by Marion Nestle

Currently browsing posts about: Food-industry-regulation

Jan 11 2022

President Biden addresses the meat industry’s lack of competition

On January 3, the White House issued a press release to announce “The Biden-⁠Harris Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.

This came with a Fact Sheet explaining the plan and its rationale.

Even as farmers’ share of profits have dwindled, American consumers are paying more—with meat and poultry prices now the single largest contributor to the rising cost of food people consume at home.

The plan provides $1 billion to increase independent processing capacity: For example, 50 beef slaughter plants owned by just a handful of companies currently process nearly all the cattle in the United States.

  • Independent processing plants–$375 million
  • Financing for independent producers: $275 million
  • Back private lenders to independent processors–$100 million
  • Worker development–$100 million
  • Technical assistance–$50 million
  • Inspection support for small producers–$100 million

How this happened

Let’s start with a report from the White House Competition Council, which sets the tone by beginning with this quote from President Biden:

Capitalism without competition isn’t capitalism; it’s exploitation.  Without healthy competition, big players can change and charge whatever they want and treat you however they want.

The Council’s goal for reducing competition in agriculture: Lowering food prices for consumers and increasing earnings for farmers and ranchers.

The 2021 timeline

July 9  President Biden issues Executive order on promoting competition in the American economy

Robust competition is critical to preserving America’s role as the world’s leading economy. Yet over the last several decades, as industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality…Consolidation has increased the power of corporate employers, making it harder for workers to bargain for higher wages and better work conditions…Consolidation in the agricultural industry is making it too hard for small family farms to survive.

July 9  The White House presents a Fact sheet on the Executive order

The markets for seeds, equipment, feed, and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for these inputs. For example, just four companies control most of the world’s seeds, and corn seed prices have gone up as much as 30% annually.

September 8  The White House issues a report Addressing Concentration in the Meat-Processing Industry to Lower Food Prices for American Families  [Note: this contains many useful charts]

December 10  The White House finds Recent Data Show Dominant Meat Processing Companies Are Taking Advantage of Market Power to Raise Prices and Grow Profit Margins  [Note: I did a blog post on this one]

The meat-processors are generating record profits during the pandemic, at the expense of consumers, farmers, and ranchers…the prices the processors pay to ranchers aren’t increasing, but the prices collected by processors from retailers are going up…At the same time, we have seen some of the top firms in this industry generate record gross profits and their highest gross margins in years.

The Reactions

The North American Meat Institute: Government Intervention in Markets Will Not Help Consumers, Producers 

For the third time in six months, President Joe Biden and his Administration announced the same plans to spend $1 billion to fund government intervention in the market in an attempt to increase prices livestock producers receive while blaming inflation on private industry…The Biden Administration continues to ignore the number one challenge to meat and poultry production: labor shortages.

Washington Post Opinion: Why President Biden is suddenly talking about meat

Now that President Biden has unveiled a plan to combat monopolistic practices in the meat industry, much of the media coverage is treating this effort as little more than an attempt to mitigate the political fallout of inflation by blaming large corporations for it…But the truth is that the White House plan only makes passing mention of inflation. Its primary focus is on the power dynamics of an industry that puts small faWilrmers and ranchers at the mercy of large meatpacking corporations, and the role this plays in causing higher prices and creating other problems.

The Counter: Can $1 billion really fix a meat industry dominated by just four companies?

The Biden administration’s newly announced investment in small, independent processors is intended to level the playing field. But without addressing the root causes [larger plants, union busting] of market concentration, critics fear it may have limited impact.

The Meatrix: the 2.5-minute trailer provides an excellent summary of the issues.  It also comes with a Take Action page

The Hagstrom Report’s list of links

Comment: Will any of this do any good in reducing the monopolistic power of Big Meat?  This depends on anti-trust legislation, and for that we must wait and see.  And where is Big Chicken in all of this?  Most of the attention here is on beef production, but the unfair practices of chicken companies need just as much attention.

Sep 10 2021

Weekend reading: Break up Big Ag

Two articles on similar themes have come out recently.

Is It Time to Break Up Big Ag? — The New Yorker

Nationally, the four largest dairy co-ops now control more than fifty per cent of the market. They’ve been able to grow so big, in part, because of a 1922 law called the Capper-Volstead Act, which provides significant exemptions from antitrust laws for farmer-owned agricultural coöperatives. “The agricultural industry is different than other industries because Capper-Volstead allows them to combine in ways that other individuals would go to jail for,” Allee A. Ramadhan, a former Justice Department antitrust attorney who led an investigation into the dairy industry, told me.

The law’s protections were intended to give small, independent farmers the right to collectively bargain prices for processing and selling their goods, but many large co-ops, such as D.F.A., have increasingly come to resemble corporations.

