I'm always happy to read a column by my friend Gary Wertish, president of the Minnesota Farmers Union. His commentary appeared Monday morning in the Minnesota Reformer.
The Biden administration is right to fight corporate concentration in meatpacking
By Gary Wertish
Corporate monopolies threaten the future of Minnesota’s rural communities. They have decimated local businesses, shipped jobs overseas and driven family farmers from their land.
None of this is inevitable. It’s the result of policy choices.
One of those choices has been to abandon rules meant to protect family farmers and ranchers from the predatory and anticompetitive conduct of meatpacking giants. The Biden administration is poised to reinvigorate those rules, but legislation moving in the U.S. House of Representatives threatens the chance to restore fair, open and competitive markets.
Recently the House Appropriations Committee approved a budget for the United States Department of Agriculture that would defund USDA efforts to improve protections for farmers and ranchers. The bill would eliminate funding for the USDA to complete proposed rulemaking under the Packers and Stockyards Act, a 100-year-old antitrust law that once ensured a more level playing field in the industry, impacting not only farmers and ranchers, but also workers, consumers and rural communities.
The meatpacking industry is dominated by a small number of giant corporations. The four largest multinational meatpackers control 54% of poultry processing, 67% of pork packing and 85% of beef packing.
This extreme concentration gives these companies — such as Tyson Foods and foreign-owned JBS and Smithfield — immense power to privately govern the livestock industry and squeeze farmers and ranchers. Corporate consolidation is a reason that the farmer’s share of every dollar we spend on food dropped from 50 cents in 1952 to 14 cents in 2021, the lowest on record.
It has not always been this way. Several decades ago, meatpacking was much less concentrated. In 1977, the big four controlled 25% of the beef market, 35% of the poultry market and 33% of the pork market. Smaller, more localized processors were the predominant players in the marketplace, giving ranchers a wide variety of potential buyers in open and transparent markets. This competitive balance was the product of the Packers and Stockyards Act, or PSA.
In the early 1900s the meatpacking industry looked much like it does today. A series of studies by the Federal Trade Commission in 1919 found that five dominant corporations not only controlled between 61% and 86% in the various industries, but also had control over many of the distribution facilities. The study — combined with the advocacy of organizations like the Minnesota Farmers Union, which was founded in 1918 — led to passage of the PSA in 1921.
The law protects poultry and hog farmers and cattle ranchers from unfair, deceptive and anti-competitive practices in meat markets. A congressional conference report in 1921 said the intent of the PSA was “to be more aggressive than all previous antitrust or trade regulation.” The law, combined with tougher merger enforcement and technological changes that diminished the role of stockyards, loosened the grip of the packing giants.
Since 1977, antitrust enforcement has waned, and courts have made it increasingly difficult to effectively use the PSA and other anti-monopoly laws.
Courts have required that farmers bringing cases alleging violations of the PSA prove the conduct not only harmed them individually but affected competition across the entire industry. That’s a very steep — and expensive — legal bar to clear. This has made it difficult to challenge practices by meatpacking giants, such as retaliation against growers for participating in advocacy organizations; administering predatory “tournament systems” that peg pay to meeting regional output levels; or using contractual arrangements that drive down the price ranchers receive for their cattle.
Fortunately, USDA has proposed rules that will clarify that the PSA does not require farmers and ranchers to show competitive harm and that predatory practices that have short-term benefits for consumers should not be considered pro-competitive.
If policymakers want to help rural communities, they will flip the script on corporate monopolies and return economic power to the farmers, workers, small businesses and consumers who are the economic backbone of our nation.
This Minnesota Reformer article is republished online under Creative Commons license CC BY-NC-ND 4.0.
Photo: Just a handful of companies control two-thirds of the pork packing industry. Photo courtesy of U.S. General Accountability Office, via Minnesota Reformer.
Related posts
- MN Farmers Union president: A legislative agenda for Minnesota’s family farmers
- Where’s the meat? Solving a bottleneck in the meat supply chain vital to farmers’ profitability
- What's the beef? In separate letters Tina Smith & Kristi Noem join colleagues spanking processors
- Congratulations to Renville farmer Gary Wertish, new Minnesota Farmers Union president
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