Ag Policy Blog

OMAHA (DTN) -- The meat industry is pushing back on Vice President Kamala Harris' plan to call for a federal ban on "price gouging" when it comes to groceries, especially meat prices.

Harris is expected to lay out her economic agenda in a speech in North Carolina on Friday. Her vice-presidential candidate, Minnesota Gov. Tim Walz, also is on the campaign stump and is set to visit Omaha on Saturday.

The Harris campaign on Friday stated her plan for the first 100 days in office would be to "bring down costs for American families." That includes creating "the first-ever federal ban on price gouging on food and groceries." Harris wants more authority for the Federal Trade Commission and states to investigate companies for antitrust practices.

"Extreme consolidation in the food industry has led to higher prices that account for a large part of higher grocery bills," Harris' campaign stated. "To confront this issue, Vice President Harris will also direct her Administration to crack down on unfair mergers and acquisitions that give big food corporations the power to jack up food and grocery prices and undermine the competition that allows all businesses to thrive while keeping prices low for consumers. And her plan will support smaller businesses, like grocery stores, meat processors, farmers, and ranchers, so those industries can become more competitive."

What's unclear is how a federal ban on retail price gouging would work. Such a move also could translate into suppressing prices for livestock producers in the process.

The Biden administration has focused heavily on increasing competition in the meat industry by providing $1 billion in grants and loans to smaller meatpackers and local meat lockers to compete against larger packers.

When it comes to retailers, the Federal Trade Commission in March released a report looking at the actions of the country's largest grocery markets during the pandemic. The investigation found the country's largest grocery retailers took advantage of Covid supply-chain disruptions that worsened food shortages and inflated prices. Among the report's findings, "Grocery retailer profits rose and remain elevated, warranting further consideration by the (FTC) and policymakers."

The Trump campaign said Harris "blames everybody but herself for the once-in-a-generation inflation crisis she created. The fact that gasoline is up 30%, families can't afford baby formula, and seniors on a fixed income are having to come out of retirement has nothing to do with price gouging and everything to do with Kamala Harris' failed economic and energy policies over the past four years."

MEAT INDUSTRY REACTION

Julie Anna Potts president and CEO of the Meat Institute -- the lead trade association for meatpackers -- pushed back on criticisms against the food inflation, saying Harris' campaign rhetoric unfairly targets the meat and poultry industries. Food prices are coming down from pandemic highs, Potts noted, and meat prices are based on supply and demand. The livestock and poultry industries have faced avian influenza and a shortage of cattle prices, along with higher energy costs and a tight labor market.

"Consumers have been impacted by high prices due to inflation on everything from services to rent to automobiles, not just at the grocery store," Potts said. "A federal ban on price gouging does not address the real causes of inflation."

Potts added that the prices livestock producers receive are based heavily on supply and demand. "Prices for cattle producers especially are at record highs, surpassing the 2014-2015 previous record highs," she said. Today, well into 2024, cattle prices remain at record levels because the U.S. has the lowest cattle inventory since Harry Truman was president.

Major meat companies have reported losses during the Biden-Harris Administration, with some closing facilities and laying off workers, Potts noted. Tyson Foods, for instance, has closed several pork and poultry processing facilities over the last two years. In March, Tyson announced it would close one of its Iowa pork plants in Perry, Iowa.

The National Chicken Council also responded to Harris' take on price gouging. "Americans are seeing inflation in nearly every part of their livelihoods - rent, gas, automobiles, furniture - not just in the meat case," said Gary Kushner, interim president of the NCC.

"Chicken prices are largely affected by supply and demand, by major input costs like corn, soybeans, energy, packaging, transportation, and by fiscal policy and burdensome government regulations -- not price gouging," Kushner said. "It's time for this administration to stop using the meat and poultry industry as a scapegoat and a distraction for the root causes of inflation and the significant challenges facing our economy."

EFFORTS IN CONGRESS, DOJ

Just two years ago Congress was holding hearings on cattle markets and senators from both parties were pushing a bill that would require more cattle to be sold through cash-trade sales rather than formula contracts. Backers pointed to market control exerted by four major packers that control 85% of fed-cattle slaughter nationally. Opponents claimed the cattle price discovery bills would actually cost producers money. The CEOs of Cargill, JBS, National Beef and Tyson Foods all testified in a House hearing that livestock and beef prices are set based on supply and demand. The cattle contract bill failed, but Congress and USDA have created a cattle contract library to provide more transparency to producers.

USDA and the Department of Justice started an investigation into cattle markets during the pandemic, but no conclusion was reached or report ever released on the findings.

AG SECRETARY WEIGHS IN

Agriculture Secretary Tom Vilsack was asked Thursday to respond to Harris' call to crack down on price gouging with food companies, as well as increase antitrust enforcement. Vilsack said he could not discuss what the vice president is suggesting in the context of a political campaign.

"But I will say this, we have been pleased with the partnership we have had with the Department of Justice as we have informed DOJ in certain circumstances to prevent mergers or to allow them under certain conditions which are beneficial to producers," Vilsack said. "We've been pleased with the work the Department of Justice has made in terms of cracking down on potential antitrust violations."

The Justice Department has been active in bringing antitrust cases, especially against the poultry industry. DOJ has sued poultry companies over worker wages as well as exit fees against poultry producers for leaving contracts.

In one of the more complicated cases going on right now, the Justice Department and six states have sued an Indiana statistics company, Agri Stats, over allegations of price fixing with major chicken and turkey companies. DOJ brought the suit against Agri Stats last year and a federal judge in May rejected a motion to dismiss the cases. DOJ alleges data Agri Stats collected and provided to poultry companies was used by major players in the industry to set and match prices.

Still, dozens of grocery chains and food distributors last year lost a six-week civil trial in federal court when a jury ruled Sanderson Farms did not conspire with rival poultry companies to raise chicken prices.

Vilsack also said USDA is in the process of completing its own retail study, "which I think will be coming out very soon, and I think that will raise some valid questions and issues about practices within the industry that ultimately impact and affect the price that people pay," he said.

The secretary also cited a study into the costs of crop seeds that was done and led to recommendations allowing farmers to have more of a voice in the patenting of seed technology, "which, we think, over time is going to make it easier for farmers to have more choice, greater transparency, and maybe even less costs in terms of the seed options that they have."

Chris Clayton can be reached at Chris.Clayton@dtn.com

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