From Bloomberg via Yahoo Finance, September 8:
The Biden administration is taking aim at major meatpackers, charging that “pandemic profiteering” is squeezing consumers and farmers alike, with a few companies that dominate the industry raking in record profits.
White House National Economic Council Director Brian Deese said Wednesday that increases in the prices of beef, pork and poultry are responsible for half the jump in food prices since late 2020, yet farmers have seen little gain in what they are paid by giant meat companies.
“It raises a concern about pandemic profiteering, about companies that are driving price increases in a way that hurts consumers who are going to the grocery store,” Deese said. What’s happened “isn’t benefiting the actual producers, the farmers and the ranchers that are growing the product.”
The comments, at a press briefing at the White House, and in an earlier blog post by three senior Biden administration aides, sent shares in major meat companies down. Sanderson Farms Inc. dropped as much as 1.8%, while JBS SA’s American depositary receipts fell 4.8% and Tyson Foods Inc. slumped as much as 1.9%.
Tyson said it “categorically rejects” the conclusions. High meat prices were driven in part by unprecedented beef demand amid a global pandemic, according to a company statement.
With mid-term elections looming next year, the Biden administration has been showing concern about rising consumer prices as the economy rebounds from Covid-19. Republicans have repeatedly faulted President Joe Biden and Democrats, saying their economic policies have caused prices to rise. The White House says price pressures are temporary and the result of the rebound.
The White House blamed corporate consolidation in recent decades for the price increases. Four companies control 82% of U.S. beef capacity while the pork and poultry sectors have similar levels of concentration, according to U.S. Agriculture Department data....
....MUCH MORE
And from the White House Briefing Room blog, September 8:
Addressing Concentration in the Meat-Processing Industry to Lower Food Prices for American Families
By Brian Deese, Sameera Fazili, and Bharat Ramamurti
The President understands that families have been facing higher prices at the grocery store recently. Half of those recent increases are from meat prices—specifically, beef, pork, and poultry. While factors like increased consumer demand have played a role, the price increases are also driven by a lack of competition at a key bottleneck point in the meat supply chain: meat-processing. Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic. That’s why the Biden-Harris Administration is taking bold action to enforce the antitrust laws, boost competition in meat-processing, and push back on pandemic profiteering that is hurting consumers, farmers, and ranchers across the country.
Meat constitutes half of food at home price increases. Large price increases for beef, pork, and poultry are driving the recent price increases consumers are seeing at the grocery store (a measure commonly known as “food at home”). Together, these three items account for a full half of the price increase for food at home since December 2020. Since that time, prices for beef have risen by 14.0%, pork by 12.1%, and poultry by 6.6%.
Four large conglomerates overwhelmingly control meat supply chains, driving down earnings for farmers while driving up prices for consumers. The meatpacking industry buys cattle, hogs, and chickens from farmers and ranchers, processes it, and then sells beef, pork, and poultry on to retailers like grocery stores. The industry is highly consolidated, and serves as a key choke point in the supply chain (see figure below).
Today, just four firms control approximately 55-85% of the market for these three products, according to U.S. Department of Agriculture data. That reflects dramatic consolidation of the industry over the last five decades, as the large conglomerates have absorbed more and more smaller processors. In 1977, the largest four beef-packing firms controlled just 25% of the market, compared to 82% today. In poultry, the top four processing firms controlled 35% of the market in 1986, compared to 54% today. And in pork, the top four hog-processing firms controlled 33% of the market in 1976, compared to 66% today.
....MUCH MORE
In addition to the handy supply chain schematic the bloggers went on to share:
