Beef Companies Black and White Rooster

By Brian Deese, Sameera Fazili, and Bharat Ramamurti

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The President understands that families have been facing higher prices at the grocery store recently. One-half of those contempo increases are from meat prices—specifically, beef, pork, and poultry. While factors like increased consumer need have played a office, the price increases are besides driven by a lack of competition at a primal clogging point in the meat supply concatenation: meat-processing. Merely four big conglomerates control the majority of the market for each of these iii 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 Assistants is taking bold action to enforce the antitrust laws, heave competition in meat-processing, and push back on pandemic profiteering that is hurting consumers, farmers, and ranchers across the state.

Meat constitutes one-half of nutrient at home price increases. Large toll increases for beefiness, pork, and poultry are driving the contempo cost increases consumers are seeing at the grocery store (a measure commonly known as "food at home"). Together, these three items account for a total 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.ane%, and poultry by vi.6%.

Iv large conglomerates overwhelmingly control meat supply bondage, driving downwardly earnings for farmers while driving upwardly prices for consumers. The meatpacking industry buys cattle, hogs, and chickens from farmers and ranchers, processes information technology, and so sells beef, pork, and poultry on to retailers like grocery stores. The industry is highly consolidated, and serves every bit a key asphyxiate point in the supply chain (see effigy beneath).

Today, just iv firms control approximately 55-85% of the market for these iii products, co-ordinate to U.S. Section of Agronomics data. That reflects dramatic consolidation of the industry over the concluding five decades, equally the large conglomerates take absorbed more than and more than smaller processors. In 1977, the largest iv beef-packing firms controlled just 25% of the market, compared to 82% today. In poultry, the height iv processing firms controlled 35% of the market in 1986, compared to 54% today. And in pork, the top four grunter-processing firms controlled 33% of the market in 1976, compared to 66% today.

That consolidation gives these middlemen the power to squeeze both consumers and farmers and ranchers. In that location'due south a long history of these behemothic meat processors making more and more, while families pay more at the grocery store and farmers and ranchers earn less for their products. Absent this corporate consolidation, prices would be lower for consumers and fairer for farmers and ranchers.

The meat-processors are generating record profits during the pandemic, at the expense of consumers, farmers, and ranchers. The dynamic of a hyper-consolidated pinch point in the supply chain raises real questions about pandemic profiteering. During the pandemic, wholesale prices for beef rose much faster than input prices for cattle. That means that the prices the processors pay to ranchers aren't increasing, but the prices collected by processors from retailers are going upwardly.

At the same fourth dimension, we take seen some of the top firms in this industry generate record gross profits and their highest gross margins in years. Gross profits for some of the leading beef, poultry, and pork processors are at their highest levels in history, and Q1 2021 and Q2 2021 were the nigh profitable quarters in history for some of these processors. Net income for many of these companies is on step to reach historic highs every bit well. (Other pinnacle processors simply don't report publicly on their profits, margins, or income.)

*2021 numbers are projected using the quarterly numbers reported this year.

These record profits, income, and margins underscore the role that meat-processors' dominant market position and power play in increasing meat prices. While factors like consumer demand and input costs are affecting the marketplace, it is the lack of contest that enables meat processors to hike prices for meat while increasing their own profitability. That is, if they faced meaningful competition, the processors would simply be able to excerpt fewer profits if their costs had gone up unexpectedly while keeping prices lower to earn retailers' business.

Some of these companies have also been rewarding their shareholders with large dividends and buybacks during this catamenia. For instance, the big processor JBS provided $2.iii billion in dividends and share buybacks in 2020. It has proposed record loftier dividend payments for 2021, increasing payouts to shareholders by nearly 75% over 2020. Similarly, Tyson recently raised dividends past 6% for fiscal yr 2021, spending $477 million on dividends in the 9 months ending July 2021. It also repurchased $200 meg of shares between September 2020 and July 2021.

