Only Big Government Can Tame Big Meat

The Biden administration’s plan to support smaller beef processors is a good start. But keeping prices in check will require tougher measures against anti-competitive practices.

 

By David Wainer, Opinion, Bloomberg

January 8, 2022

 

The Biden administration desperately needs a win on inflation, and cutting the price Americans pay for beef would have an immediate impact on most families.

 

Yet the prescription unveiled by the White House this week to boost competition in the highly concentrated meat sector, while prudent, won’t make much of a dent on meat prices, at least not for a while. It isn’t likely to help fight inflation, either. No wonder shares of Tyson Foods Inc., a big producer of beef and pork as well as chicken, have risen more than 4% since the plan was announced.

 

Meat prices have been soaring -- accounting for more than half the increase in grocery costs for American families. The blame for this, according to the administration, belongs with the four companies that together control more than 80% of the meatpacking market. The White House has been focused on this industry for months, arguing that excessive concentration is hurting consumers, who are paying more for their steaks and burgers, as well as small ranchers and farmers, who have struggled to stay profitable.

 

The push to inject competition into meatpacking is part of a broader effort by the Biden administration to challenge concentrations of power in business, in industries ranging from technology to railroads to health care. Under the plan, the administration will spend $1 billion to help independent meat-processing companies expand their operations and hire additional workers

 

Yet it will take a while before the promised funds have any impact. For one, like much of the U.S. economy, the meat industry is dealing with a shortage of workers, which will make it challenging for smaller competitors to scale up without raising wages.

 

“You have four to five million people missing from the workforce, and working in a slaughterhouse is not exactly a desirable job,’’ said Rodrigo Almeida, a Santander Bank analyst who follows meatpackers. “You can put as much money as you want to work, but if there’s no labor it’s hard to make these plans work.”

 

It also is up for debate whether fighting monopolies is the best way to tame inflation. Former Treasury Secretary Lawrence Summers took to Twitter recently  to say that the administration’s efforts could have the opposite effect, by discouraging investment that could boost supply. A better approach to keep prices in check, Summers suggests, would be to open up the market to international competition...

 

more, including links, chart

https://www.bloomberg.com/opinion/articles/2022-01-08/meatpacking-needs-more-oversight-to-slow-surge-in-beef-prices