WASHINGTON, Sept.8 (Reuters) – The Biden administration plans to take a tougher stance on meat packers it says are causing sticker shock in grocery stores.
Four companies control much of the U.S. meat processing market, and key aides to President Joe Biden blamed those companies for rising food prices in a blog on Wednesday.
As part of a package of initiatives, the administration will channel $ 1.4 billion in cash for the recovery of the COVID-19 pandemic to small-scale meat producers and workers, administration assistants said. in the blog post. They also pledged measures to “crack down on illegal pricing,” White House aides said in the blog.
Four companies slaughtered about 85% of grain-fed cattle in the United States that are processed into steaks, roast beef and other cuts of meat for consumers in 2018, according to the most recent data from the United States Department of Agriculture ( USDA).
The four major processors in the US beef industry are: Cargill (CARG.UL), a global commodities trader based in Minnesota; Tyson Foods Inc (TSN.N), the chicken producer who is the largest American meat company in terms of sales; JBS SA (JBSS3.SA), based in Brazil, the world’s largest meat packer; and National Beef Packing Co (NBEEF.UL), which is controlled by Brazilian beef producer Marfrig Global Foods SA (MRFG3.SA).
Tyson shares briefly dipped into higher volume trading after the Reuters report.
The companies did not immediately respond to requests for comment.
“Making inflammatory statements that ignore the fundamentals of how supply and demand affect markets does nothing,” said Mark Dopp, chief operating officer of the North American Meat Institute, an industry group that represents meat packers. “US consumers of most goods and services see higher costs, in large part due to a persistent and widespread labor shortage. The meat and poultry industry is not different.”
Price hikes for beef, pork and poultry have led to half of the price hikes Americans have paid for the food they eat at home since December, the White House said. And the administration sees these companies reaping too much profit after the stimulus helped support demand for their products.
“We have helped support this market, and it is frustrating to see these companies turn around and raise prices,” Bharat Ramamurti, deputy director of the White House National Economic Council, said in an interview. “What we are seeing here smacks of pandemic profit and is the behavior that the administration finds concerning.”
The U.S. Consumer Price Index (CPI) showed beef and veal prices in July were up 6.5% from a year earlier, while poultry prices were up by 5.3% and pork prices were up 7.8%. Last year’s poultry price increases were the largest since 2004 and the largest since 2014 for beef and veal as well as pork.
Rising inflation has posed a serious threat to Biden’s efforts to contain the COVID-19 pandemic – his top priority as president – and stage an economic recovery from the recession it brought about.
The Biden administration has responded to these problems in part by stepping up its efforts to crack down on what it sees as anti-competitive and monopolistic behavior that could raise prices. A meeting of the new White House Competition Council created by Biden is scheduled for Friday.
The USDA and the Department of Justice have previously conducted an investigation into pricing in the chicken processing industry. Read more
“The goal over time is to bring these prices down,” Ramamurti said.
U.S. lawmakers seek to tighten oversight of the beef industry as concerns over anti-competitive behavior rise after the pandemic and a cyberattack on JBS USA. Read more
The administration is “encouraged” by bipartisan legislation that could make it easier to negotiate prices in the meat market, she said in the blog.
Reporting by Trevor Hunnicutt in Washington Additional reporting by Tom Polansek in Chicago and Chuck Mikolajczak in New York Editing by Matthew Lewis and Jonathan Oatis
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