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April 2022, Volume 28, Number 2

Food System: Meat

The Biden Administration is trying to increase competition in meat processing by providing $100 million in grants and loans to small meat processors and increase competition between meatpackers for farmers’ cattle. By supporting smaller meatpackers, the goal is to encourage the four firms that process 85 percent of US cattle, JBS USA Holdings, Tyson Foods, Cargill and National Beef Packing, to pay higher prices for cattle to farmers.

The market share of the largest four meatpackers rose from 25 percent in 1977 to 71 percent in 1992 as meat processing firms merged and were sold to larger entities. Real wages fell sharply during the 1980s, as older and unionized plants in urban areas were replaced by newer nonunion plants in rural areas that were often staffed by immigrants. An average 117,000 US cattle were processed each day in 2021.

Cattle feedlots pay about $1,200 for year-old calves that weigh 750 pounds and fatten them to 1,300-pound steers in about six months, when they are sold to meat processors for $1,800 each.

The US Department of Justice charged that US chicken processors conspired to fix the price of chicken as well as the wages of their employees. By sharing information on wages and benefits, DOJ argues that processors can hold down labor costs. Private suits filed by workers allege that 20 chicken processors conspired with two data-providing firms to exchange labor cost data and led to several settlements, although the processors did not admit guilt.

Most chicken and hogs are raised under contracts with meatpackers, making it harder for new and vertically integrated processing firms to compete in chicken and pork processing.

Most fresh food goes directly from farms to retail and food service distribution centers, while food that is processed goes from farm to factory and then to retailers. Processing and transportation firms in winter 2022 complained of labor shortages as covid left 10 percent of workers sick at some firms, leading to empty store shelves. Many employers asked their non-sick employees to work additional hours, which fueled employee burnout and may encourage more workers to quit their jobs.

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