US intervenes to increase competition in the meat industry

The US government will invest in the country’s meat processing capacity and „revive” trade rules, arguing that Covid-19 has shown the industry needs more competition.

Approximately $ 500 million of the Biden Government’s „Build Back Better” investment in US infrastructure will be used in new meat and poultry processing facilities.

Another $ 155 million will be used to support existing smaller processors in the U.S. meat industry in areas such as capacity expansion and inspection fee costs.

The plan also calls for the U.S. government to seek to strengthen the country’s Packers and Stockyards Act, a law passed a century ago to protect farmers from unfair trade practices.

In response, the North American Meat Institute, the trade organization representing meat and poultry companies in the United States, warned of the „unintended consequences” of revising the law.

Nonetheless, US Secretary of Agriculture Tom Vilsack said the Biden administration’s announcement was in response to how Covid-19 „uncovered a rigid, consolidated and fragile food system.”

Vilsack added, “The USDA investment [the US Department of Agriculture] by expanding meat and poultry capacities along with the restoration of the Packers and Stockyards Act, will begin to level the playing field for farmers and ranchers. This is a unique opportunity to reshape the food system to be more resilient to shock, provide greater value to producers and workers, and provide consumers with affordable choices of healthy food produced locally and regionally by farmers and processors of diverse backgrounds. ”

The US government argues that the country’s agricultural markets have become „more concentrated and less competitive,” creating „pressure” on farmers and ranchers.

It points to the US meat industry and indicates that „four major meat packers” account for 80% of the country’s beef market. In the first months of the pandemic, when processing plants were closed, farmers faced shortages of customers and shelves were short of products, the administration argues.

The US government believes the “risks” to the market will increase in light of the climate crisis and cybersecurity concerns. Last month, JBS, one of four beef processors that make up 80% of the US market, was hit by a security breach that affected operations in the country.

The proposed amendments to the Packers and Stockyards Act will result in the USDA „clarifying” what it believes is against the regulations. The department, meanwhile, said it will „address oppressive chicken processing practices” and „reaffirm the USDA’s longstanding position that it is not necessary to demonstrate harm or likely harm to competition to determine a violation of the law.”

Julie Anna Potts, President and CEO of the Meat Institute, said, “President Biden’s executive order calling for the USDA to change the Packers and Stockyards rules will have unintended consequences for consumers and producers. Government intervention in the market will raise food prices for consumers at a time when many are still suffering from the economic fallout from the pandemic.

“These proposed changes will open the floodgates to litigation that will ultimately limit ranchers’ ability to market their livestock at will. These proposals have already been examined and rejected and contradict the precedent that was created in eight federal pellate circles. ”

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