Sweeping meatpacking reform introduced in the Senate
During the first week of March, a group of Senate Democrats introduced sweeping legislation to restructure the U.S. meatpacking industry, arguing changes are necessary to restore competition in livestock markets and lower grocery prices for American families.
Deemed the Family Grocery and Farmer Relief Act, the legislation was introduced by Senate Minority Leader Chuck Schumer (D-NY) and cosponsored by Sens. Cory Booker (D-NJ), Peter Welch (D-VT), Elizabeth Warren (D-MA), Bernie Sanders (I-VT), Ruben Gallego (D-AZ), Jeff Merkley (D-OR), Brian Schatz (D-HI), Dick Durbin (D-IL), Ed Markey (D-MA), Andy Kim (D-NJ), Chris Murphy (D-CT) and Sheldon Whitehouse (D-RI).
The senators believe the bill would address market concentration in the meatpacking sector, which they argue has harmed farmers and ranchers and contributed to higher retail meat prices. It would also implement several major reforms to the meatpacking industry, including restrictions on market concentration, new antitrust enforcement measures and limits on foreign ownership in the U.S. meat supply chain.
“The pernicious stranglehold of the meatpacking monopoly has weakened our supply chains and price gouged consumers at the grocery store,” Schumer states. “This is not the ‘Golden Age’ President Donald Trump promised, but it’s what this administration does best – cater to special interests and corporations at the expense of middle-class families.”
“This is why Democrats are going to do what Trump refuses to do – put the affordability crisis front and center, every day, all year long,” he adds.
Major structural changes
One of the most significant provisions in the bill would require major meatpacking companies to operate in only one protein sector, instead of multiple species markets.
Companies currently involved in more than one protein sector would be required to choose one protein sector and divest other portions of their business.
The bill also proposes a cap on the concentration of beef processing at both the regional and national level, and if these limits are exceeded, the Federal Trade Commission (FTC) would be required to order companies to sell off processing plants, facilities or business units until competition is restored.
In addition, the measure would restore the FTC’s authority to enforce antitrust laws in the meatpacking sector; prohibit foreign leverage over the domestic meat market; place emphasis on unfair and unjust discriminatory pricing practices in retail and wholesale meat markets and authorize the Small Business Administration to provide financial assistance, loan guarantees, technical assistance and other support to farm cooperatives and small businesses.
Those in support of the bill say it targets a market structure in which a handful of large corporations dominate processing, as industry giants like Tyson, JBS, Cargill and National Beef currently control around 85 percent of the U.S. cattle processing market, nearly 67 percent of pork processing and about 60 percent of poultry production.
Schumer contends this has resulted in an anti-competitive environment which harms livestock producers and contributes to rising food prices.
Mixed reaction
Reactions to the proposal have been mixed across the livestock industry.
R-CALF USA welcomed the legislation, saying it reflects growing recognition of structural issues within the industry.
“For decades, R-CALF USA has been rigorously fighting on behalf of cattle feeders and ranchers for free and fair competition in the cattle markets,” states R-CALF USA Chief Executive Officer (CEO) Bill Bullard. “We welcome Congress’ recent effort to address the competition crisis plaguing our nation’s cattle markets.”
Bullard goes on to note the legislation targets some of the same concerns raised by the Trump administration.
“President Trump directed the U.S. Department of Justice (DOJ) to investigate the nation’s largest beef packers for potential collusion, price-fixing and price manipulation and issued an executive order directing the DOJ and FTC to form task forces to determine whether beef prices are being distorted throughout the supply chain,” Bullard explains. “Schumer’s bill similarly calls on the FTC to address concentration-driven distortions in retail beef prices.”
“The administration and Congress are aligned – both recognize the scope of the crisis facing the U.S. beef supply chain, which has seen the alarming contraction of the American cattle herd and a steady loss of the farmers who care for those animals,” he adds. “We will closely analyze Schumer’s bill, engage actively in the debate over its passage and potential improvements and treat it as a serious proposal to address the broken market conditions which have harmed America’s cattle producers for far too long.”
Conversely, meat industry representatives like the Meat Institute strongly criticized the proposal, arguing it could disrupt the livestock supply chain and ultimately increase consumer prices.
Meat Institute President and CEO Julie Anna Potts says the legislation is “flat out absurd” and would likely “backfire spectacularly.”
“Schumer’s bill and other efforts to villainize meatpackers is simply reckless election-year pandering which threatens to damage a crucial industry at the center of every American meal,” Potts says. “If the senator is trying to make meat and poultry more affordable for consumers, this is the wrong approach. It will have the opposite effect. While this may be just a messaging bill to Schumer, it is real life for American families, farmers and ranchers and for the 3.2 million Americans employed throughout the industry.”
Potts further warns forcing companies to divest operations would undermine the efficiency of the meat processing sector and notes beef packers have already been operating under tight margins.
“None of this changes the reality the U.S. has the smallest cattle herd in 75 years,” she states. “Consumer beef prices reflect short cattle supply and high consumer demand. Schumer’s bill cannot wish away the free market fundamentals of supply and demand.”
“The ensuing chaos and likely significant drop in meat production will upset delicate supply and demand forces, ultimately forcing retail and foodservice to hike consumer prices for beef, pork and poultry. It comes at exactly the wrong time when food prices are already too high for many American families,” she adds.
Potts continues, “These actions would create uncertainty for livestock and poultry producers, especially cattle producers. Provisions of the bill would hit cattle feeders especially hard, putting some out of business completely. Costs would also be added to transport cattle to feedlots in other regions, and when Schumer’s bill results in fewer beef packing facilities in this country, producers will be faced with less processing capacity, which will lead to a smaller industry. None of this encourages America’s beef producers to invest in their business and raise more animals.”
“Such a foolish proposal would never even be considered in another industry,” Potts concludes. “Imagine the federal government mandating Ford only manufacture trucks, while forcing them to sell off all their other vehicle lines to separate small businesses. It is unthinkable in a free market. They don’t even do it in Russia anymore.”
A path forward
In addition to garnering divided opinions, DTN Policy Editor Chris Clayton says the Family Grocery and Farmer Relief Act faces an uncertain future in Congress.
In a March 5 DTN article, Clayton notes the proposal currently has only Democratic cosponsors and no Republican support, making its path forward in the Republican-controlled Senate unclear.
For cattle producers, meatpackers and policymakers, the issue of market concentration is likely to remain a central topic as Congress continues to weigh reforms aimed at strengthening the nation’s food supply chain.
Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
