Biden abandons grilling of meat producers while prices remain high

President Biden’s beef with the meatpacking industry has gone up in smoke.

For the first three months of 2022, Mr. Biden and his advisers seemed to talk about little else than the perils of consolidation in the meat industry.

Beginning with a Jan. 3, 2022, White House forum, Mr. Biden accused industry leaders of exploiting small, independent farmers and slamming consumers with high prices. The president addressed the issue four times in public remarks that month.

The president deployed Cabinet secretaries to tell anyone who would listen that consolidation in the meat industry was responsible for soaring inflation and rising grocery prices. At the time, Republicans blamed Mr. Biden and congressional Democrats for spurring high inflation through massive government spending.

Mr. Biden dedicated two paragraphs to the relatively obscure issue of meatpacking consolidation in his most important platform: the State of the Union address.

Since April 2022, the administration has been largely silent on the issue despite relatively unchanged meat prices.

The average retail value of choice beef was $7.62 per pound in January 2022 and $7.64 per pound last month, according to the U.S. Department of Agriculture. The issue was notably absent from Mr. Biden’s State of the Union speech this year.

The reason, analysts say, is that the administration was wrong about the problems and solutions. Mr. Biden and his Cabinet blamed industry consolidation when they should have focused on the labor and cattle shortages caused by the COVID-19 pandemic.

“This administration talks about expanding capacity for small- and medium-sized meat producers, but the biggest pinch point is labor,” said Lee Schulz, an agriculture specialist with Iowa State University. “We’ve had a very low unemployment rate heading into the pandemic, and that continues to be a challenge. Some policy attention needs to be directed at that rather than adding physical space at plants.”

As Mr. Biden sees it, the meat industry is dominated by four global companies that are abusing their market power during the pandemic. He said the conglomerates are driving up consumer costs, underpaying farmers and tripling their profit margins.

Cargill, Tyson Foods, JBS, and National Beef Packing Co. control about 73% of all beef, 67% of all pork and 54% of all chicken that end up on dinner tables.

The president said corporate concentration empowered the few prominent players to set higher prices than a more competitive industry would allow. All four companies have denied allegations of profiteering.

“When corporations have to compete, their profits go up, but your prices go up when they don’t have to compete,” Mr. Biden said during his 2022 State of the Union speech, the last time he broached the subject. “You’ve got four basic meatpacking facilities. That’s it. You play with them, or you don’t get to play at all. And you pay a hell of a lot more. A hell of a lot more because there’s only four.”

Mr. Biden’s solution was to enable smaller, independent businesses to expand their processing capabilities to compete with the corporations. That would increase competition, thus lowering meat prices in grocery stores, he said.

In January 2022, Mr. Biden doled out $1 billion from the American Rescue Plan to help independent meat producers access cold storage and other equipment to improve product distribution. He announced that his administration would work with lenders to give independent meat companies more credit to add workers and expand facilities.

The Justice and Agriculture departments, meanwhile, announced an online portal to make it easier for farmers and ranchers to report anti-competitive industry practices. The portal collected 124 complaints in fiscal year 2022 and 40 so far in fiscal year 2023.

Yet meat prices have barely budged over the past 15 months. The average retail value of pork remains unchanged at $4.75 per pound. The average price of fresh whole chicken was $1.62 per pound at the time of Mr. Biden’s remarks and is now $1.87 per pound.

“The price of beef has not been impacted by the administration’s policies, nor by the flawed narrative surrounding industry concentration, which has been constant for more than a decade. In fact, the entire industry is at record levels of production in an effort to keep pace with demand,” said Sean Heather, vice president of antitrust policy at the U.S. Chamber of Commerce.

The American Farm Bureau Federation and the National Farmers Union, which hailed Mr. Biden’s efforts last year, both declined to comment for this report.

David Anderson, who teaches agricultural economics at Texas A&M University, said Mr. Biden’s efforts will ultimately pay off with lower prices but the results won’t be seen for a few years.

“I think it takes time to make a difference. There are a lot of longtime lags in this industry, particularly on the beef side,” he said.

The White House said large meatpackers were reporting record profit margins before COVID-19 and claimed it was evidence that industry consolidation was squeezing consumers and farmers. The administration’s data shows that the companies’ net aggregate income jumped from roughly $4 billion in 2016 to more than $6 billion in 2020.

Andy Green, senior adviser for fair and competitive markets at the USDA, said the four meat companies seized on the pandemic to further squeeze consumers. Agriculture policy has focused on “get big” or “get out” in hopes of lowering costs, he said, but consolidation has proved detrimental to farmers and consumers.

“The reality is that consolidation in the meat and poultry processing sector has created a dangerous bottleneck in the middle of our food system. A handful of large companies hold dominant positions in a market that all too easily squeezes out small businesses and entrepreneurs,” he said in a statement to The Washington Times. “When shocks like COVID-19 came about, it became very clear that those companies could demand higher prices from consumers and lower prices from producers — all while increasing their profit margins.”

Sarah Little, a spokeswoman for the North American Meat Institute, an industry trade association that represents meat producers and packers, including the four companies targeted by the Biden administration, said meat has lagged behind other food products experiencing inflation.

Data from the Bureau of Labor Statistics showed that prices for all food at home, including eggs and fish, increased 12% in 2022 while pork and beef prices barely changed.

“The so-called concentration of the market has not changed, but livestock supply and demand has. Most of the new packing capacity funded by the Biden administration has yet to break ground or send products to market,” Ms. Little said.

The White House said Mr. Biden hasn’t abandoned the issue even though he hasn’t talked about meat prices for a while. A White House spokesperson pointed to several Agriculture Department actions, including three implemented last month, to lower consumer prices.

Mr. Schulz said the prices are increasing mainly because processing plants have shut down or are operating with reduced capacity during the pandemic. While supply was reduced, demand for meat increased. The average American consumed 224.6 pounds of red meat or poultry in 2022, up from 204.6 pounds a decade ago, according to Agriculture Department data.

The number of beef cows in the U.S. as of Jan. 1 was 28.9 million, down 4% from last year and an 8.5% decrease from 2019.

It takes a while for processing plants to become operational, especially for beef. It takes a cow roughly two years to reach maturity to produce a calf and another 20 months for the calf to be ready for the slaughterhouse.

“The biology of the industry dictates the supply that you have. It takes years to produce beef from cattle. Supplies continue to be tight, and you are seeing very strong demand for beef. It’s economics 101,” Mr. Schulz said.