Sort & Cull
Vilsack Addresses USDA Investment in Smaller Packing Plants, Antitrust Enforcement in Packing Industry
Agriculture Secretary Tom Vilsack opened up the daily press briefing on Wednesday, Sept. 8, at the White House to talk about the Biden administration's work to address rising meat prices at grocery stores.
The secretary spoke to the White House press corps about some of the actions USDA is doing to invest $500 million into smaller packing plants and address antitrust enforcement in the packing industry. He also talked about the need for legislation "to make cattle markets more transparent and fair."
Vilsack was joined in the White House briefing with Brian Deese, the director of the White House National Economic Council.
Looking at the question of rising grocery prices, Deese told reporters that beef, pork and poultry amount to roughly half of the increase in food prices at grocery stores since December 2020 (pre-pandemic). Since then, beef prices have increased 14%, pork prices by 12.1% and poultry by 6.6%.
Deese then highlighted a topic that has been repeatedly highlighted in the agricultural press, but hasn't extended out to larger media. "If you look at that market the thing that is striking is -- across beef, poultry and pork -- significant consolidation in those industries. So anywhere from 55% to 85% of the market is controlled by the top four producers in those industries," Deese said.
Vilsack noted repeatedly that farmers selling cattle, hogs and poultry were losing money at a time when consumers were paying higher prices at the grocery stores, and "the fact that there are now record profits or near-record profits for those in the middle."
Vilsack said there has been so much consolidation in the processing industry that "it's very difficult to determine whether or not the prices being aid to farmers is fair." He added that's why USDA is producing more information on price discovery, and he alluded to the need for legislation but somewhat vague on exactly what legislation should be passed. "Certainly we want to work with Congress in their efforts legislatively to pass legislation that will expand the capacity for us to have information."
The secretary added that USDA also wants to see changes to "product of the U.S." labels for meat to ensure consumers actually understand what it means.
The accompanying White House report co-written by Deese pointed the public profits reported by JBS and Tyson, though citing that other large packers do not publicly report their profits. National Beef and Cargill are privately owned and in the pork industry, Smithfield Foods is owned by a Chinese company, WH Group, though WH Group does release some profit information.
Reporters at the White House asked about the Big Four packers "profiteering" and "price gouging" consumers and producers. After pointing out a poultry price-fixing case against Tyson (and Perdue) for $35 million, Vilsack had to rein in his commentary because nothing illegal has been proven in the cattle and hog industries. He added, "Well, look again, if I'm losing $150 a head on my cattle, and the guy who's buying it from me -- who's forcing me to take that price -- is charging and making $1,800 a head, I don't know what you call it, but what I do know is that our job is to make sure that that farmer gets a fair price and that the producer -- that the -- when I go to the grocery store and I'm in the checkout line, I'm paying a fair price; I'm not paying more than I should."
Missing from Wednesday's event was anyone from the Department of Justice. The DOJ has not provided any updates on the status of its investigation into cattle markets that began in May 2020. The DOJ was a missing element in hearings held by multiple U.S. Senate committees during the past summer on cattle markets. Everyone in the industry is waiting to see if DOJ finds reasons for criminal or civil actions against packers, or if DOJ finds a market that worked as expected when packers were forced to shutdown processing capacity early in the pandemic, which drove down livestock prices but drove up grocery prices.
One surprising commentary from Vilsack came when a reporter asked if he is going to reverse the Trump administration's decision to dissolve the Grain Inspection, Packers and Stockyards Administration (GIPSA), which the Trump administration moved from being independent to being under the USDA Agricultural Marketing Service. "Are you going to reestablish GIPSA?" the reporter asked.
Vilsack responded "Well, that's a slightly different area. GIPSA basically takes a look at grading grain and things of that nature, OK? It's not really into the Packers and Stockyards area. What farmers really want to us to do is what we're doing, which is to enforce the Packers and Stockyards and strengthen that."
It was at least an acknowledgment that GIPSA doesn't have the teeth to do the job it originally had been created to do.
After Vilsack's presser, Sen. John Thune, R-S.D., announced he and at least three other senators, will introduce a bill to reinstate mandatory country-of-origin labeling for beef. The bill would require USDA to work with the U.S. Trade Representative's office to develop a country-of-origin label that would pass muster with the World Trade Organization. Sen. Chuck Grassley, R-Iowa, also applauded the administration's efforts and put in a plug for his own bipartisan bills to push packers to buy more livestock on cash markets from independent producers.
The secretary also plugged USDA's changes Wednesday to the ELAP to help livestock producers in drought who are paying higher costs to transport feed. https://www.dtnpf.com/….
DTN highlighted last week some of the comments over USDA's plans to fund $500 million in livestock and poultry processing through grants, loans and technical assistance to smaller packers. https://www.dtnpf.com/….
White House report: Addressing Concentration in the Meat-Processing Industry to Lower Food Prices for American Families https://www.whitehouse.gov/…
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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