Superior Market Updates – 1.11.22

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Date: April 20, 2021

Federal Action Plan for Meat & Poultry Processors

Rising prices of meat have become the norm over the last two years, especially for those working in the industry. Inflation for meat hit nearly a four-decade high this past November when prices rose 20.9% from the year prior. On top of this, there seems to be a growing disparity between smaller regional meat processors and the four largest national beef and poultry processors. According to the White House administration, these four processors account for 85% of beef production and 54% of poultry production. With these current issues, pressure has mounted to find out how to stabilize the U.S. meat industry.

Last Monday, the Biden administration outlined a plan to combat the growing concerns of inflation and competitive imbalance among meat processors. This action plan, which includes an array of financial grants and loans for independent meat processors, focuses on curbing the competition gap. In addition, funds will be available for workforce training and the reduction of overtime inspection costs. The plan totals over $1 billion in aid mainly geared for the smaller meat processors.

Along with this funding, the plan also looks to create more “clarity and strengthen” labeling rules centered around the Packers and Stockyards Act. The USDA will be announcing the details of this change at a later date that looks to add more traceability to meat being processed in the U.S. These efforts look to focus on helping U.S. farmers and ranchers by reporting law violations more effectively and to better define “Product of USA” labeling requirements.

This administration plan has been met with mixed reactions. Organizations like the U.S. Cattleman’s Association and American Farm Bureau have applauded the efforts to create more transparency and the commitment to smaller U.S. processors. These organizations see these actions helping get to the bottom line of why consumers continue to see higher meat prices along with giving farmers a fair shake. Others like the North American Meat Institute and the U.S. Chamber of Commerce are disappointed in the approach of this plan. The Meat Institute believes these actions have come too late and that the market has already started to right itself. They believe more attention should be given to the real problems at this time which are labor shortages and supply chain issues. The U.S. Chamber sees the plan as government intervention that is interrupting years of bipartisan antitrust laws. They warn that the plan could make matters worse by creating more supply challenges and continuing the upward trend of prices.

The impact of this plan remains to be seen. The coming weeks and months will show what the true impact is. The only certain thing is that many eyes will be watching to see what happens next.

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Sources:
Lucey, C. & Thomas, P. (2022, Jan. 3). Biden promotes plan aimed at tackling meat prices. Retrieved from https://www.wsj.com/articles/biden-promotes-plan-aimed-at-tackling-meat-prices-11641242596

Shearer, S. (2022, Jan. 7). Mixed reactions to White House meat processing action plan. Retrieved from https://www.nationalhogfarmer.com/news/mixed-reactions-white-house-meat-processing-action-plan

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