Biden abandons grilling of meat producers while prices remain high

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President Biden’s beef with the meat-packing industry went up in smoke.

For the first three months of 2022, it seemed like Mr. Biden and his advisers talked about little else except the perils of meat industry consolidation.

Beginning with a Jan. 3, 2022, White House forum, Mr. Biden lectured the leading companies of the meat industry, accusing them of exploiting small independent farmers and slamming consumers with high prices. In January 2022 alone, the president addressed the issue four separate times during public remarks.

The president deployed Cabinet secretaries to tell anyone who would listen that consolidation in the meat industry was responsible for soaring inflation and rising grocery store prices. The White House offensive came at a time when Republicans were blaming Mr. Biden and Democrats for spurring high inflation through massive government spending.

Mr. Biden dedicated two paragraphs to the relatively obscure issue of meat-packing consolidation in his most important platform, the State of the Union in 2022.

But since April 2022, it’s been largely crickets from the administration on the issue, even though meat prices have remained relatively unchanged. 

In January 2022, beef cost $7.62 per pound, compared with $7.64 per pound last month, according to the U.S. Department of Agriculture. Still, the issue was notably absent from Mr. Biden’s State of the Union speech this year.

The radio silence is because the administration got the diagnosis and prescription for higher meat prices wrong, experts say. Mr. Biden and his Cabinet blamed the problem on industry consolidation when it should have been focused on the labor and cattle shortages caused by the coronavirus pandemic, according to analysts. 

“This administration talks about expanding capacity for small- and medium-sized meat producers, but the biggest pinch point is labor,” said Lee Schultz, an agriculture specialist with Iowa State University. “We’ve had a very low unemployment rate heading into the pandemic and that continues to be a challenge. Some policy attention needs to be directed at that rather than adding physical space at plants.”  

As Mr. Biden sees it, the meat industry is dominated by four global companies that are abusing their market power by profiteering off the pandemic. He said the conglomerates are driving up consumer costs, underpaying farmers, and tripling their profit margins.

The four companies — Cargill, Tyson Foods, JBS SA, and National Beef Packing Co. — control about 73% of all beef, 67% of all pork, and 54% of all chicken that winds up on consumers’ dinner tables.

The president alleged that industry corporate concentration has empowered the few large players to raise prices at a rate higher than a more competitive industry would allow. All four companies have denied profiteering allegations.

“When corporations have to compete, their profits go up, but your prices go up when they don’t have to compete,” Mr. Biden said during his 2022 State of the Union, the last time he broached the subject. “You’ve got four basic meat-packing facilities. That’s it. You play with them or you don’t get to play at all. And you pay a hell of a lot more. A hell of a lot more because there’s only four.”

Mr. Biden’s prescription is to enable smaller independents to expand their processing capabilities to compete with the bigger companies. That will increase competition, thus lowering prices for meat in the grocery stores, he said.

In January 2022, Mr. Biden doled out $1 billion in American Rescue Plan funds to help independent meat producers access cold storage and other equipment to improve product distribution. He also announced that his administration would work with lenders to provide independent meat companies with more credit to add workers and boost facilities.

The Justice and Agriculture departments at the same time announced an online portal to make it easier for farmers and ranchers to report anti-competitive industry practices. It had received 66 submissions by May 2022, according to the most recent numbers offered by the Agriculture Department.

Yet meat prices have barely budged over the past 15 months. The price of pork remains unchanged at $4.75 per pound, while poultry was $1.62 per pound at the time of Mr. Biden’s remarks, now it’s $1.85.

“The price of beef has not been impacted by the administration’s policies, nor by the flawed narrative surrounding industry concentration, which has been constant for more than a decade. In fact, the entire industry is at record levels of production in an effort to keep pace with demand,” said Sean Heather, vice president of antitrust policy at the U.S. Chamber of Commerce.

The American Farm Bureau Federation and the National Farmers Union — two organizations that hailed Mr. Biden’s efforts last year — both declined to comment for this story.

Dave Anderson, who teaches agricultural economics at Texas A&M University, said Mr. Biden’s efforts will ultimately pay off with lower prices, but the results won’t be seen for a few years.

“I think it takes time to make a difference. There are a lot of long-time lags in this industry, particularly on the beef side,” he said.

The White House says large meat packers were reporting record profit margins before COVID, and that’s evidence that industry consolidation is squeezing consumers and farmers. Their data shows the companies’ net aggregate income jumped from roughly $4 billion in 2016 to more than $6 billion in 2020.

Sarah Little, a spokeswoman for the North American Meat Institute, an industry trade association that represents meat producers and packers, said meat and poultry prices have lagged behind other food products experiencing inflation.

Data from the Bureau of Labor Statistics showed that all food at home, including eggs, fish, and other products, experienced a 12% price increase in 2022 because of inflation, while the price of pork and beef barely changed last year.

“The so-called concentration of the market has not changed but livestock supply and demand has. Most of the new packing capacity funded by the Biden administration has yet to break ground or send products to market,” Ms. Little said.

The White House says that just because Mr. Biden hasn’t talked about meat prices for a while, it doesn’t mean he’s abandoned the issue. A White House spokesperson pointed to a slew of actions taken by the Agriculture Department, including three implemented last month, that are aimed at lowering consumer prices.

Mr. Schulz said the price increases are largely due to plants either shutting down or operating with reduced capacity during the COVID-19 shutdowns. Those factors reduced supply while demand for meat increased. The average American consumed 224.6 pounds of red meat or poultry in 2022, compared to 204.6 pounds a decade ago, according to Agriculture Department data.

There were 28.9 million beef cows in the U.S. as of Jan. 1, down 4% from last year and an 8.5% decrease from 2019.

It takes a while for plants to become operational, especially with the life cycle of beef. For example, it takes a cow roughly two years to reach maturity to produce a calf and, once born, it takes another 20 months for the calf to be ready for the slaughterhouse.

“The biology of the industry dictates the supply that you have. It takes years to produce beef from cattle. Supplies continue to be tight and you are seeing very strong demand for beef. It’s economics 101,” Mr. Schultz said. 

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