The Biden administration has a plan to eliminate some of the concentration in the meat packing industry. With this intensity of four large companies controlling 85% of the beef market, competition is waning for smaller producers. For poultry, the top four processing firms control 54% of the market, and in pork, it’s 70%.
With these top companies controlling so much of the supply chain, the Biden administration is saying these conditions needs to change. In July, President Joe Biden signed an executive order on promoting competition in the American economy.
Many ranchers now have little or no choice of who to sell their animal to, causing their income to decline. Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared to about 39 cents today, according to the USDA. For hog farmers, the price has decreased from an average of 50 cents 50 years ago to 19 cents today, the USDA reports.
The administration is calling for an action plan that they are calling a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain. The Action Plan includes four core strategies, including better earnings for producers and more choices and affordable prices for consumers.
The administration plans to use $1 billion in American Rescue Plan funds for expansion of independent processing capacity. Kansas has four large meatpacking plants in the state: two in Dodge City and two in the Garden City area.
Kansas groups said the need for processing capacity is vital. “We’ve identified the need for additional processing capacity,” said Matt Teagarden, Chief Executive Officer of Kansas Livestock Association. “The last two years, the supply of fed cattle has exceeded our ability to get them harvested in a timely manner.”
The supply chain disruptions due to COVID-19 and the Finney County fire are leveling off.
“In the last six or eight weeks we have kind of gotten through that backlog of cattle and the market has responded accordingly,” Teagarden said. “Additional processing capacity would be positive for our members. That’s something that we support.”
Richard Felts, the president of the Kansas Farm Bureau, said having more processing plants is important.
“We’ve heard from the producers is we need to have more opportunities to have animals processed,” Felts said. “And obviously, part of the issue is there’s just more livestock available to be harvested than there is a capacity.”
Through their analysis of stakeholder input, USDA identified an urgent need to: expand and diversify meat and poultry processing capacity; increase producer income; provide producers an opportunity to have ownership in processing facilities; Create stable, well-paying jobs in rural regions; raise the bar on worker health, safety, training, and wages for meatpacking jobs; spur collaboration among producers and workers; Prompt state, tribal, and private co-investment and provide consumers with more choices.
“As concentrated as our protein supply system is monopolized, any efforts to try and make a more competitive system is good,” said Donn Teske, president of the Kansas Farmers Union. “We have to do better.”
All three representatives said there are many details that need to be worked out, but all three are positive that this issue has made it to the forefront. And because Kansas has more than six million head of cattle and houses around one-quarter of the fed cattle in the U.S., all three expect having more processers, whether small ones grow larger or new ones start up, will help the ranchers in the Sunflower State.
“If this effort supports private investment and additional packing capacity, I think that private investment is going to be drawn to where there are supplies of market ready cattle,” Teagarden said. “Kansas will come out just fine.”
As reported in The Hutchinson News.
