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Roundtable on American meat industry consolidation dedicates US$1 billion for increased processing capacity

By: Shaun Haney

January 3, 2022

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Along with United States Department of Agriculture (USDA) Secretary Tom Vilsack and Attorney General Merrick Garland, U.S. President Joe Biden hosted a roundtable to address consolidation in the meat industry and the impacts on the cattle sector.

President Biden opened the roundtable, held January 3, 2022, by mentioning the 50-14 proposed legislation by Tester/Grassley; how the producer is getting less of the total grocery dollar in comparison to the past; and, current significant packer margins.

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As part of the roundtable, it was announced the Biden-Harris administration plans to dedicate $1 billion in American Rescue Plan funds for expansion of independent processing capacity.

USDA reviewed nearly 450 comments received over the summer in response to its request for input on how best to increase independent processing capacity. Through their analysis of stakeholder input, USDA identified an urgent need to:

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In response to the Biden administrations announcement the North American Meat Institute (NAMI), a group representing the packing industry asked the following questions:

Watch the public version of the roundtable below:

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The USDA will increase available funding and is releasing new program details to support the meat and poultry supply chain. Specifically, the Biden-Harris Administration will (the following copy is directly from the U.S. Biden administration):

Expand independent processing capacity

Support workers and the independent processor industry

Promote innovation and lower barriers to entry via publicly accessible expert knowledge.

Meat and poultry processing is a complex and technical sector that requires strict adherence to a host of environmental, food safety, and worker safety requirements. Creating new business models that support both workers and producers is similarly complex and time-intensive. At the same time, processors need access to new and emerging innovative practices and technologies. USDA will invest an estimated $50 million in technical assistance and research and development to help independent business owners, entrepreneurs, producers, and other groups, such as cooperatives and worker associations, create new capacity or expand existing capacity.

The government will:

These changes will allow these facilities to serve more customers in more markets. An additional round of funding for this program will be made available through a forthcoming Request for Applications.

The Biden-Harris Administration will strengthen the rules that protect farmers, ranchers, and consumers. Specifically, in 2022, the Biden-Harris Administration will:

It is the policy of the Administration to promote vigorous and fair enforcement of the existing competition laws, and to ensure “all of government” works together to promote competition:

Today, DOJ and USDA are announcing a new joint initiative to better coordinate their efforts—including launching within 30 days a new portal for reporting concerns about potential violations of the competition laws.

“The President’s Executive Order on Promoting Competition established the White House Competition Council to coordinate a “whole of government approach” to promoting competition. In furtherance of this approach, Competition Council members USDA and DOJ will provide a new joint channel for farmers and ranchers to report complaints of potentially unfair and anticompetitive practices in the agricultural sector to them—whether under the Sherman and Clayton Acts or the Packers and Stockyards Act. This joint channel will facilitate the agencies’ ability to work together based on a common understanding of farmers’ and ranchers’ concerns. The agencies will protect the confidentiality of the complainants to the fullest extent allowed under the law. The agencies also announced their commitment to the strongest possible whistleblower protections. DOJ and USDA further announced that they will enhance their collaboration on referrals, information sharing, and identifying areas of the law in need of modernization.”

The Biden-Harris Administration will work to increase transparency in cattle markets so that ranchers can get a fair price for their work:

USDA is using its existing authorities to increase transparency to the extent possible. Right now, meatpackers have outsized power in setting the prices for beef. The dominance of opaque contracts and insufficient competition undermine price discovery and fairness in the independent livestock markets, which ultimately lock producers into prices that aren’t the product of free and fair negotiation. In August, USDA began issuing new market reports on what beef-processors pay to provide additional insight into formula cattle trades and help promote fair and competitive markets. USDA is looking at what more can be done under existing authorities.

The Biden-Harris Administration will also work with Congress to make cattle markets fairer and more transparent. The Administration is encouraged to see bipartisan legislation in the Senate by Senators Grassley, Fischer, Tester, and Wyden, and in the House by Representatives Axne and Feenstra, that seeks to improve price discovery in the cattle markets and facilitate actual negotiation of prices between livestock producers and packers.

“We look forward to working with Congress on these important issues, and we hope that they will also look for ways to ensure farmers and ranchers have fair access to processing capacity,” the government says.