Can Politicians Save the Beef Industry?
By Jennifer Hill
In recent months US lawmakers have set their sights on the meat industry, slinging a variety of efforts at the wall, waiting to see what sticks. From old, failed legislation made new to senate hearings and executive orders, the meat business has had steady news coverage unlike we’ve seen for decades. While the sudden acknowledgment from a mostly unaware public has been nice, any time the government begins suggesting solutions, eyebrows should raise.
The flurry of political activity appears to be in response to a resurgence of those within and outside agriculture calling for change in the meatpacking industry where the “Big Four” control approximately 85% of the market. Calls for change have been fueled by diminishing prices for live cattle while boxed meat prices continue to climb, all of which was exasperated by COVID shutdowns. And much like the COVID crisis measures, the proposed solutions have been occasionally random, nonsensical and don’t all necessarily address the problem at hand.
Farm System Reform Act Reintroduced
Earlier this month Senator Cory Booker (D-NJ), an outspoken vegan advocate, reintroduced his agricultural legislation, The Farm System Reform Act, claiming it will “create a level playing field” in agriculture. While the bill does a number of things aimed primarily at the beef industry the most notable aspect falls in the take down of many family and corporate owned confined animal feeding operations, or CAFOs. The bill would place an immediate moratorium on new and expanding “large” CAFOs, and phase out the largest by 2040. A large CAFO is defined by the EPA as a facility holding more than 1,000 head of beef or 700 head of dairy cattle. To accomplish this the bill would authorize $100 billion of taxpayer money over 10 years to buy out existing large operations. Those in the industry know that a 1,000 head feedlot is in fact not large at all. Many small family businesses operate feedlots four and five times that size in order to achieve economies of scale. The drastic reduction in feedlot size will do nothing to improve the current lack of hook space in packing houses and a government forced closure of a massive sector of the beef industry certainly won’t make it easier to feed a growing population. Of course, it’s unlikely that Senator Booker was aiming to get more meat in US kitchens.
In addition to limiting CAFOs the legislation also aims to restore mandatory country of origin labeling. MCOOL has been hotly debated among producers for more than a decade, gaining and losing favor in conjunction with live cattle prices. As always, the question producers must ask is, at the end of the day who will foot the bill for mandatory labels? Historically the packers have passed that cost down to producers. Additionally, Canadian critics have already stated they will be watching the measure, reminding the US that the World Trade Organization threatened heavy sanctions against the US the last time MCOOL was enforced in 2015. On top of MCOOL the bill prohibits the use of the Product of US label on meat that was not truly produced in the US. A current loophole allows that label to be used if the animal was processed domestically, despite spending the rest of its time elsewhere.
The bill also strengthens the Packers and Stockyards Act, prohibiting packers from owning livestock for more than 7 days prior to slaughter and requiring that 50% of a covered packer's daily slaughtered livestock come through spot market sales from nonaffiliated producers. This section of the legislation has received the most widespread support as producers seek to knock back the “Big Four”. Unfortunately, it does nothing to limit the government monopoly on inspectors, increase available processing facilities and pricing transparency or decrease the Packer bottleneck.
National Cattlemen’s Beef Association immediately responded, calling the legislation misguided and bad news for 95% of cattle producers. R-CALF has declared the bill good and bad, calling the focus on origin labeling, “critically important” while condemning the CAFO limitation. Both groups will likely spend more time slinging mud at each other than presenting viable solutions.
Legislative Hearings
The House Agriculture Committee and the Senate Judiciary Committee have both spent the summer conducting hearings on beef supply chain and pricing concerns. Witnesses from all sectors of the beef industry gave testimony and faced questioning. Last week ranking Member of the Senate Judiciary Committee Sen. Chuck Grassley (R-Iowa) expressed concerns of the downsizing of the cash market and questioned Tyson and JBS representatives on their practices, which he described as anti-competitive. Tyson defended their practices, stating that what they pay producers depends on market conditions.
Like most senate hearings the likelihood that anything comes from the bluster and smoke is small. Thus far they’ve generated a few soundbites and applause from rural constituents who enjoy watching suits squirm.
President’s Executive Order
Early in July President Joe Biden gave a speech outlining his executive order, Promoting Competition in the American Economy, which directed numerous changes at the American agriculture industry. Included in the order was a directive to the USDA to review and strengthen the Packers and Stockyards Act, make it easier for individual producers to show damages against packers and protect those that do, invest $500 million in expanding meat processing, review product labeling, and provide producers expanded rights to repair equipment. He also ordered a report on the effect of retail concentration and its impact on food industries and encouraged the Federal Trade Commission to enforce anti-trust laws as they relate to big ag. While there were a few lucid ideas about the importance of market competition expressed in Biden’s speech, on the whole it’s hard to expect much from yet another government report.
Concerningly Biden also found the order to be the appropriate time to push Net Neutrality which was revoked by the previous administration.
Won’t the Government Save Us All?
Agriculturalists in America used to pride themselves on their fierce independence and sustainability. Unfortunately, the recent focus by lawmakers to rush in and save us from markets rather than end their own current promotion of monopolies and cronyism will likely do nothing to help the average American farmer or rancher. But what can we expect from an Administration whose fact sheet on the Presidential Executive Order begins with the sentence, “The economy is booming under President Biden’s leadership.”? Clearly our lawmakers are out of touch.