The Hill: Big four meatpackers deny price fixing amid record profits

THE HILL, KARL EVERS-HILLSTROM AND TOBIAS BURNS

CEOs of the big four meatpacking companies on Wednesday denied accusations of price-fixing, under fire from House lawmakers after reporting record profits amid soaring meat prices.

“Was there ever an agreement between your four companies to cooperate together on issues impacting supply or pricing? I need a yes or no,” Rep. David Scott (D-Ga.), chairman of the House Agriculture Committee, asked the CEOs of beef packing companies Cargill, JBS USA, Tyson Foods and National Beef Packing.

Together, the companies control more than 80 percent of the beef market. All four of the executives denied conspiring to manipulate the cattle market under oath.

“Let me tell you, this can’t possibly happen in a competitive market,” Scott said, referring to a 400 percent increase in profit margins in the packing industry since 2015.

As households face a 40-year peak in consumer inflation of 8.5 percent, food prices have risen even higher, reaching nearly 9 percent annually, according to the latest numbers from the Department of Labor.

Ground beef prices tallied in March by the Department of Labor were up 18 percent on the year for urban consumers. USDA Choice-grade round steaks were up 14 percent, Choice-grade sirloin was up 17 percent, and stew beef was up 24 percent.

President Biden and congressional Democrats have promised to crack down on corporate consolidation in the private sector as one part of their effort to fight inflation.

A White House analysis released late last year found that the big four meatpackers tripled their net profits since the start of the pandemic. Together they raked in nearly $13 billion in profits last year, according to more recent earnings data compiled by liberal watchdog group Accountable.US, with all four companies reporting record profits.

The meatpacking CEOs were eager to associate their soaring profit margins with the inflationary trends in the broader economy, which most economists say stem from supply chain disruptions caused by the pandemic. They noted the industry has long been heavily consolidated, but hasn’t always reported high profit margins.

Tyson Foods CEO Donnie King testified that “recent price shifts have nothing to do with industry consolidation” and instead pointed to labor shortages and a spike in demand caused by the pandemic.

“The business cycle for beef has experienced an extreme swing between the price of live cattle and the price of finished beef due to the confluence of a number of unforeseeable factors that constrained the supply of beef while at the same time increasing its demand,” King testified.

King said that “Tyson does not set the prices for either cattle that we buy or beef that our customers purchase. These prices are set by straightforward market forces, namely available supply and consumer demand.”

But last year, Tyson agreed to pay $221.5 million to settle accusations of conspiring to inflate chicken prices. Under the settlement, Tyson avoided admitting liability, as the company pointed out in a filing with the Securities and Exchange Commission.

JBS in February agreed to pay $52.5 million to settle a lawsuit brought by grocery stores and wholesalers accusing the big four meatpackers of conspiring to drive up beef prices. The company did not admit wrongdoing.

In 2020, Pilgrim’s Pride, a subsidiary of the Brazilian-owned JBS parent company, pleaded guilty to fixing the price of chicken products and paid a $110 million fine to the Justice Department.

Republicans on the House committee largely blamed supply and demand for rising meat prices. But lawmakers on both sides of the aisle accused meatpackers of abusing their market power to offer noncompetitive prices to ranchers that are driving them out of business.

“Forty family cattle farms per day call it quits, and farmers contemplate taking their lives because the generations of work that went into creating their family farms are slipping out of their fingers,” Rep. Abigail Spanberger (D-Va.) told the CEOs.

Earlier during the hearing, ranchers testified that even as beef prices soar, they’re struggling to stay afloat, as meatpacking giants extract most of the profits and the cost skyrockets for feed, fertilizer and fuel.

Coy Young, a Missouri cattle farmer, told lawmakers that rural America is “under attack by the greed and corruption of the big four” meatpackers. He cited federal data showing that producers’ share of beef sales totaled just 37 percent in 2020, down from 60 percent three decades ago.

“There’s enough money to go around in the meat industry. It’s the distribution of profits that are proportionally unbalanced that is the problem,” Young told lawmakers.

Many people have been placing the wrong food in the refrigerator. These are…
Ranchers said that meatpacking giants force small producers to enter into agreements that aren’t competitively priced. They stressed that the federal government already has the legal authority to address anti-competitive practices by enforcing the Packers and Stockyards Act, a century-old law designed to protect ranchers from corporate consolidation.

Last July, the Biden administration tasked USDA with strengthening enforcement of the antitrust law, but proposed changes are currently going through a rulemaking process.

“I was told not to use this word. I’m sorry, but I can’t think of another word. Rural America is one huge slum, and this is a result of the lack of antitrust enforcement,” said Gilles Stockton, a Montana cow-calf producer.

Ranchers and lawmakers also questioned why they haven’t received an update from the Justice Department on its antitrust investigation into the big four meatpackers launched in 2020.

“We deserve to know as members of Congress, but certainly as cattle producers, what happened, and if there was any collusion or price fixing,” said Rep. Vicky Hartzler (R-Mo.), who raises cattle on a small farm.

The four Democrats who bucked party and voted no on gas price-gouging bill
Bipartisan bill targets Google’s ad business
Not all market observers agree that the meatpacking consolidation hurts the food supply chain.

“You have concentration in this industry because it is tremendously efficient,” Dr. Stephen R. Koontz, a professor of agricultural economics at Colorado State University, testified to the Senate agriculture committee on Tuesday.

“Economies of size and the resulting efficiency are orders of magnitude larger than what are found and what are measured in terms of pricing impacts.”

Recent Posts


Jun 21, 2024
Womens' Issues

Ahead of Two-Year Anniversary of Dobbs Decision, Spanberger Helps Lead Bicameral Effort to Repeal Antiquated Law Restricting Abortion

The “Stop Comstock Act” Would Block Future Administrations from Using 150-Year-Old Statute to Ban the Mailing of Mifepristone & Other Drugs Used in Medication Abortions WASHINGTON, D.C. — U.S. Representative Abigail Spanberger today helped introduce bicameral legislation in response to clear intent by extreme politicians and judges to misuse an archaic law from the 1800s […]



Jun 21, 2024
Womens' Issues

Spanberger Statement Marking Two Years Since Supreme Court Overturned Roe v. Wade 

Congresswoman: “On the Second Anniversary of this Dark Day in Our Nation’s History, We Must Recommit Ourselves to Codifying Roe v. Wade and Resisting All Attempts to Turn Back the Clock on Women’s Rights” WASHINGTON, D.C. — U.S. Representative Abigail Spanberger today released the following statement ahead of Monday, June 24, 2024 — two years […]



Jun 20, 2024
Press

Spanberger, Carey Lead Bipartisan Effort to Waive Passport Fees for Family Visiting Injured Servicemembers Abroad

The “No Passport Fees for Heroes’ Families Act” