USDA wants to “strengthen” competition in US meat markets
The United States Department of Agriculture (USDA) announced last week that it intends to tighten outdated regulations protecting poultry, pig and livestock producers from “unfair, deceptive and anti-competitive” practices , according to a Press release.
Small ranchers hope new rules will make the industry fairer after meat conglomerates nearly monopolize it.
“We are looking at losing a whole chunk of this industry and this is something we have to stand up for and make sure we are heard,” Justin Tupper, a South Dakota breeder and vice president of South Dakota, told OCCRP. the United States Cattlemen’s Association. Monday.
The regulatory agency said it would protect the meat market by proposing three new rules to the century-old packer and stockyard law. The new rules will address clarity and application of the law, specific concerns about the so-called “poultry producer tournament system” and make it easier for producers to seek justice for unfair practices.
“The pandemic and other recent events have revealed how the concentration can wreak havoc on independent farmers and ranchers, while exposing working family consumers to higher prices and uncertain production,” said Agriculture Secretary Tom Vilsack.
“The Packers and Stockyards Act is an essential tool to protect farmers and ranchers against excessive concentration and unfair and deceptive practices in the poultry, pork and livestock markets, but the law has 100 years and must take into account modern market dynamics, “he said.” It shouldn’t be used as a haven for bad players. “
Four beef processors, Tyson Foods, JBS SA, Cargill and National Beef / Marfrig, control more than 80 percent of beef production, while three large pork companies control nearly 60 percent of pork production. This leaves small and medium-sized meat producers like Tupper at a standstill.
“They (the packers) can control the supply chain, they can control the outlets, and when there are only four places to go with them, they have enough market power to really control what they get. for them, ”Tupper told OCCRP.
Not only is competition limited, he said, but the big feedlots have “soft deals” with the big four processors in exchange for better prices on livestock, leaving independent farmers with paltry profit margins that sometimes do not cover their investment.
“They own them (the cattle) for a week or two and we raise and own them for a year and we break even or lose money and they make US $ 1,500 per head,” Tupper said. .
He explained that $ 150 to $ 300 per head would be a very fair share for packers, but they actually make 10 to 15 times that amount.
A USDA spokesperson told OCCRP that between 2015 and 2020, ranchers’ share of beef prices fell by more than 25%.
The “poultry tournament system” has been the subject of many complaints, according to the spokesperson. In the chicken industry, companies control almost all stages of production with contract farms providing chicks, feed, medicine and processing while farm owners bear the costs of housing and labor. -work.
Then the farmers are forced to compete in the “Poultry tournament system” which ties the price that poultry farmers are paid to their rank in a scoring system.
“Producers have no control over the results because the inputs (chicks, feed, etc.) are controlled by the companies and there is little transparency,” the USDA spokesman said. “As part of this process, producers are vulnerable to abuse. “
Add to all this, the global pandemic, packaging factory outbreaks, a crippled restaurant industry and a ransomware hack on the world’s largest meat packer have lowered the production rate, which has put ranchers down. like Tupper in a vulnerable position.
“When you start talking about these huge business conglomerates and the amounts of money they made while everyone was losing money to COVID, they blew everyone up on the coals, and I think one thing to keep in mind here is the consumers are hurt, ”Tupper said. “The meat in the grocery store is as high or higher than it has ever been.”
“When they make that much money, they have no incentive to step up the slaughter,” he said.