Biden Announces $1 Billion Investment to Boost Independent Meat Producers
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In 2020, when COVID-19 began spreading across America, the meat industry was hit especially hard early on, with the Trump administration even stepping in to keep processing plants open. The publicity these meatpacking outbreaks received — along with the resulting shortages and limits at grocery stores — helped aim a more public spotlight on something many already knew: America's meat industry has a consolidation problem. Not that the signs weren't already there — including a poultry price-fixing investigation by the Department of Justice — but the pandemic brought this issue to the forefront.
It's a problem Biden has promised to deal with during his presidency, and this week, the Biden-Harris Administration revealed their Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.
The White House billed the plan as offering "four core strategies" that would result in "better earnings for producers and more choices and affordable prices for consumers." They include $1 billion in new funding for independent processors; strengthening of rules for farmers, ranchers, and consumers; better enforcement of those rules; and increased transparency in the cattle market.
"Four large meat-packing companies control 85 percent of the beef market. In poultry, the top four processing firms control 54 percent of the market. And in pork, the top four processing firms control about 70 percent of the market. The meatpackers and processors buy from farmers and sell to retailers like grocery stores, making them a key bottleneck in the food supply chain," the White House stated.
"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 statement continued. "Most farmers now have little or no choice of buyer for their product and little leverage to negotiate, causing their share of every dollar spent on food to decline. Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared to about 39 cents today. Similarly, hog farmers got 40 to 60 cents on each dollar spent 50 years ago, down to about 19 cents today."
Additionally, the Biden administration wrote that "meat and poultry prices [are] now the single largest contributor to the rising cost of food people consume at home," while at the same time, consolidation has also left American supply chains "susceptible to shocks" as we saw during the pandemic, an issue that "leaves us all vulnerable."
The $1 billion in funding to expand independent processing capacity will come from the $1.9 trillion American Rescue Plan, the COVID-19 relief package that passed earlier this year. Those funds will be split between different programs, such as grants to jumpstart existing independent processing projects, more loans for independent producers, support for well-trained workers, technical and research and development assistance, reduced USDA inspection fees, and grants to help small processing facilities reach more customers.
Also slipped into the action plan is a labeling change consumers might find useful: The USDA is looking to update the rules for "Product of USA" labels. "Under current labeling rules, meat can be labeled 'Product of USA,' if it is only processed here — including when meat is raised overseas and then merely processed into cuts of meat here," the White House explains. Forthcoming new rules will hopefully help shoppers "better understand where their meat comes from."