In this file:

 

·         Government-induced competition rarely works

A U.S. program to increase competition in meat-packing won’t work

 

·         Nalivka: Key Beef Industry Economics - Not Just For Ranchers and Packers

… it takes every segment of this supply chain working for the industry to be successful and the supply chain is more than family farmers and big packers…

 

·         Mixed reactions to White House meat processing action plan

Legislative Watch: Product of USA labeling rules to be issued; Congress returns; USDA Ag Outlook Forum will be virtual.

 

·         USDA and DOJ Issue Shared Principles Focusing on Antitrust Enforcement in Agriculture

… a list of joint principles that underscore their departments’ continuing efforts to protect farmers, ranchers, and other agricultural producers and growers from unfair and anticompetitive practices by enforcing federal competition laws like the PSA…

 

·         Small beef processor says the Biden action plan is good for cattle producers

“If animals are diverted away from the big four, the majors, then, what’s going to happen is they’re going to have to substitute with more import animals and more import product,” he says. “In return, it is going to expose that side of the business that they’ve been able to hide behind all the loopholes.”

 

 

Government-induced competition rarely works

A U.S. program to increase competition in meat-packing won’t work

 

By Sylvain Charlebois, The Kindersley Clarion (Canada)

Jan 7, 2022

 

Dr. Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.

 

United States President Joe Biden recently introduced a billion-dollar program to lower food inflation by increasing competition in meat-packing. It’s likely ill-fated.

 

A few weeks ago, a damning report out of Washington suggested the top U.S. meat-packing plants have increased profit margins by 300 per cent since the beginning of the COVID-19 pandemic.

 

The report, prepared by White House economic advisers, didn’t sit well with Biden.

 

Consolidation in the meat-packing industry has been an ongoing issue in many parts of the world. In the United States, four dominant companies – Tyson Foods, JBS, Marfrig and Seaboard Foods – control as much as 85 per cent of the meat-packing business.

 

Biden has openly blamed this big four for skyrocketing prices at the meat counter.

 

While food inflation has been at about 6.4 per cent in the United States over the last few months, meat prices have risen by more than 12 per cent in the last year.

 

Meanwhile, farmers are getting less for their product.

 

The Biden administration plans to tackle the lack of competition by supporting smaller and independent meat-packers. Since buying local and food inflation are top-of-mind for Americans, it’s a no-brainer political move for the administration.

 

And, of course, Americans love their meat – they’re among the top meat eaters in the world. Americans eat almost 240 pounds of meat a year on average. Canadians eat about 150 pounds of meat a year, and that’s a lot, but America’s love affair with meat is unique.

 

In Canada, three plants process about 85 per cent of all the beef produced in Canada. For pork, oligopolistic forces aren’t as significant; we have dominant players like Olymel and Maple Leaf, but we also have smaller players. The poultry sector is also more balanced than in the U.S.

 

Still, meat prices have gone up by more than 10 per cent in the last year in many parts of Canada, and that’s more than double the rate of food inflation in general. Many blame meat-packing companies for gouging consumers.

 

Canadians haven’t seen a report similar to the one the White House produced, so we don’t know what the situation looks like here.

 

But food processing is challenging and it’s even tougher for meat packing. Food safety standards and other regulations make it close to impossible to start a new federally-licensed plant, a facility capable of selling out-of-province or overseas.

 

Regional abattoirs, which can only transact within a province, have less reason to worry.

 

Distribution costs are also considerable in Canada.

 

But the biggest cost is labour. It has always been an issue for the sector, but the pandemic has made things much worse. While Cargill, Exceldor and Olymel are offering better working conditions and higher wages and benefits to workers, the increased use of robotics is inevitable. It’s happening everywhere, including in Canada. Capitalizing operations will add more financial pressure on meat-packers...

 

more

https://theclarion.ca/business/meat-packing-competition-will-fail-u-s-markets-if-its-forced/

 

 

Nalivka: Key Beef Industry Economics - Not Just For Ranchers and Packers

 

By John Nalivka, Opinion, Drovers 

January 7, 2022

 

John Nalivka is president of Sterling Marketing, Inc., Vale Oregon.

 

Considering the Biden Administration’s plan to “fix” the meat packing / processing industry so that “farmers” can receive a “fair” price and be profitable, I have reached the conclusion that I must have missed something in my graduate economics classes.  Or perhaps, USDA’s conclusion with regard to the economics of market structure and pricing across the meat industry supply chain is just wrong.  I support the latter.

