Springfield Business Journal_2020-06-15

SPRINGFIELD BUSINESS JOURNAL · 41 JUNE 15-21, 2020 ENERGY & ENVIRONMENT Meatpacking industry consolidation must be investigated America’s meat industry has consoli- dated dramatically in recent decades. Missouri Farm Bureau and many farmer and consumer advocates are calling for investigations into the industry. A reliable and affordable meat supply is important, and market consolidation can harm both of these goals. Today, four companies process over 80% of American beef. Three companies control 63% of the nation’s hog process- ing. Five companies control more than 60% of the chicken market, led by north- west Arkansas-based Tyson Foods (NYSE: TSN). Tyson operates six poultry process- ing facilities in Missouri and 10 in Arkan- sas. Consolidation itself is not necessarily bad. The problems arise when these com- panies use their size and market power to hurt consumers and farmers. Unfortunately, several recent events have fed suspicion toward the big meat- packers. Last summer, a fire at a cattle process- ing plant in Holcomb, Kansas, roiled the market. The Tyson-owned facility, the second-largest plant in the country, was out of operation for four months. Tyson was able to immediately shift almost all production to other locations. Less than a month after the fire, its CEO said that the only losses Tyson experi- enced were related to the cost of trans- porting cattle to other plants. Despite Tyson’s resiliency, the prices packers paid farmers for live cattle plum- meted in the aftermath of the fire. At the same time, consumer prices for beef shot up. Margins per animal for the meatpack- ers rose to their highest level in recent memory. Many farmers cried foul. They argued that the industry’s lack of competition let packers use the Holcomb fire as an ex- cuse to raise prices for finished cuts while shortchanging farmers for their live ani- mals. After a nationwide uproar, U.S. De- partment of Agriculture Secretary Sonny Perdue announced he would in- vestigate. Missouri livestock producers and Missouri Farm Bureau applauded this announcement. Unfortunately the inves- tigation has yet to yield any results. Fast forward to 2020. In April and May, the COVID-19 crisis hit meatpacking plant workers hard. National news buzzed about the large numbers of employees contracting the virus. Many plants tempo- rarily closed or slowed down production as they installed safeguards. Consumers found bare shelves in the protein aisle as supplies ran short and panic buying kicked in. Where meat could be found, prices were through the roof. Some people reported ground beef cost- ing more than the usual price for steak. At the same time, processors told farm- ers not to deliver animals to them. Farmers who were allowed to deliver were paid far less than normal for their animals. This repeat of the Holcomb situation infuriated many farmers. They felt like the packers were taking advantage of an- other crisis to boost their margins on both ends. Missouri Farm Bureau and other groups called on USDA to expand its Holcomb in- vestigation to include the new issues. Sec- retary Perdue quickly agreed to do so. Missouri Sen. Josh Hawley went a step further. He asked the Federal Trade Commission to examine the industry’s “conduct, pricing and contracting,” and possible effects of foreign ownership. Missouri Attorney General Eric Schmitt asked the Department of Justice to inves- tigate the industry for antitrust violations. He also asked the DOJ to look into ways to promote competition, address market manipulation and protect consumers. Missouri Farm Bureau and several members of Missouri’s congressional delegation joined the call for investiga- tions. It appears DOJ was listening. On June 3, its antitrust division announced it was indicting four senior executives for price fixing in the chicken market. The investigation is ongoing. Two days later, DOJ announced an investigation into the country’s four largest meat pro- cessors. We also need more data about the ef- fects of consolidation on the markets and how proposed solutions would impact the industry. Missouri Farm Bureau has asked for help from the university of Missouri. The University’s Food and Agricultural Policy Research Institute is the nation’s leading agricultural economics research center. Using FAPRI’s analysis, policymakers can make informed decisions about any changes to the industry. Missouri farmers and consumers de- serve transparent prices and fair com- petition. If meatpackers are using unfair practices like collusion and price-fixing, this must be stopped. Using the best in- formation and aggressive investigations, we can restore fairness to America’s meat industry. Eric Bohl, of Columbia, is the director of public affairs & advocacy for Missouri Farm Bureau, the state’s largest farm organization. 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