These tape profits and dividend payments come at a time when consumers are paying more than to put nutrient on the table, workers are risking their health and safety to keep America fed, and farmers and ranchers are also facing unprecedented droughts, wildfires, and other extreme conditions events that put their herds and farms at chance. Meanwhile, taxpayers accept made historic investments to help businesses keep their doors open and families cope with the economic impacts of this pandemic. These taxpayer investments have kept per capita demand for meat steady, unlike the collapse in demand the meat industry experienced in the Neat Recession.

Every bit nosotros restart the world's largest economy and make great strides in the economic recovery, the Biden-Harris Assistants is committed to restarting right for the American people—consumers and producers alike—past transforming the food system. This is a pivotal moment of opportunity to build dorsum a ameliorate food system that is fair, competitive, distributed, and resilient.

The Biden-Harris Administration and USDA are taking on these issues by:

• Taking strong actions to scissure down on illegal price fixing, enforce antitrust laws, and bring more transparency to the meat-processing industry. USDA is conducting an ongoing joint investigation with the Department of Justice into cost-fixing in the chicken-processing industry, which has already yielded a $107 meg guilty plea by Pilgrim'south Pride and numerous other indictments. USDA has also appear a more robust Packers and Stockyards Human action enforcement policy and new efforts to strengthen Packers and Stockyards Human activity rules, so that meat-processors tin can't use their market dominance to abuse farmers and ranchers. And USDA is creating more than transparency, with new market reports on what beef-processors pay, as well as new rules designed to ensure consumers get what they pay for when meat is labeled "Product of USA."
  
• Providing relief to small businesses and workers hurt by COVID, and creating a more competitive food supply concatenation. USDA will invest $one.4 billion in pandemic assistance to provide relief to pocket-sized producers, processors, distributors, farmers markets, seafood processors, and food and subcontract workers impacted by COVID-nineteen. This includes $700 million to accomplish small operations who take not received previous rounds of federal pandemic aid. USDA volition also provide $700 million to states, tribes, and nonprofit organizations to distribute upwards to $600 per worker in relief payments directly to frontline farmworkers and meatpacking workers who incurred expenses preparing for, preventing exposure to, and responding to the COVID-19 pandemic. USDA volition also invest $500 million in American Rescue Plan Act funds to support new competitive entrants to expand local and regional meat and poultry processing chapters. USDA will provide grants, loans, and technical assistance to create new meat and poultry processing capacity that will compete with the big guys, forcing them to lower prices and actually earn their business organization, and provide farmers and ranchers access to meliorate choices and fairer prices in local and regional nutrient systems.

• Getting ahead of climate change related disruptions by supporting farmers and ranchers from the effects of extreme weather. Unprecedented drought and extreme weather events have brought new challenges for farmers, ranchers, and agricultural workers, on superlative of the celebrated challenges associated with the COVID-19 pandemic. To respond to the drought affecting farmers and ranchers across the West and Midwest, USDA volition aggrandize its Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program (ELAP) to include the price of transporting feed, delivering much-needed relief to affected livestock producers.
  
• Working with Congress to make cattle markets more transparent and fairer. Right now, meatpackers accept outsized power in setting the prices for beef, which are often set in opaque contracts that lock independent livestock producers into prices that aren't the product of free and fair negotiation. The Assistants is encouraged to run into bipartisan legislation by Senators Tester, Fischer, Grassley, Wyden, and others that seek to amend price discovery in the cattle markets—and facilitate bodily negotiation of prices between livestock producers and packers. Nosotros look forward to working with Congress on these important bug, and we hope that they will also expect for means to ensure farmers and ranchers have fair admission to meat-processing capacity.

All together, these actions volition help build a food organisation that works for the American people higher up all else. They will support families, farmers, and workers while preventing bad actors in the supply chain from lining their pockets and getting further alee without accountability. This will brand the food organization fairer and more equitable, more competitive and transparent, and more than distributed and resilient against shocks. In plow, it will increase farmers' and ranchers' earnings, deliver greater value to workers, and offer consumers affordable, healthy food produced closer to home.

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Source: https://www.whitehouse.gov/briefing-room/blog/2021/09/08/addressing-concentration-in-the-meat-processing-industry-to-lower-food-prices-for-american-families/

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