Break Up Big Chicken — The New York Times

Most chicken that Americans eat is processed by a handful of big companies because, in recent decades, the government gave its blessing to the consolidation of poultry processing, along with a wide range of other industries. The unsurprising result: In recent years, the surviving companies took advantage of their market power to prop up the price of chicken, overcharging Americans by as much as 30 percent.

Evidence of the industry’s misconduct became so blatant — thanks in part to lawsuits filed by wholesale poultry buyers — that regulators were roused from complacency. Beginning in 2019, the government has filed a series of charges against the companies and their executives.

And while we are at it, let’s not forget Philip Howard’s work, which I’ve written about previously.

Jul 15 2021

Biden’s Executive Order on the Meat Industry

The White House issued a fact sheet on promoting competition in several business areas, one of them agriculture.

Over the past few decades, key agricultural markets have become more concentrated and less competitive. The markets for seeds, equipment, feed, and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for these inputs. For example, just four companies control most of the world’s seeds, and corn seed prices have gone up as much as 30% annually. Consolidation also limits farmers’ and ranchers’ options for selling their products. That means they get less when they sell their produce and meat—even as prices rise at the grocery store…Overall, farmers’ and ranchers’ share of each dollar spent on food has been declining for decades. In short, family farmers and ranchers are getting less, consumers are paying more, and the big conglomerates in the middle are taking the difference.

In the Order, the President:

  • Directs USDA to consider issuing new rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.
  • Directs USDA to consider issuing new rules defining when meat can bear “Product of USA” labels, so that consumers have accurate, transparent labels that enable them to choose products made here.
  • Directs USDA to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labelsso that consumers can choose to buy products that treat farmers fairly.
  • Encourages the FTC to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs—such as when tractor companies block farmers from repairing their own tractors.

According to Politico

The rules seek to make it easier for the agency to challenge unfair and deceptive practices by meat processors and would allow farmers to more easily file complaints with USDA or sue under the Packers and Stockyards Act. People familiar with the order said it would also tighten the rules for so-called poultry grower tournament systems, in which contract farmers are paid more or less than their peers in the same area depending on how closely they meet buyers’ standards.

The agency is also moving forward with rules that seek to increase food access through alternatives to supermarkets, like local farmer’s markets, and increase consumer transparency about where meat is raised.

Lest anyone think these are trivial measures, take a look at the reactions.

The North American Meat Institute:

President Biden’s executive order calling for USDA to change the Packers and Stockyards rules will have unintended consequences for consumers and producers…Government intervention in the market will increase the cost of food for consumers at a time when many are still suffering from the economic consequences of the pandemic. These proposed changes will open the floodgates for litigation that will ultimately limit livestock producers’ ability to market their livestock as they choose. These proposals have been considered and rejected before and they are counter to the precedent set in eight federal appellate circuits.

Zephyr Teachout in The Nation:

He ordered the Department of Agriculture to use its full power under the Packer and Stockyards Act to break the stranglehold of distributors and other corporate giants that crush farmers and farmworkers…Biden has a chance to be the first trust-busting presidency in over 50 years—and we keep getting strong signals that he’s got it in his sights. That’s great news for workers, for small businesses, and for the small communities that have been left out in the collapsing concentration of our country for the last 50 years.

USDA Vilsack announces plans to boost competition:

Secretary Tom Vilsack said USDA will offer $500 million in grants, loans, and other assistance to help new meat and poultry processors enter the market, along with $150 million to support small plants that are already operating. The department will also move forward with a series of regulations to protect farmers and ranchers who work with large agribusinesses.

The National Sustainable Agriculture Coalition applauds Vilsack’s action:

NSAC is also pleased to see that USDA will issue new rules under the Packers and Stockyards Act. As directed in the Executive Order, this new rule will make it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.

Will Biden’s USDA follow through?  That would be real progress.

Jan 28 2021

Food trends predicted for 2021

I’ve been collecting predictions of what’s going to happen to the food industry this year.  Here are some, about cooking, sales, products, flavors, regulations, e-sales, robotics, and agriculture.

Feb 21 2020

Weekend reading: Industry schemes to deny harm

David Michaels.  The Triumph of Doubt: Dark Money and the Science of Deception.  Oxford University Press, 2019.  

Image result for The Triumph of Doubt: Dark Money and the Science of Deception

Even though this book is not strictly about food politics, it has enough about the sugar and alcohol industries to qualify.  I did a blurb for it.

Triumph of Doubt is an industry-by-industry account of how corporations manipulate science and scientists to promote profits, not public health.  Nothing less than democracy is at stake here, and we all should be responding right away to David Michaels’ call for action.

