Addressing Focus within the Meat-Processing Trade to Decrease Meals Costs for American Households

By Brian Deese, Sameera Fazili, and Bharat Ramamurti

The President understands that households have been dealing with greater costs on the grocery retailer just lately. Half of these current will increase are from meat costs—particularly, beef, pork, and poultry. Whereas components like elevated shopper demand have performed a task, the worth will increase are additionally pushed by a scarcity of competitors at a key bottleneck level within the meat provide chain: meat-processing. Simply 4 giant conglomerates management the vast majority of the marketplace for every of those three merchandise, and the info present that these corporations have been elevating costs whereas producing document income throughout the pandemic. That’s why the Biden-Harris Administration is taking daring motion to implement the antitrust legal guidelines, increase competitors in meat-processing, and push again on pandemic profiteering that’s hurting customers, farmers, and ranchers throughout the nation.

Meat constitutes half of meals at dwelling value will increase. Massive value will increase for beef, pork, and poultry are driving the current value will increase customers are seeing on the grocery retailer (a measure generally often known as “meals at dwelling”). Collectively, these three objects account for a full half of the worth improve for meals at dwelling since December 2020. Since that point, costs for beef have risen by 14.0%, pork by 12.1%, and poultry by 6.6%.

4 giant conglomerates overwhelmingly management meat provide chains, driving down earnings for farmers whereas driving up costs for customers. The meatpacking trade buys cattle, hogs, and chickens from farmers and ranchers, processes it, after which sells beef, pork, and poultry on to retailers like grocery shops. The trade is very consolidated, and serves as a key choke level within the provide chain (see determine beneath).

In the present day, simply 4 corporations management roughly 55-85% of the marketplace for these three merchandise, in line with U.S. Division of Agriculture information. That displays dramatic consolidation of the trade during the last 5 a long time, as the massive conglomerates have absorbed increasingly smaller processors. In 1977, the biggest 4 beef-packing corporations managed simply 25% of the market, in comparison with 82% immediately. In poultry, the highest 4 processing corporations managed 35% of the market in 1986, in comparison with 54% immediately. And in pork, the highest 4 hog-processing corporations managed 33% of the market in 1976, in comparison with 66% immediately.

That consolidation provides these middlemen the ability to squeeze each customers and farmers and ranchers. There’s a protracted historical past of those big meat processors making increasingly, whereas households pay extra on the grocery retailer and farmers and ranchers earn much less for his or her merchandise. Absent this company consolidation, costs could be decrease for customers and fairer for farmers and ranchers.

The meat-processors are producing document income throughout the pandemic, on the expense of customers, farmers, and ranchers. The dynamic of a hyper-consolidated pinch level within the provide chain raises actual questions on pandemic profiteering. Through the pandemic, wholesale costs for beef rose a lot sooner than enter costs for cattle. That implies that the costs the processors pay to ranchers aren’t growing, however the costs collected by processors from retailers are going up.


On the identical time, we now have seen a few of the prime corporations on this trade generate document gross income and their highest gross margins in years. Gross income for a few of the main beef, poultry, and pork processors are at their highest ranges in historical past, and Q1 2021 and Q2 2021 had been probably the most worthwhile quarters in historical past for a few of these processors. Web earnings for a lot of of those corporations is on tempo to succeed in historic highs as nicely. (Different prime processors merely don’t report publicly on their income, margins, or earnings.)


*2021 numbers are projected utilizing the quarterly numbers reported this 12 months.

These document income, earnings, and margins underscore the function that meat-processors’ dominant market place and energy play in growing meat costs. Whereas components like shopper demand and enter prices are affecting the market, it’s the lack of competitors that permits meat processors to hike costs for meat whereas growing their very own profitability. That’s, in the event that they confronted significant competitors, the processors would merely have the ability to extract fewer income if their prices had gone up unexpectedly whereas holding costs decrease to earn retailers’ enterprise.

A few of these corporations have additionally been rewarding their shareholders with giant dividends and buybacks throughout this era. As an illustration, the massive processor JBS supplied $2.3 billion in dividends and share buybacks in 2020. It has proposed document excessive dividend funds for 2021, growing payouts to shareholders by practically 75% over 2020. Equally, Tyson just lately raised dividends by 6% for fiscal 12 months 2021, spending $477 million on dividends within the 9 months ending July 2021. It additionally repurchased $200 million of shares between September 2020 and July 2021.

