US President Joe Biden and his deputy, Kamala Harris, have launched a US$1 billion action plan to reduce the power of a handful of large companies that have been controlling the American meat and poultry supply chains.
The move follows the signing of an executive order by President Biden in July to promote competition in the American economy and comes at a time when Americans are facing record inflation, which saw a 6.4% price jump in overall food prices in November with eggs and poultry rising even further.
In a meeting with farmers, ranchers and independent processors, President Biden said the plan would focus on 4 core strategies:
Earlier this year, Tyson Foods rejected similar White House statements, saying it was inaccurate to suggest that consolidation was leading to higher prices. It argued that scale allowed for greater efficiency and lower prices, adding that it had invested £15 billion in 11,000 independent farms to source chickens, cattle and pigs.
Sarah Little, North American Meat Institute spokeswoman, told Bloomberg that labour remained a huge challenge and was one reason for the rise in food prices. “Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce. New capacity and expanded capacity created by the government will have the same problem,” she said.
In a fact sheet released by the White House, the Biden administration says the meat and poultry processing sectors is a textbook example where a lack of competition is hurting consumers, producers and the US economy.
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“Four large meat-packing companies control 85% of the beef market. In poultry, the top 4 processing firms control 54% of the market. And in pork, the top 4 processing firms control about 70% of the market. The meatpackers and processors buy from farmers and sell to retailers, like grocery stores, making them a key bottleneck in the food supply chain.
“When dominant middlemen control so much of the supply chain, they can increase their own profits at the expense of both farmers, who make less, and consumers, who pay more. Most farmers now have little or no choice of buyer for their product and little leverage to negotiate, causing their share of every dollar spent on food to decline.”
And even as farmers’ share of profits have dwindled, American consumers are paying more – with meat and poultry pries now the single largest contributor to the rising cost of food people consume at home.
The Biden administration is also concerned that when too few companies control such a large portion of the market, the US food supply chains are more susceptible to shocks caused by, for example, Covid-19, cyber-attacks, or fires. Over-reliance on a handful of giant processors leaves everyone more vulnerable, it said.