by Marion Nestle

Currently browsing posts about: Consolidation

Jul 22 2022

Weekend viewing: Robert Reich on Big Ag

I came across this from a tweet by Ricardo J Salvador @cadwego
Wherein the former Secretary of Labor clearly lays out one of the major drivers for price increases, as well as a clear way for the Biden administration to use its authority to relieve the problem. The core issue is the anti-competitive, monopoly power of consolidated industries.
Just 4 firms control 85% of the beef market, 66% of the pork market, and 54% of the poultry market. The result? -Lower pay for farmers. -Bigger profits for monopolies. -Higher prices for you. There’s no question: We need to break up Big Ag.
He explains this in a video–How Farmers Are Getting Shafted By Monopolies–which, I am delighted to report, I figured out how to embed here.

 

His bottom line:

Just 4 firms control 85% of the beef market, 66% of the pork market, and 54% of the poultry market.

The result?
-Lower pay for farmers.
-Bigger profits for monopolies.
-Higher prices for you.

There’s no question: We need to break up Big Ag.

Dec 21 2021

The White House: meat companies have too much power

I was amazed to see this announcement from the White House, of all places: “Recent Data Show Dominant Meat Processing Companies Are Taking Advantage of Market Power to Raise Prices and Grow Profit Margins.”

In September, we explained that meat prices are the biggest contributor to the rising cost of groceries, in part because just a few large corporations dominate meat processing. The November Consumer Price Index data released this morning demonstrates that meat prices are still the single largest contributor to the rising cost of food people consume at home. Beef, pork, and poultry price increases make up a quarter of the overall increase in food-at-home prices last month.

The big concern is consolidation—monopoly power—in the meat industry.

Four large conglomerates control approximately 55-85% of the market for pork, beef, and poultry, and these middlemen were using their market power to increase prices and underpay farmers, while taking more and more for themselves…their gross profits have collectively increased by more than 120% since before the pandemic, and their net income has surged by 500%. They have also recently announced over a billion dollars in new dividends and stock buybacks, on top of the more than $3 billion they paid out to shareholders since the pandemic began.

The bottom line?

The meat price increases we are seeing are not just the natural consequences of supply and demand in a free market—they are also the result of corporate decisions to take advantage of their market power in an uncompetitive market, to the detriment of consumers, farmers and ranchers, and our economy [bold face in original].

Will the Biden Administration be able to do anything about this level of monopoly power?  Stay tuned.

Nov 2 2021

Congressional staff report: Covid 3X harder on meatpacking workers

The majority staff of the House Select Subcommittee on the Coronavirus Crisis has issued a scathing report: “Coronavirus Infections and Deaths Among Meatpacking Workers Were Nearly Three Times Higher than Previous Estimates.”

Newly obtained documents from five of the largest meatpacking conglomerates, which represent over 80 percent of the market for beef and over 60 percent of the market for pork in the United States—JBS USA Food Company (JBS), Tyson Foods, Inc. (Tyson), Smithfield Foods (Smithfield), Cargill Meat Solutions Corporation (Cargill), and National Beef Packing Company, LLC (National Beef)—reveal that coronavirus infections and deaths among their meatpacking workers were substantially higher than previously estimated.

The report’s main findings:

  • Certain meatpacking plants saw particularly high rates of coronavirus infections during the first year of the pandemic. For example, 54.1 percent of the workforce at JBS’ Hyrum, Utah plant contracted the coronavirus between March 2020 and February 2021.
  • Across companies, Tyson saw 29,462 employee infections and 151 employee deaths, and JBS saw 12,859 employee infections and 62 employee deaths.
  • Coronavirus Outbreaks in Meatpacking Plants Disproportionately Impacted Minority Workers
  • The full extent of coronavirus infections and deaths at these meatpacking companies was likely much worse than these figures suggest.
  • OSHA made a political decision not to issue regulatory standards that might require meatpacking companies to take actions to protect workers.

Recall that meatpacking workers were among the first to get sick from Covid-19, causing

The report confirms that Covid-19 in meatpacking workers was and is a national tragedy and scandal, a direct result of corporate consolidation and capture of government.

The report’s recommendations to meatpacking plants, government agencies, and Congress can’t come soon enough.

Sep 16 2021

The Biden Administration’s challenge to meat industry consolidation

I posted last week on meat-industry consolidation, an issue that has become so prominent that the White House is even talking about it.

The President understands that families have been facing higher prices at the grocery store recently. Half of those recent increases are from meat prices—specifically, beef, pork, and poultry. While factors like increased consumer demand have played a role, the price increases are also driven by a lack of competition at a key bottleneck point in the meat supply chain: meat-processing. Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic.

That’s why the Biden-Harris Administration is taking bold action to enforce the antitrust laws, boost competition in meat-processing, and push back on pandemic profiteering that is hurting consumers, farmers, and ranchers across the country.

Speaking for the White House, the director of the National Economic Council said:

When you see that level of consolidation and the increase in prices, it raises a concern about pandemic profiteering — about companies that are driving price increases in a way that hurts consumers who are going to the grocery store, and also isn’t benefiting the actual producers, the farmers and the ranchers that are growing the product.

The reactions

In a statement, Tyson’s Foods said “Tyson Foods categorically rejects the conclusions drawn earlier today by the Secretary of Agriculture and the Director of the National Economic Council in a White House press briefing.  The U.S. Department of Agriculture recently published a report detailing the drivers of consumer inflation in the food sector, none of which are related to industry consolidation or scale.”

Smithfield pointed to a statement from the North American Meat Institute.

And then there’s this @FarmPolicy tweet,

Interesting times, these.

Mar 22 2008

The “Chickenization” of the Beef Industry

I’ve just learned a new word: “chickenization.” This comes from an article on meatpoultry.com explaining how consolidation in the beef industry has gotten so extreme that just three companies now control more than 70% of the market: JBS 31%, Tyson 21%, and Cargill 21%. Monopoly capitalism in action!

Mar 13 2008

Consolidation in the meat industry: a good thing?

A reader of the last post on the big meat recall asks for the second time (sorry I didn’t get to it earlier): “I recently read an article by Tim Phillpot about the consolidation of the meat industry and how this gives them leverage to control how beef is raised and sold. Apparently JBS (Brazil) is planning on buying National Beef Packing here in the US. The comments say that most analysts think the deals are positive. What do you think are the ramifications of such a concentration of power and influence?”

Indeed. We’ve just seen one result of industry consolidation: a recall of 143 million pounds of ground beef. I’m not sure that everyone views this deal favorably. I’m hearing a lot about anti-trust laws. In its March 5 account, the Wall Street Journal noted that the deals “will almost certainly prompt regulatory scrutiny because of their size and potential effect on the marketplace.”

What’s this about? The U.S. dollar is weak so American companies are a bargain for foreign investors; beef producers are cutting back on production because of the high price of grain (in part because its grown for fuel); and the industry is worried that the government will enforce safety regulations. If you control a big percent of the market–and the newly merged company will control 33% all by itself–you call the shots. I’m hoping that federal regulators will pay as much attention to this huge beef company merger as as it did to the tiny (by comparison) takeover of Wild Oats by Whole Foods last year.