Congress holds hearings on beef prices as cost of food soars

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Lawmakers on Capitol Hill have aggressively questioned the chief executives of the country’s four major beef producers, accusing them of engaging in anti-competitive practices that have financially harmed cattle ranchers and driven up the price of meat.

The four multinational corporations – National Beef, JBS, Cargill and Tyson – control 85 percent of the beef industry. Allegations that these meatpackers have had to abolish their position in a highly concentrated market have led to $ 400 million in fines and settlements in recent years. Critics of the companies’ conduct also say industry consolidation has squeezed both ends of the supply chain, with ranchers paying unsustainable prices for their cattle and consumers overpaying at the grocery store.

Defenders of the meatpacking firms say they are scapegoated for inflation. Tyson chief executive Donnie King the actions of the defended his company Wednesday, The Cattle or Beef for Setting Prices.

“These prices are set by straightforward market forces, namely available supply and consumer demand. These market forces mean that there are times when the commodity business cycle favors one party over another, ”he said.

But lawmakers have taken a sharp tone with executives in the face of rising food prices and concerns that companies have taken advantage of. The four companies’ collective net profits rose more than 300 percent during the pandemic.

Last year, the prices for beef, pork and poultry increased by more than half for other types of food, accounting for more than half of the price inflation at grocery stores. But in the past couple months other categories, such as produce, eggs and grains, have also been skyrocketed.

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The House and Senate agriculture committees before the hearings designed two bills to provide relief to consumers and ranchers and prevent anti-competitive practices. The Meat Packing Special Investigator Act, co-sponsored by Sens. Jon Tester (D-Mont.), Charles E. Grassley (R-Iowa) and Mike Rounds (RS.D.), would create a new US Agriculture Department office for anti-competitive practices in the meat and poultry industries. The Cattle Price Discovery and Transparency Act, co-sponsored by Grassley, Tester and Sens. Deb Fischer (R-Neb.) And Ron Wyden (D-Ore.), Would establish negotiated sales minimums and require clear reporting of marketing contracts to ensure ranchers are getting a fair shake in a highly consolidated cattle market.

Tester, who testified Tuesday in support of these two bipartisan bills, said that the meat industry is more consolidated today than it was a century ago and that rural America is drying up because farmers and ranchers can’t afford fair prices for their goods.

Passage of these two bills into law will mean better prices for consumers, too, Tester said in an interview.

“Competition benefits the consumer, and right now that competition doesn’t exist,” he said. “Not only is getting the farmer [ripped off], but the consumer is, too, because packers can set the price at both ends and make as much money as they want in the middle. The competition will drive down prices. “

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In a statement to The Post, Grassley said, “This issue has been around long enough to inflate the spike, but the current economic and political conditions only further justify our bipartisan reforms.”

Not everyone is in agreement that consolidation in the industry is the problem or that these new bills can fix it.

In a letter to House Agriculture Committee leaders, The US Chamber of Commerce said that “real, underlying causes driving up prices” were coronavirus-related supply chain disruptions and increased input costs, particularly higher energy and labor costs.

“Rather than blame American business, policymakers should explore other avenues to promote competitiveness and lower prices, including expanded energy production, tariff reduction, and regulatory relief,” executive vice president Neil Bradley said in an interview. “And they should keep in mind that monetary policy is the best tool to fight inflation.”

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Rep. Glenn Thompson (Penn.), The Republican Representative of the House Agriculture Committee, said Wednesday that he was “very disappointed in the way this has come together,” adding that “there has been collusion, manipulation or other wrongdoing by packers,” Then the law should be enforced by the USDA and the Department of Justice. Absent such findings, it’s time to stop demonizing the packing industry. “

Thompson said that at every turn, the Biden administration had erroneously pointed the finger at the meatpacking industry as single-handedly responsible for rising food costs.

National Economic Council Director Brian Deese has taken a look at the consolidation between the meat industry and the rising prices of meat. Last year, President Biden issued an executive order focusing on antitrust enforcement and consolidation of the directly addressing meat industry. And in January, the White House listed $ 1 billion in aid for smaller meat-industry processors, aimed at the four most powerful meat companies.

The latest effort to combat rising prices is the White House offering $ 1 billion in aid to smaller meat-industry producers

Still, there is little doubt that Big Meat’s practices have been severely impacted by American ranchers. Gilles Stockton, spokesman for the Northern Plains Resource Council, a Montana agriculture and conservation group, said when he ran in 1975, “Out of every dollar spent on beef, 71.3 cents went to ranchers or feedlots. Now that is 36.4 cents. ”

He said the pandemic was an opportunity for the “beef packing cartel” to take advantage and pay less for cattle.

“They were using their excavation packs as they were under stress and not at full capacity because their workers were sick,” he said. “At the same time, there was a huge demand for beef, so prices skyrocketed. But this is not a one-off issue. In 2015, I was paid $ 2.50 per pound. It’s about $ 1.70 now. ”

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Tyson’s King was strongly objected to the idea of ​​”pandemic profiteering” in his testimony, saying, “We just didn’t have enough people to fully staff our plants,” Cattle prices in the corresponding drop. At the same time, “the price for finished beef – the beef that the consumers buy at the time – is rising, driven by skyrocketing consumer demand” and “basic economics holds that demand is high and supply is low, prices will rise,” That’s exactly what they did. ”

The House Agriculture Committee will continue to solicit feedback on both bills before it takes action.

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