DES MOINES, Iowa – The Biden administration announced Monday it will allocate $1 billion to expand independent beef, pork and chicken processing in an effort to increase competition and reduce costs for consumers.
The move comes as President Joe Biden faces growing political and public angst over rising inflation, which soared to a 39-year high in November, the latest data available. An ABC News/Ipsos poll last month found 57% of Americans disapprove of Biden’s handling of the economy.
Biden is meeting Monday with farmers, ranchers and independent processors to roll out the initiative, tapping the $1.9 trillion American Rescue Act to fund the effort. The White House says consolidation in the meat industry is at least partly to blame for the skyrocketing prices.
The price of groceries has climbed 6.4% over the previous 12 months, according to the November data. That includes a 12.8% spike in the price of meat, poultry, fish and eggs.
Four large meatpacking companies control 85% of beef processing, and four firms control 54% of poultry processing and about 70% of pork processing, the Biden administration said in a statement on Monday.
Biden’s plan calls for providing financing, worker training and technical assistance to independent companies expanding meat processing capacity.
Sarah Little, a spokeswoman for the North American Meat Institute, whose members include giant processors Cargill Inc., Tyson Foods, JBS USA and National Beef Packing Co., said the price increases are being driven by a labor shortage and other factors, not by consolidation.
“The meat and poultry industry’s biggest challenge now is the labor shortage,” Little said in an email. “In addition, these companies have the same problems as any other industry: energy costs have risen, input costs have risen, transportation costs have risen. This all leads to higher prices for consumers, just like other food companies and other industries.”
This is not the first time Biden has taken aim at corporate America as he seeks to curb inflation. In November, Biden asked the Federal Trade Commission to investigate whether oil and gas companies are engaging in “illegal conduct” by profiting from high gas prices that have, like meat prices, also skyrocketed during the pandemic.
Little said prices for producers have rebounded since the pandemic hit in 2020 and caused meatpacking plants to close as workers became sick with COVID-19.
“The market has already begun to balance itself,” Little said. For example, prices for cattle producers have pushed close to record highs. “This is because packers have begun to clear the backlog of cattle created by the pandemic. The herd size is shrinking while demand remains high,” Little said.
She said access to labor is the biggest hurdle that packers face in maintaining the meat supply. “New capacity and expanded capacity created by the government will have the same problem,” she said.
Biden also wants to give producers selling their cattle more information about pricing, address consumer labeling issues, and strengthen a law designed to combat meatpacker abuses.
“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 White House said.
MORE: ‘We’re fighting for a way of life’: Pandemic causes Iowa cattle farmers to lose money while consumers pay more
The administration said the concentration of production in the meatpacking industry makes it susceptible to shocks — such as the global pandemic, fires or cyberattacks — that temporarily shutter processing plants.
The reduced slaughter capacity drives down prices for producers while pushing consumers’ costs higher, it said.
MORE: A Guatemalan immigrant takes on big ag, seeks to set farmers free by starting their own chicken processing plant in Iowa
Contributing: USA TODAY’s Joey Garrison
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at firstname.lastname@example.org or 515-284-8457.
‘This too shall pass away’ this famous Persian adage seems to be defeating us again and again in the case of COVID-19. Despite every effort