Michaels, a former OSHA official, has written an insider’s look at a wide range of industries that follow the tobacco industry’s playbook for casting doubt on inconvenient science.  The range is impressive: football, diesel fuel, opioids, silica dust, Volkswagen cars, climate denial, food packaging chemicals, alcohol, sugar, and Republican ideology

He’s got some ideas about what to do—keep conflicted scientists out of policy making, for example—but in this political environment?

That leaves it up to us folks to take to the streets.  If only.

Jul 4 2016

Happy Fourth of July!

Happy eating:

And happy thinking.  Check out Senator Elizabeth Warren’s speech on industry consolidation and concentration, including what is happening in the food industry.

Competition in America is essential to liberty in America, but the markets that have given us so much will become corrupt and die if we do not keep the spirit of competition strong. America is a country where everyone should have a fighting chance to succeed—and that happens only when we demand it.

Here’s one idea:

The Agriculture Department has a role to play in making sure that poultry farmers and produce growers aren’t held hostage to the whims of giant firms.

May 20 2015

Case study on why regulation matters: salt reduction in the UK

Thanks to Courtney Scott, a doctoral student at University of North Carolina, for sending me this account of the fate of Britain’s salt reduction strategies, published in the BMJ (British Medical Journal).

The lead author on the article is Dr. Graham MacGregor, Britain’s leading advocate for diets lower in salt.  It is about the derailing of Britain’s remarkable successful salt reduction strategy.

Under the auspices of Britain’s Food Standards Agency (FSA), the salt reduction program initiated in the early 2000s—getting companies to slowly but steadily reduce the salt in their products—was working well.

Most impressive: salt intake, blood pressure, heart disease, and stroke declined in parallel with the decline in salt in the food supply.

But in 2010, Britain elected a more conservative government.

Andrew Lansley was appointed secretary of state for health, and he moved the responsibility for nutrition from the FSA to the Department of Health. This disrupted the salt reduction programme, making it unclear who would be responsible for the policy. In 2011 Lansley launched the responsibility deal, whereby he made the alcohol and food industries responsible for reducing alcohol consumption and improving nutrition, respectively. As a result, salt reduction lost momentum.

The key points of the article:

  • Most of the foods that industry currently provide are very high in salt, fat, and sugars and are therefore more likely to cause cardiovascular disease and predispose to cancer than healthier alternatives.

  • The UK’s salt reduction programme…led to a significant reduction in population salt intake, accompanied by reductions in blood pressure and cardiovascular mortality.

  • The programme has been set back by the coalition government’s decision to hand power back to the food industry as part of the responsibility deal.

  • An independent agency for nutrition with a transparent monitoring programme is urgently needed to improve the food that we eat.

As I’ve explained previously, most salt—80% or more—in American diets is already in processed and prepared foods when they are presented to us.  That’s where the salt reduction has to come from.  As the authors explain,

Members of the food industry have said that they are keen to reformulate their foods to make them healthier. All they require is to be on a “level playing field” with the other major companies, so that they can make their foods healthier in a structured, incremental way. They need to be assured that there are proper reporting mechanisms in place and that all of the companies are being monitored equally. Enforcement is required, and if it doesn’t work, regulation or legislation must be enacted.

The debates over salt may be the most contentious in the field of nutrition (as the Washington Post puts it), but the parallels between the British decline in salt intake and in salt-related disease are impressive.

On a population basis, eating less salt is healthier.

This is something you can’t easily do on your own.  The food industry has to do it.  And food companies don’t want to, for obvious reasons.

Hence: the need for regulation.

Apr 10 2013

Why regulate? Because it works.

JAMA Pediatrics has just published the online version of a study by Daniel Taber et al, Association Between State Laws Governing School Meal Nutrition Content and Student Weight Status: Implications for New USDA School Meal Standards.

I wrote the accompanying editorial: School meals: A starting point for countering childhood obesity.

In it, I review how researchers like Taber et al are demonstrating how regulations aimed at changing the environment of food choice seem to be helping children and adults eat more healthfully.

That is why regulation is worth consideration.

The food industry cannot make significant changes on its own.  Food companies are beholden to stockholders and returns to investors.

We can’t count on consumer demand.  It’s up against the billions of dollars spent on food marketing, advertising, and lobbying.

It’s government’s role to level the playing field.

Studies like this one are beginning to show positive results.

If you take junk food and sodas out of schools, kids don’t eat as much of them and are healthier.  If you have strict nutrition standards for school food, the food is healthier and so are the kids.

This may all seem self-evident, but now we have research to prove it.

Government agencies should pay close attention and figure out everything they can do to make the food environment healthier for children and adults.