Meatpacking Consolidation Concerns Democrats

Democrats are raising antitrust concerns related to the meatpacking industry, accusing major players of profiteering and contributing to inflation.

At a recent House Judiciary antitrust subcommittee hearing, Chairman David Cicilline, D-R.I., argued poultry integrators and consolidation in the food industry in general have pushed poultry farmers into poverty. Republicans countered Democrats were just trying to shift blame for inflation.

“Across the country, food prices are soaring, families are going hungry, and small businesses are suffering,” Ciccilline said in his opening statement.

“Today, nearly every link of America’s food supply chain is dominated by less than a handful of corporations. We’ve seen consolidation trigger more consolidation, which has caused a domino effect throughout our nation’s food supply.”

Cicilline noted four companies control 85% of beef processing, four control two-thirds of the pork market, and four grocery chains control 72% of local markets. He said research indicates only 15 cents of every food dollar goes to farmers.

The North American Meat Institute, however, disputed the assumption that consolidation had led to rising prices, blaming the increases instead on labor shortages.

“Inflation is hurting consumers by erasing the wage gains workers received due to the tight labor market and the pandemic,” Julie Anna Potts, president and CEO of the North American Meat Institute, said in a press release. “It is no wonder the Biden administration and some members of Congress would rather hold press conferences and hearings instead of addressing the labor shortage and supply chain bottlenecks.”

In testimony submitted for the hearing, Potts said USDA scrutiny of the industry keeps antitrust issues in check.

“Farmers have less choice and autonomy in a consolidated food system, and this may force farmers to make decisions they would otherwise reject,” National Farmers Union President Rob Larew told the panel. “Constrained choices and lack of options also reduce bargaining power, and a more consolidated farm and food system has detrimental effects on communities, including population decline and widening income inequality.”

President Joe Biden has criticized the consolidation in the food industry, saying, “Capitalism without competition isn’t capitalism. It’s exploitation.”

But Peter St. Onge, a research fellow in economics at the conservative Heritage Foundation, told lawmakers the meatpacking industry is among the most competitive and efficient in the country and the current inflation is “due to a series of administration blunders.”

“Blaming workers and companies for this administration’s inflationary policies is an irresponsible distraction that threatens to worsen the crisis,” he said.

Separately, a University of Arkansas analysis concluded price discovery in the fed cattle market is functioning effectively and alternative marketing arrangements “do not allow beef packers to increase beef margins and lower cattle prices.”