January 25, 2022
More than once in recent weeks President Joe Biden has shared his quote: “Capitalism without competition is not capitalism. It’s exploitation.” His discussions in recent weeks promise he will bring lower prices to the meat case and higher prices for farmers.
“In the coming weeks and months, Americans can expect to see more protections for farmers and ranchers selling products like beef, pork and poultry,” shared Biden at the second meeting of the White House Competition Council on Monday, Jan. 24. The Competition Council was set up by the President’s July competition executive order to coordinate and monitor progress across the entire federal government. It is comprised of 10 Cabinet members, including Secretary of Agriculture Tom Vilsack, and the heads of seven independent agencies.
Our action plan for a fairer, more competitive, and more resilient meat and poultry supply chain is a good thing for consumers and a great thing for farmers. pic.twitter.com/Nk7gdO9IHQ— Secretary Tom Vilsack (@SecVilsack) January 5, 2022
In the meeting Monday, Vilsack explained USDA’s plan to expand competition in meat processing by funding new and independent processors and strengthening rules to protect farmers and ranchers. This administration continues to pour funding into expanding meat processing capacity, predominantly from the $1 billion of funds allocated under the American Rescue Plan passed by Congress in early 2021. Now that money is closer to being in the hands of those looking to address the vulnerabilities of the meat supply chain.
Funding the middleman
USDA Undersecretary for Marketing and Regulatory Programs Jenny Lester Moffitt says coming out of the pandemic, it became clear the need to grow the middle of the supply chain and address the bottleneck that is currently there in meat and poultry processing capacities.
“This is a big deal,” Moffitt says of the dedicated funds. “This is really about adding in more processing capacity, adding in diversity in processing capacities, and adding in more local and regional markets and really making a much more resilient meat and processing supply chain.”
The $1 billion allows the administration to apply a multi-prong approach of providing funding and grants to aid new and existing facilities. Moffitt shares USDA designated $375 million for grants that will be split into two phases. The first phase of $150 million coming this spring will support 15 new or existing facilities looking to grow and expand to serve more producers.
Moffitt says USDA hopes to see a variety of sizes and species apply, whether that is a larger more regional independent processing facility or smaller processing facilities. The first round of funding will help those farmers or facilities that are almost across the finish line but need just a little more financing.
The remaining $225 million will be available this summer in phase two, Moffitt says, recognizing that some projects need a little bit more time to get their applications together.
USDA also plans to deploy $275 million in partnerships with lenders to increase access to capital, initially with an emphasis on lenders who are invested in underserved communities. Vilsack already announced $100 million available in these guaranteed loans to back loans made by private lenders that invested in independent-owned processing.
In addition to the above investments from the American Rescue Plan, USDA has made $32 million in grants to 167 existing meat and poultry processing facilities to help them reach more customers by becoming Federally inspected through the Meat and Poultry Inspection Readiness Grants Program.
Partnering with local producers
Sixth generation family farmer Corwin Heatwole was one of five farmers who participated in a roundtable Jan. 3 with Biden on meat processing challenges. He founded Farmer Focus, which offers a unique business model for poultry farmers seeking a departure from contract poultry farming.
Unlike traditional contracts, Farm Focus’ model empowers farmers by allowing them to own their flocks, eliminating farmer competition for compensation and providing fair pay for their hard work. Farmer Focus built a system that allows farmers to work together, driving innovation and supporting farmers' desire to raise the best chicken possible.
Heatwole explains one of the largest burdens for smaller farmers is the entry cost to ownership. “Due to Farmer Focus’ model being unique and organic, it’s been historically harder for our farmers to secure lending from banks and the USDA,” he explains. He hopes that the funds committed with the recent USDA announcements can ease the entry-level burden for small farmers while increasing resources for research and innovation that will help keep alternative farm models like theirs remain competitive.
“We believe that competition is the key to a thriving poultry industry that provides fair pay to farmers and transparency to consumers,” Heatwole adds. “We are optimistic about the administration’s focus on increasing processing capacity for independents. In addition to opening up options and opportunities for generational family farmers, consumers will benefit from choice in how their chickens were raised and through the added transparency of labeling as laid out by Secretary Vilsack and President Biden.”
Heatwole says he’s hopeful based on what he heard during his roundtable discussion with the President. “We believe this administration is committed to fostering a fair, more competitive and more resilient meat industry. We were truly humbled to be invited to join the discussion on this critical topic, which touches all of us. I truly believe that together we can continue to level the playing field for farmers and ranchers and establish a more resilient food supply network.”
Brent Johnson, president of the Iowa Farm Bureau Federation, also offered a farmer voice in the roundtable discussion with the President. “The message that I delivered to the President was specifically talking about the price discrepancy for what farmers received as dress meat prices versus what consumers buy in the grocery store,” Johnson says.
Currently farmers are getting $2 to $2.25 per pound for their meet, however, Biden mentioned hamburger at the grocery store is $5/lb. However, Johnson told Biden at his grocery store hamburger prices are up to $7/lb.
“We had a really nice back and forth dynamic with the President. He was very receptive to those conversations,” Johnson says.
Meanwhile, the North American Meat Institute says the Biden administration has alleged that meat and poultry industry concentration is to blame for rising consumer prices. “The truth is not so convenient,” NAMI says.
Using USDA’s meat industry concentration data, although the four-firm concentration in fed cattle beef packing has remained relatively constant since 1994, the Consumer Price Index for beef has been variable over that same period, sometimes above and sometimes below the overall CPI.
“If concentration is causing the recent rise in consumer prices for meat and poultry products, then why did concentration not cause inflation five or ten years ago?” NAMI states.
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