The Biden administration unveiled a $1 billion plan intended to address rising inflation by increasing competition in the meat and poultry industry.
“Over the last few decades, we’ve seen too many industries become dominated by a handful of large companies that control most of the business and most of the opportunities—raising prices and decreasing options for American families, while also squeezing out small businesses and entrepreneurs,” a fact sheet from the Biden administration read.
“The meat and poultry processing sector is a textbook example, with lack of competition hurting consumers, producers, and our economy.”
The administration blamed the supply chain bottlenecks on an oligopoly of four meatpacking companies which control 85% of the packaged beef market, 70% of the pork market, and 54% of the poultry market. Those processors buy from farmers and sell to retailers, making them “a key bottleneck in the food supply chain,” the statement said.
“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,” the statement continued.
“Even as farmers’ share of profits have dwindled, American consumers are paying more—with meat and poultry prices now the single largest contributor to the rising cost of food people consume at home,” it went on. “And, when too few companies control such a large portion of the market, our food supply chains are susceptible to shocks. When COVID-19 or other disasters such as fires or cyberattacks shutter a plant, many ranchers have no other place to take their animals. Our overreliance on just a handful of giant processors leaves us all vulnerable, with any disruptions at these bottlenecks rippling throughout our food system.”
“The Biden-Harris Administration will dedicate $1 billion in American Rescue Plan funds for expansion of independent processing capacity,” the statement read. It then outlined a strategy to use those funds. The US Department of Agriculture identified 8 key needs based on responses to a request for input on how to increase independent processing:
- Expand and diversify meat and poultry processing capacity;
- Increase producer income;
- Provide producers an opportunity to have ownership in processing facilities;
- Create stable, well-paying jobs in rural regions;
- Raise the bar on worker health, safety, training, and wages for meatpacking jobs;
- Spur collaboration among producers and workers;
- Prompt state, tribal, and private co-investment; and
- Provide consumers with more choices.
The administration detailed those needs, and proposed a number of possible solutions to each, in the statement.
The Biden administration’s directive is the result of several weeks of rhetoric blaming corporations for supply chain problems and rising inflation. Last month, White House Press Secretary Jen Psaki put the blame on the “greed” of “meat conglomerates” who were “jacking up prices during a pandemic” to take advantage of consumers, she said.
Massachusetts Democratic Senator Elizabeth Warren also blamed corporations for rising prices. “Giant grocery store chains force high food prices onto American families while rewarding executives & investors with lavish bonuses and stock buybacks. I’m demanding they answer for putting corporate profits over consumers and workers during the pandemic,” Warren tweeted.