The Biden administration hopes to reel in the costs families are facing by increasing competition across the economy, with a major focus on meat and poultry processing.
“In too many industries, a handful of giant companies dominate the market,” President Joe Biden said in a virtual press conference on Monday.
“And too often they use their power to squeeze out smaller competitors and stifle new entrepreneurs, making our economy less dynamic and giving themselves free rein to raise prices, reduce options for consumers or exploit workers,” he said.
The meat industry — in which four big corporations control over 80% of the market — is a “textbook example,” he said.
“Without meaningful competition, farmers and ranchers don’t get to choose who they sell to,” he said.
Producers have to take the price processors want to pay, and corporations can use their power to overcharge grocery stores and, ultimately, families, he said.
Fifty years ago, ranchers got over 60 cents of every dollar a family spent on beef. Today they get about 39 cents. Hog farmers got 40 cents to 50 cents. Today they get about 19 cents, he said.
“And the big companies are making massive profits,” he said.
As those profits go up, grocery store prices go up, and the prices farmers see go down, he said.
“This reflects the market being distorted by lack of competition,” he said.
Small, independent farmers and ranches are being driven out of business — sometimes businesses that have been around for generations, he said.
The administration has an action plan to create fair markets and more opportunities for family farmers and ranchers and bring down the price of meat and poultry at grocery stores, he said.
That plan includes investing $1 billion to expand independent meat and poultry processors, strengthening rules to protect farmers, enforcing existing antitrust laws and bringing greater transparency to cattle markets, he said.
The North American Meat Institute, however, contends government intervention in markets won’t help consumers or livestock producers.
For the third time in six months, Biden and the administration have announced the same plan to fund government intervention in an attempt to increase prices for livestock producers while blaming inflation on private industry, said Julie Anna Potts, the Meat Institute’s president and CEO.
“The Biden administration continues to ignore the number one challenge to meat and poultry production — labor shortages,” she said.
“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,” she said.
“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,” she said.
The administration has claimed industry structure is keeping down prices for cattle producers, conveniently ignoring the fact the beef industry has changed little for almost 30 years. Prices reflect supply and demand, the Meat Institute said.