July 2021, Volume 27, Number 3
Meat and Migrants
Red meat prices rose in summer 2021, reflecting rising demand and difficulty finding enough workers to staff dis-assembly lines. A cyber attack closed nine beef processing plants of JBS, the largest US beef producer and the second-largest US pork producer, for a few days in June 2021. JBS paid $11 million to unlock its computers and restart operations.
Brazil-based JBS is the world’s largest meat company by sales, with worldwide revenue of $53 billion in 2020.
As the retail and farm prices of beef diverged in summer 2021, farmers complained that concentration in the meatpacking industry lowers the price they receive for cattle. Four firms, JBS, Tyson, Cargill, and National Beef Packing, account for 80 percent of US beef, while Smithfield Foods, JBS and Tyson produce 60 percent of US pork, and all had record profits in 2020. Meanwhile, some farmers complain that they are losing money on each cow or pig they sell because meatpackers buy relatively few animals in live auction markets.
Suits filed by grocery chains, ranchers and others allege that the meatpackers are conspiring to hold down farm prices and raise the prices they charge for meat. The North American Meat Institute, which represents large meatpackers, disputed these charges, saying that cattle prices were depressed when slaughter lines slowed or stopped due to covid.
Democrats introduced the Farm System Reform Act to crack down on the monopolistic practices of meatpackers and corporate integrators, stop the growth of concentrated animal feeding operations (CAFOs), and return to mandatory country-of-origin labeling of meat. Proponents want to protect family farmers from large meatpackers, while opponents say that the FSRA is government overreach into a system that produces quality red meat at low cost for consumers.
Chicken. Chicken processing is less concentrated than red meat packing, but chicken processors have more control over the farmers who raise chickens for them. Chicken processors supply chicks and feed to farmers. Some use a tournament system that pits farmers against each other to determine how much each is paid for chickens.
Cal-OSHA levied $181,400 in fines on Foster Poultry Farms and several staffing agencies for failing to protect employees at Foster’s Livingston, California chicken processing plants from Covid and for failing to timely report a fatality from Covid. The staffing firms cited included Human Bees, Marcos Renteria Ag Services, Intermountain Employment Services (Ascend Staffing), and Staffing Solutions.
The price of chicken rose as absenteeism reduced line speeds in poultry processing plants while fast food chains promoted chicken sandwiches. Tyson Foods said in May 2021 that a third of its 125,000 workers had been vaccinated, and that it was raising wages and introducing flexible work shifts to attract more workers.
Infrastructure. President Biden’s infrastructure investment plans raised questions about investing in people versus places; should people in lagging areas be encouraged to get more education and leave the area for jobs elsewhere, or should governments invest in local projects so that people do not have to move? Coastal cities have been attracting venture capital and educated people, widening the gap with places in the Midwest and south that are losing economic activity and people.
Biden plans to send more federal R&D funds to lagging states. Five states received half of federal R&D funds in 2018, California, Maryland, Massachusetts, New York and Virginia.
Smaller cities such as Greenville, South Carolina that attracted new residents in 2020 may become new economic hubs. Greenville attracted BMW and Michelin and eventually 120 other auto-related firms, and the city revamped Falls Park along the Reedy River to improve the local quality of life.