A Handful Of Big Meat Packing Companies May Be Pushing Up The Price Of Groceries
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Grocery prices are rising fast, and the Biden administration thinks meatpackers are partly to blame. The White House suggests that a handful of big meatpacking companies are pushing up prices at the supermarket, even as farmers and ranchers are struggling. The companies deny that. The administration's beef with meatpackers is part of a larger campaign against what the White House sees as anti-competitive behavior by big business. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Some of the costliest items in your shopping cart these days are likely to come from the butcher department. Beef, pork and chicken prices are the biggest drivers of supermarket inflation this year. Just last month, wholesale meat prices soared by 8 1/2%.
ADAM JONES: It's just outrageous. We're not talking about filet mignon. We're just talking about being able to make spaghetti or being able to make tacos.
HORSLEY: Adam Jones knows his beef. Jones raises Angus cattle in northwest Kansas, and he grew up in the cattle business.
JONES: My dad was a feedlot manager for about 30 years. So I was - probably in second grade, I didn't realize that everyone didn't live on the edge of a feedlot.
HORSLEY: Jones calls himself a conservative Republican, but he welcomes the Biden administration's push to bring more competition to the meatpacking industry. Right now, more than 80% of all the beef in the U.S. is slaughtered and packed by just four big companies. So ranchers don't have a lot of options about where to sell their cattle.
JONES: There has been merger after merger. It's gotten to the point where there's no competition in our industry at all.
HORSLEY: A similar handful of companies also controls processing of more than half the chicken in the U.S. and two-thirds of the pork. Agriculture Secretary Tom Vilsack says that gives industry giants like Tyson, Smithfield and JBS enormous leverage over both farmers and consumers.
TOM VILSACK: Farmers are losing money on cattle, on hogs and poultry that they're selling at a time when consumers are seeing higher prices at the grocery store. And there are now record profits or near-record profits for those in the middle.
HORSLEY: Vilsack says meatpackers' stranglehold on the market lets them command higher prices at the supermarket while also putting the squeeze on ranchers, who, in some cases, can't even cover their costs.
VILSACK: And I remember talking to a producer the other day at Council Bluffs, and he said, I don't get this. I just sold my cattle, and I lost $150 a head. But the processor made $1,800 a head. How can that be?
HORSLEY: The administration is setting aside half a billion dollars to help bankroll new meat processors to compete with the big four. The Justice Department is also investigating alleged price fixing in the chicken market. The No. 2 chicken processor, Pilgrim's Pride, pleaded guilty this year to conspiring with others to limit production and keep chicken prices artificially high. But Tyson, the nation's largest beef and chicken processor, categorically rejects the idea that the industry is overly concentrated or that that's hurting ranchers and consumers.
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SHANE MILLER: The present spread between live cattle and beef prices has everything to do with the law of supply and demand.
HORSLEY: Shane Miller, Tyson's group president for fresh meats, told a Senate committee this summer the pandemic and other shocks have forced packing houses to slow down their slaughtering operations.
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MILLER: This led to an oversupply of live cattle and an undersupply of beef, all while demand for beef products is at an all-time high. So it should not surprise any of us that as a result, the price for cattle fell while the price for beef rose.
HORSLEY: The meatpacking companies argue in normal times, their giant size makes them more efficient and helps keep prices for consumers low. In recent decades, that argument carried a lot of weight. Government regulators were willing to go along with one merger after another so long as hamburger was cheap. But the Biden administration is more skeptical of supersized corporate power. Claire Kelloway, who's with the anti-monopoly Open Markets Institute, says it's risky to have so much of the nation's food supply in the hands of a few big companies.
CLAIRE KELLOWAY: Between these recent price shocks and the pandemic and ongoing allegations of price fixing, that argument for consolidation is falling apart. And there's increasing evidence and suspicions that this market power has gone too far and is beginning to hurt consumers.
HORSLEY: Almost exactly a century ago, the federal government passed a law to crack down on excesses of what was then called the meat trust. The Biden administration is dusting off that strategy, and it may find fresh support from shoppers facing sticker shock at the butcher counter. Scott Horsley, NPR News, Washington.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.