 

First, let’s define the beef (yes, beef not cattle) industry supply chain.  This is important in any discussion as each link in the chain plays a critical role for the success of the entire supply chain – from producing a calf to marketing finished beef products to the consumer – and is far more complex than farmers and packers.  It involves 1) cow-calf operations that raise calves, 2) stocker operations that hold those calves for added gain on grass and sell feeder cattle, 3) feedlots that buy and finish those feeder cattle to market weight, 4) packers who buy the finished cattle and convert those live cattle to finished marketable quality beef products through fabrication and further-processing and market those beef products directly or through 5) distributors to 6) restaurants and supermarkets. 

 

Emphasizing the structure of the beef industry to stress the importance of the distinct segments, I say without reservation, it takes every segment of this supply chain working for the industry to be successful and the supply chain is more than family farmers and big packers.

 

One key economic principal of this beef supply chain is economies of scale.  This is true for the ranches raising cows and calves, feedlots finishing cattle, packers and processors converting those cattle to beef products, and even supermarkets and restaurants.  Simply put, as a firm expands production and achieves greater production efficiencies, per unit costs decline.  This is a driving force in any business and has been particularly true in production agriculture as well as the packing / processing industry.  Much of my graduate research on economies of scale and the minimum efficient scale of cattle ranches in Nevada in 1983 would still hold true today. 

 

The drive toward economies of scale and the resulting increased production efficiency has a notable impact on the beef industry.  This is true whether it be ranches raising cows, feedlots, and packers.  Economies of scale have led to consolidation in all segments of the industry as agriculture businesses strive for the point on the long run average cost curve where economies of scale are exhausted...

 

more

https://www.drovers.com/opinion/nalivka-key-beef-industry-economics-not-just-ranchers-and-packers

 

 

Mixed reactions to White House meat processing action plan

Legislative Watch: Product of USA labeling rules to be issued; Congress returns; USDA Ag Outlook Forum will be virtual.

 

P. Scott Shearer, National Hog Farmer 

Jan 07, 2022

 

The White House announced its "Action Plan for a Fairer, More Competitive and More Resilient Meat and Poultry Supply Chain" in which the administration is making $1 billion in American Rescue Plan funds available for expansion of independent meat and poultry processing capacity in an effort to provide greater competition.

 

In a virtual meeting with producers, President Joe Biden took aim at concentration in the meat and poultry industries. He said, "Capitalism without competition isn't capitalism, it's exploitation. That's what we're seeing in poultry and those industries now. Small independent farmers and ranchers are being driven out of business."

 

The Action Plan is to create a more competitive, fair, resilient meat and poultry sector, with better earnings for producers and more choices and affordable prices for consumers, according to the White House...

 

... The North American Meat Institute President Julie Anna Potts said in a statement, "For the third time in six months, President Joe Biden and his Administration announced the same plans to spend $1 billion to fund government intervention in the market in an attempt to increase prices livestock producers receive while blaming inflation on private industry...

 

... American Farm Bureau Federation President Zippy Duvall said in a statement, "Farmers and ranchers want a fair shake. The joint initiative between USDA and the Department of Justice to create an online portal to report competition law violations, and efforts to strengthen the Packers & Stockyards Act, will go a long way to ensuring fairness in the industry. More accurately defining 'Product of the USA' labeling will also allow families to make more well-informed decisions at the grocery store."

 

U.S. Cattlemen's Association President Brooke Miller said, "We are hopeful that the Action Plan unveiled today will help bring transparency and true price discovery to the cattle marketplace, bring back truth in labeling through the closure of the Product of the U.S.A. loophole, and invest in a stronger - and more American - meat industry."

 

Congress Returns ...

 

USDA Ag Outlook Forum ...

 

more

https://www.nationalhogfarmer.com/news/mixed-reactions-white-house-meat-processing-action-plan

 

 

USDA and DOJ Issue Shared Principles Focusing on Antitrust Enforcement in Agriculture

 

Brian Eyink and Connie Potter, Hogan Lovells

Jan 7, 2022

 

USDA and DOJ have announced shared principles to drive antitrust enforcement in the meat and poultry supply chains.

