Images
WASHINGTON – President Joe Biden met with family farmers and ranchers on Monday to highlight his administration’s continued efforts to support independent meat processors and to pressure the four biggest meat packers to lower prices for consumers.
With meat and poultry prices driving the broader rise in the cost of groceries nationwide, the White House has spent months arguing that anti-competitive consolidation within the industry Meat packaging is the cause of the price hike.
Four companies – Tyson, JBS, Marfrig and Seaboard – control up to 85% of the nation’s meat-packing business, according to a White House estimate.
Overall, the price of groceries has climbed 6.4% in the past year, according to November data from the US Department of Agriculture. Yet the prices of meat, poultry, fish and eggs increased even more during the same period, at a rate of 12.8%.
“As profits increase [at the biggest meatpackers], the prices you see in grocery stores are increasing proportionately, ”Biden said at Monday’s White House event.
At the same time, he said, “the prices farmers receive for the products they put on the market are falling. This reflects the distortion of the market by the lack of competition.”
The administration’s plan to tackle this lack of competition centers on supporting smaller, independent meat packers, essentially creating new competition for the big four.
“Capitalism without competition is not capitalism. It is exploitation,” Biden said. “This is what we are seeing in the meat and poultry industries,” he added.
The industry rebuffed Biden’s remarks. Following the White House event, Julie Anna Potts, president of the North American Meat Institute, a leading meat packaging industry group, said on Monday that the White House was ignoring the number one challenge of the meat packaging industry: labor shortages.
“Press conferences and the use of taxpayer dollars to establish government-sponsored packaging and processing plants will do nothing to address labor shortages in meat and poultry factories and to drive up inflation in the economy, ”Potts said in a statement to CNBC.
“The administration wants the American people to think that the meat and poultry industry is unique and that it doesn’t have the same problems causing inflation in the economy, such as rising input costs , energy costs, labor shortages and transportation issues, ”said Potts. “Consumers know better.”
Accompanied by Attorney General Merrick Garland and Agriculture Secretary Tom Vilsack, Biden detailed an ongoing effort at the USDA to allocate around $ 1 billion in Covid relief funds to support independent meat packers and lower barriers when entering the industry.
While the White House has called the event a major “announcement” of a “plan of action,” most of the individual elements that make up the plan have already been announced, some as early as July of last year.
They include about $ 375 million in gap funding grants to help independent meat processors increase their capacity to better compete with dominant players in the industry.
The plan also includes $ 100 million in loan guarantees to private lenders, which the USDA says will release up to $ 1 billion in new loans immediately to help build new storage and distribution infrastructure. of food. These loan guarantees were first announced in December of last year.
An additional $ 275 million will be allocated to fill an existing credit gap for independent meat packers, according to a White House fact sheet released on Monday. This money appears to be part of a $ 500 million block first announced by Vilsack in July of last year.
Another element of Biden’s action plan involves greater coordination between the Justice Department and the Agriculture Department to crack down on illegal anti-competitive practices in the food industry.
Garland and Vilsack announced Monday that within 30 days a new online portal will be launched for the public to report potential violations of competition laws in the marketplace.
On a broader level, however, the White House’s effort to blame the big meat packers for food price inflation has its roots at least in part in politics.
Polls show systematically that inflation is the biggest economic concern of Americans. Public anger over the high prices has helped push Biden’s approval ratings to record highs in recent months.
It also contributed to the collapse late last month of Biden’s domestic spending bill, the Build Back Better Act.
After being passed in the House last year, the legislation collapsed in the Senate when Senator Joe Manchin, a conservative Democrat from West Virginia, cited inflation as the main reason he could not support the approximately $ 1.75 trillion bill, which contained transformative investments. in the social safety net and renewable energy.
Still, economists say there isn’t much Biden can do in the short term to reverse the inflationary trends that are being driven by the pandemic-fueled economic changes and disruption around the world.
Meanwhile, Biden’s own administration recently admitted that soaring meat and poultry prices were due to the same factors that are driving price hikes everywhere else: high demand, fewer available workers, and a chain of global supply struggling to recover from two years of the pandemic.
USDA Home Food Index, which tracks consumer food prices, said in its report last month that the price of meat, poultry and eggs was “driven by strong domestic and international demand, labor shortages. ‘labor, supply chain disruptions and high costs of feed and other inputs’.