2202-endflap-meat

End Flap: Biden vs. the Meat Industry

Jan. 27, 2022
It’s hard not to wonder: will concentration in the meat & poultry industry lead to antitrust action?

It seems like it’s game on between Joe Biden and the meat industry.

The president’s harsh criticism of meat and poultry processing companies culminated in a virtual meeting at the White House on January 3. On that occasion, Biden announced a plan to encourage more competition in the meat industry, through grants for smaller processors and other measures. The attendees were mostly farmers and ranchers; processors were notable by their absence.

Biden and other executive branch personnel have been attacking the meat & poultry sector for its high degree of concentration. Now rumblings are starting to come from the U.S. Dept. of Justice about antitrust enforcement.

As we all know, market concentration in the meat & poultry industry has been criticized for a long time, and some actions have gone beyond criticism. The major chicken companies have been fighting a slew of cases accusing them of price-fixing, including one criminal case that ended up in a mistrial.

Add to all this the spike in meat prices over the past six months or so, and you can see why the meat industry might have an image problem. Or, shall we say, a bigger problem than it already had.

Let’s face it: For a long time, America has had a love-hate relationship with meat. We love meat because, properly prepared, it’s delicious. It’s versatile, it’s loaded with protein, and most of us grew up eating it at least twice a day.

But meat also attracts a lot of hate, for a lot of reasons. Excessive consumption leads to health problems. Raising cattle, at least in contemporary mass production methods, is associated with all kinds of ecological damage, from cows belching methane (no, really) to forests being destroyed to clear land for feed crops.

Then came COVID, which hammered the food industry hard, and the meat & poultry sector hardest of all. One big plant after another got shut down, roiling the supply chain. Meat companies got criticism for shutting down; they got more for staying open.

Much of this criticism centered on how its mega-plants were affected by the disease. They became epicenters of infection, and the shutdown of a single plant profoundly affected overall processing capacity for whatever species was handled there. This situation highlighted the degree of concentration in processing and led to increased calls for antitrust enforcement.

There are two basic schools of thought on antitrust. The laissez-faire approach holds that as long as consumers are not harmed, any degree of concentration in an industry is none of the government’s concern. That view prevailed in this country for a long time. But it’s being supplanted by a more expansive one, which says that the interests of all players and potential players in a market must also be considered.

It’s hard to see how the meat processing industry, as currently constituted, can meet either of these standards.

Growers have railed for years against the processors’ long-standing practice of forcing growers to buy young animals and other supplies from them, then sell back the grown animals at the processor’s price. And inflation is starting to erode the “best for the consumer” standard. Rightly or wrongly, processing concentration is getting blamed for skyrocketing meat prices.

As I see it, Big Meat has several options: 1. Do nothing and hope Biden and the Democrats lose the next few elections; 2. Do nothing and possibly get hammered with court-mandated breakups years from now; 3. Work with Biden to achieve at least a reasonable facsimile of diversification.

Yes, I know I’m asking them to nurture potential competitors. But when the alternative is destruction of their companies as now constituted, that doesn’t seem so unreasonable.

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