How Consolidation by Meatpacking Giants is Hurting Farmers and Consumers, and What the Biden Administration is Doing About It

Blog | November 4, 2024

How Consolidation by Meatpacking Giants is Hurting Farmers and Consumers, and What the Biden Administration is Doing About It

by Hannah Tremblay

Our food belongs in the hands of many

Corporate consolidation in the meatpacking industry: bad for farmers and consumers

Our food system has become more consolidated and less competitive over the past several decades. This consolidation means just a few companies control most agricultural inputs, like seeds and fertilizer, as well as how and where farmers can sell what they produce. The issue is particularly dire in the livestock industry, where four large meatpackers (companies that slaughter, process, package and distribute meat) control over 80% of the beef market.

This consolidation has led to lower prices paid to farmers and higher prices paid by consumers. While the farmers' share of the price of beef has dropped by 14% over the last five years, the price of beef in the supermarket has increased. This consolidation is driving farmers out of business and off their land - the U.S. lost 106,884of its beef operations (representing 15%) between the 2017 and 2022, according to the USDA census report.

Recent USDA efforts to address consolidation

President Biden has made it a priority to address competition issues; his Executive Order on Promoting Competition in the American Economy included initiatives that empower USDA to stop abusive practices of meat processors and encouraged antitrust agents to focus efforts on agricultural markets in particular.

Even late into its term, the Administration continues its work to fight consolidation across the agricultural industry. At a Farmers and Ranchers in Action event at the White House last month, Secretary of Agriculture Tom Vilsack announced several new actions the Administration is planning to take.

"For the past 40 years, USDA has largely not fully enforced our fair and competitive practice laws," Vilsack said. "This suite of initiatives are really about promoting choice, about lowering costs for farmers, about a food system that's more resilient and ultimately lower costs for consumers."

Vilsack announced that the USDA has published an interim report on competition in the meat industry. The report identifies hidden feeds and anti-competitive pricing strategies and is a crucial first step in addressing the issue.

Vilsack also announced a new rulemaking effort under the Packers & Stockyards Act to increase fairness in fed cattle (fattened cattle leaving a feedlot to be sold to slaughter) markets. As part of this effort, USDA will seek input and public comments on proposals to make the fed cattle market more competitive. The USDA believes that more transparency and competition is needed in the contracts between ranchers and the processors buying fed cattle, who can squeeze producers and drive down prices.

Finally, Vilsack announced that the USDA is increasing funding and research capacity in order to increase transparency and improve access to seeds, in order to increase access to diverse, resilient and competitive seed varieties, an important step towards increasing competition in this important input market.

Biden Administration announces further investments to strengthen competition

On October 30, USDA Deputy Secretary Xochitl Torres Small announced investments by the Biden Administration to strengthen farms and businesses by expanding fertilizer production and expanding independent meat processing capacity, which it hopes will lower fertilizer costs for farmers, increase competition and lower food costs for consumers.

Fertilizer Projection Expansion Program Grants, funded by the Commodity Credit Corporation, will award $120 million to six fertilizer projects in Arkansas, California, Illinois, South Dakota, Washington and Wisconsin. The project funds independent business owners to modernize equipment and build production facilities.

Additionally, the USDA is awarding $20.2 million to 26 projects through the Local Meat Capacity grant program to expand processing capacity of the meat and poultry industry, giving producers more options when it comes to processing their animals.

"When we invest in domestic supply chains, we drive down input costs and increase options for farmers," Deputy Secretary Torres Small said. "Through today's investments to make more fertilizer and process meat locally, the Biden-Harris Administration is bringing jobs back to the United States, lowering costs for families, and supporting farmer income."

To date, the USDA has funded a total of 67 projects and $368 million through Fertilizer Production Expansion Program Grants and 97 projects at $55.8 million through the Local Meat Capacity program.

Looking ahead and taking action

These rules and initiatives are a good first step in fixing the consolidation that has run amok in our food system, but the USDA must continue to rebuild their authority under the Packers and Stockyards Act. The rulemaking process takes years and could easily be undone by a future administration with different policy priorities. Vice President Harris has committed to continuing this work, while former President Trump's campaign has endorsed a get-big-or-get-out stance on agriculture, meaning that the upcoming Presidential Election will have a huge impact on this progress towards increasing competition in our agriculture system.

Want to support more efforts to increase fairness of our food system and support family farmers? Take action and support the LOCAL Foods Act!

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