Where's The Beef??? The United States
“Four large conglomerates overwhelmingly control meat supply chains, driving down earnings for farmers while driving up prices for consumers,” White House September 8, 2021 Blog
By Robert Thomas
Part Five Of A Series
According to the Biden Administration the consolidation in the US meat packing industry has had negative effects on what US farmers/ranchers and feedlot operators receive for their animals.
With the United States and Canadian cattle markets integrated - due to the dominance of north - south trade in the cattle markets - prices are often driven by the much larger US market.
Consolidation in the packing industry has lead to a few players not only dominating the North American meat processing industry but on a world scale.
In the case of JBS SA - who operate a plant at Brook’s Alberta - became the world’s top meat packer through a series of mergers and acquisitions which consolidated the market.
JBS SA acquired Swift and Company in 2007, Smithfield Foods in 2008, Pilgrim’s Pride in 2009 and the pork processing side of Cargill Meat Solutions in 2015.
The Joe Biden Administration has started to move against consolidation in the packing industry through anti-trust legislation as well as supplying federal funding to help establish smaller regional packing plants to encourage competition.
In July 2021 the United States Department of Agriculture (USDA) announced a $500 million initiative through the Building Back Better Initiative (through the American Rescue Plan) for new meat packing facilities and $150 million to existing small and very small meat processors.
In total $1 billion USD was made available to encourage the construction or new or the upgrading of smaller US meat processing companies.
The move is designed to “to expand processing capacity and increase competition in meat and poultry processing to make agricultural markets more accessible, fair, competitive, and resilient for American farmers and ranchers,” the USDA said in a statement announcing the funding.
US President Joe Biden announced the funding after meeting with US farmers.
"In too many industries, a handful of giant companies dominate the market," Biden said at the meeting.
“And too often they use their power to squeeze out smaller competitors and stifle new entrepreneurs, making our economy less dynamic, giving themselves free rein to raise prices, reduce options for consumers or exploit workers.”
"The meat industry is a textbook example," Biden said.
The United States Department of Agriculture (USDA) tracks the prices paid at retail, wholesale and fed cattle prices. Those statistics show over time a shrinking percentage paid to feedlots.
The USDA statistics show in 2017 fed steers earned 44.9 percent of the final retail price, in 2019 it was down to 42.6 percent and in 2021 it was 36.8 percent.
It is not just in the cattle business where the packer consolidation has occurred it is throughout the entire US meat industry.
Professor Marian Nestle a highly respected and recognized expert on nutrition, food studies and public health at New York University (NYU) - she has written numerous books and even appeared in the documentary Super Size Me 2: Holy Chicken - said the US meat packing industry is dominated by four main processors who use their economic muscle to control the market.
Professor Marian Nestle in Super Size Me 2: Holy Chicken
“The big four meat packing companies control 85% of the market, so they get to call the shots, and do. This makes it tough for meat producers who have no choice about where and how to get their animals slaughtered. That’s a relatively new phenomenon, exposed during the pandemic. Small meat producers have had problems for decades. USDA has always favored Big Meat and ignored the little guys. The pandemic changed that to some extent, but it remains so be seen how the new programs will play out,” Professor Nestle told MJ Independent.
A main part of the breakthrough documentary was how the large chicken processors not only control the processing market but how they use that clout to control all aspects of the industry.
According to the documentary the giants in the processing industry were shown in the industry to control what farmers received baby chicks, feed and then had a pricing regime that was said to force producers into massive debt and “slavery” to the large processors.
A main factor with the mega plants over the past couple of years has been supply chain issues plus labour shortages due to the pandemic sweeping through processing plants and not just making workers sick but also dying.
Some market watchers point out the double digit price of meat - 14 percent for pork and 20 percent in the United States - was due to the COVID 19 pandemic and how the virus swept through the plants leading to shutdowns and lower supplies raising consumer prices.
But a look at Tyson Foods - the largest meat processor in the United States - shows profits of $3 billion in 2021.
In the last quarter Tyson reported profits of $1 billion I its United States operations.
There has been some success on the legal front to prove manipulation in beef pricing in the United States.
In February 2022 JBS SA in the United States agreed to pay $52.5 million to settle litigation accusing the firm and others - Cargill Inc, National Beef Packing Co and Tyson Foods Inc - of conspiring to limit supply and drive up prices and profits in the $63 billion a year US beef industry.
The other three beef packers named in the lawsuit, Cargill Inc, National Beef Packing Company and Tyson Foods Inc, are still before the US Federal Court.
The plight of the American beef producer was documented in a December 2021 article which appeared in the New York Times.
The article dealt with the plight of American ranchers who, due to low prices and increasing costs, are losing money in a time where the price of Beef at the consumer level is soaring.
The problems identified has impacted Canada, or at least in theory, as the major meat processors are headed to court in Canada.
A pair of calves out grazing near Moose Jaw - MJ Independent photo
Canadian Class Action Launched In Quebec
With JBS SA settling the class action in the United States a similar class action lawsuit has been filed in Quebec.
A class action lawsuit has been filed against Cargill in the United States and Canada, JBS in both the United States and Canada, Swift Beef Company, Tyson Foods in the United States and National Beef Packing LLC.
In their class action lawsuit filed March 24, 2022 Montreal based law firm Belleau Lapointe claim there is a cartel existing in the beef processing industry which has conspired as a cartel to restricting beef supply keeping up prices artificially for beef.
“At least from January 1, 2015, and still to this day the Defendants are plotting among themselves and with others in order to fix, maintain, control, prevent, reduce or eliminate production or supply of Beef and to fix, maintain or to control the price of it in Quebec and elsewhere, and thus unduly reduce competition (hereinafter, the “Cartel,” the court filing reads.
The lawsuit requests an undefined amount of compensation for anyone who purchased beef in Quebec from January 1st, 2015.
At the present time none of the defendants has filed a statement of defense in the lawsuit and as such none of the allegations have been proven in a Court of Law.