These document income and dividend funds come at a time when customers are paying extra to place meals on the desk, employees are risking their well being and security to maintain America fed, and farmers and ranchers are additionally dealing with unprecedented droughts, wildfires, and different excessive climate occasions that put their herds and farms in danger. In the meantime, taxpayers have made historic investments to assist companies hold their doorways open and households deal with the financial impacts of this pandemic. These taxpayer investments have stored per capita demand for meat regular, in contrast to the collapse in demand the meat trade skilled within the Nice Recession.


As we restart the world’s largest economic system and make nice strides within the financial restoration, the Biden-Harris Administration is dedicated to restarting proper for the American folks—customers and producers alike—by remodeling the meals system. It is a pivotal second of alternative to construct again a greater meals system that’s truthful, aggressive, distributed, and resilient.

The Biden-Harris Administration and USDA are taking over these points by: 

  • Taking sturdy actions to crack down on unlawful value fixing, implement antitrust legal guidelines, and produce extra transparency to the meat-processing trade. USDA is conducting an ongoing joint investigation with the Division of Justice into price-fixing within the chicken-processing trade, which has already yielded a $107 million responsible plea by Pilgrim’s Pleasure and quite a few different indictments. USDA has additionally introduced a extra sturdy Packers and Stockyards Act enforcement coverage and new efforts to strengthen Packers and Stockyards Act guidelines, in order that meat-processors can’t use their market dominance to abuse farmers and ranchers. And USDA is creating extra transparency, with new market experiences on what beef-processors pay, in addition to new guidelines designed to make sure customers get what they pay for when meat is labeled “Product of USA.”
  • Offering reduction to small companies and employees damage by COVID, and making a extra aggressive meals provide chain. USDA will make investments $1.4 billion in pandemic help to offer reduction to small producers, processors, distributors, farmers markets, seafood processors, and meals and farm employees impacted by COVID-19. This contains $700 million to succeed in small operations who haven’t obtained earlier rounds of federal pandemic help. USDA will even present $700 million to states, tribes, and nonprofit organizations to distribute as much as $600 per employee in reduction funds on to frontline farmworkers and meatpacking employees who incurred bills getting ready for, stopping publicity to, and responding to the COVID-19 pandemic. USDA will even make investments $500 million in American Rescue Plan Act funds to help new aggressive entrants to develop native and regional meat and poultry processing capability. USDA will present grants, loans, and technical help to create new meat and poultry processing capability that may compete with the large guys, forcing them to decrease costs and really earn their enterprise, and supply farmers and ranchers entry to raised selections and fairer costs in native and regional meals programs.
  • Getting forward of local weather change associated disruptions by supporting farmers and ranchers from the consequences of maximum climate. Unprecedented drought and excessive climate occasions have introduced new challenges for farmers, ranchers, and agricultural employees, on prime of the historic challenges related to the COVID-19 pandemic. To answer the drought affecting farmers and ranchers throughout the West and Midwest, USDA will develop its Emergency Help for Livestock, Honeybees and Farm-Raised Fish Program (ELAP) to incorporate the price of transporting feed, delivering much-needed reduction to affected livestock producers.
  • Working with Congress to make cattle markets extra clear and fairer. Proper now, meatpackers have outsized energy in setting the costs for beef, which are sometimes set in opaque contracts that lock unbiased livestock producers into costs that aren’t the product of free and truthful negotiation. The Administration is inspired to see bipartisan laws by Senators Tester, Fischer, Grassley, Wyden, and others that search to enhance value discovery within the cattle markets—and facilitate precise negotiation of costs between livestock producers and packers. We stay up for working with Congress on these essential points, and we hope that they will even search for methods to make sure farmers and ranchers have truthful entry to meat-processing capability.

All collectively, these actions will assist construct a meals system that works for the American folks above all else. They may help households, farmers, and employees whereas stopping unhealthy actors within the provide chain from lining their pockets and getting additional forward with out accountability. It will make the meals system fairer and extra equitable, extra aggressive and clear, and extra distributed and resilient in opposition to shocks. In flip, it can improve farmers’ and ranchers’ earnings, ship better worth to employees, and provide customers inexpensive, wholesome meals produced nearer to dwelling.