 

On January 3, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack and Attorney General Merrick Garland announced a set of joint principles intended to drive antitrust enforcement in the meat and poultry supply chains. The announcement comes as part of a broader and prolonged effort by the Biden Administration to focus on competition in the meatpacking sector specifically and in the national economy more broadly. For example, the Administration has cited meat and poultry prices as driving food inflation and has identified market concentration in the meatpacking industry as an area of focus. For example, the Administration has characterized the top 4 beef, pork, and chicken processors as controlling over 50% and as much as 85% of their respective markets.1 At the forefront of these discussions are commitments to strengthening the Packers and Stockyards Act (PSA), the 100-year-old law that designed to protect against unfair, deceptive, and anti-competitive practices in the meat markets.

 

In their announcement, USDA and DOJ announced a list of joint principles that underscore their departments’ continuing efforts to protect farmers, ranchers, and other agricultural producers and growers from unfair and anticompetitive practices by enforcing federal competition laws like the PSA. As stated in a USDA press release,2 the principles are as follows:

 

·         Farmers, ranchers, and other producers and growers deserve the benefits of free and fair competition. The Justice Department and USDA therefore are prioritizing matters impacting competition in agriculture.

 

·         The agencies will jointly develop within 30 days a centralized, accessible process for farmers, ranchers, and other producers and growers to submit complaints about potential violations of the antitrust laws and the Packers and Stockyards Act. The agencies will protect the confidentiality of the complainants if they so request to the fullest extent possible under the law and also commit to supporting relevant whistleblower protections, including newly-applicable protections for criminal antitrust complainants against unlawful retaliation.

 

·         The agencies will work together to promote effective information sharing and case cooperation, including processes the agencies will follow to efficiently address a complaint.

 

·         Both agencies commit to vigorously enforce the laws that protect farmers, ranchers, and other producers and growers from unfair, deceptive, discriminatory, and anticompetitive practices. As appropriate, USDA will make reports or refer potential violations of the Packers and Stockyards Act to the Justice Department to better enable its Antitrust Division to pursue meritorious competition-related cases and to allow the agencies to collaborate on issues of mutual interest. Additionally, the Justice Department and USDA will work together to identify and highlight areas where they believe Congress can help modernize statutory frameworks.

 

On the same day, the White House hosted a roundtable event with farmers, ranchers, an independent poultry processor, and Cabinet members to reemphasize its commitment to boosting competition and reducing prices in the meat-processing industry.3 At the event, Secretary Vilsack tied into this effort several rulemakings that USDA has earlier announced as being in the works, although proposed rules have not yet been issued:

 

·         USDA is in the process of developing three proposed rules under the Packers and Stockyards Act (PSA) to better protect poultry and hog farmers and cattle ranchers from unfair and anti-competitive practices in meat markets. The proposed rules revive rulemakings initiated during the Obama Administration to identify actions that USDA views as violating the PSA, regulate poultry grower contracting (often referred to as tournament systems), and codifying the department’s view that parties need not demonstrate competitive harm to bring an action under the PSA.4

 

·         USDA plans to issue new regulations governing “Product of USA” claims for meat and poultry products.

 

To complement these efforts, the Biden Administration announced it seeks to improve resiliency in meat and poultry supply chains with a $1 billion investment to expand independent processing capacity and support workers and the independent processor industry.5

 

Next steps ...

 

References ...

 

more, including links

https://www.jdsupra.com/legalnews/usda-and-doj-issue-shared-principles-6201098/

 

 

Small beef processor says the Biden action plan is good for cattle producers

 

By Meghan Grebner, Brownfield

January 7, 2022

 

An independent beef processor says he thinks the Biden administration’s recently announced action plan for a fairer, more competitive livestock market is going to shed some light on some unsavory packer practices.

 

Patrick Robinette owns and operates North Carolina-based Micro-Summit Processors and chairs the US Cattlemen Association’s Independent Beef Processors committee.  “If animals are diverted away from the big four, the majors, then, what’s going to happen is they’re going to have to substitute with more import animals and more import product,” he says. “In return, it is going to expose that side of the business that they’ve been able to hide behind all the loopholes.”

 

 He tells Brownfield the action plan, which includes increasing competition in the marketplace, the intent to issue new “Product of the USA” labeling rules, and the new joint initiative for reporting concerns about potential violations of the competition laws, among other things, is a win, win for cattle producers and consumers.

 

As for the action plan, Robinette says “I love it”.  “But...

 

more, including audio [12:23 min.]

https://brownfieldagnews.com/news/small-beef-processor-says-the-biden-action-plan-is-good-for-cattle-producers/