Consumers are paying higher prices at the grocery for beef, pork and poultry, and the four largest meat packing companies are making record profits, yet the farmers in the middle are losing money.
In a report from the U.S Department of Agriculture, it is estimated that since December 2020, average grocery store prices for beef, pork and poultry have risen by 14%, 12.2%, and 6.6% respectively, while farmers are losing hundreds per head on livestock sold to a limited number of consolidated meat processors.
The limited number of processors for the nation’s protein supply also caused a bottleneck during the early stages of the pandemic in 2020, which led to a meat supply shortage in some areas of the country.
USDA is aiming to reverse those trends by promoting more competitive practices to drive more price transparency and a more competitive market.
“Anywhere from 55%-85% of the market is controlled by the top four producers,” Brian Deese, director of the National Economic Council, said during a news conference with U.S. Secretary of Agriculture Tom Vilsack. “When you see that level of consolidation and price increases, it raises a concern about pandemic profiteering. It isn’t benefiting farmers and ranchers that are growing the product.”
USDA wants to eliminate those impacts on farmers and consumers by focusing on four specific areas:
- Addressing illegal price fixing, enforce antitrust laws and bringing transparency to the meat-processing industry.
- Providing relief to small businesses and workers impacted by the pandemic.
- Providing relief and support to farmers and ranchers suffering from the effects of extreme weather.
- Calling on Congress to make cattle markets more transparent and fairer.
“Goal No. 1 is to make sure farmers get a fair return for their efforts and capital investment, and the second goal is to make sure when consumers go to the grocery store consumers get fair prices,” Vilsack said.
To meet those goals, USDA and the Justice Department are currently carrying out a price-fixing investigation aimed at the poultry-processing industry, which has produced $107 million in payouts through a number of indictments.
Also, earlier this summer, USDA announced it would issue new regulations under the Packers and Stockyards Act, which will make it easier for farmers to bring claims and implement anti-retaliation protections for those who speak out about bad practices, among other regulations.
The USDA also will consider new rules about “product of the USA” labels and how it determines which meats can bear that phrase.
During the news conference, Vilsack shared an account from a farmer who told him he took a hit of $150/head on his cattle but the processor made $1,800/head.
“We need a much more fair and resilient (meat processing) system,” Vilsack said.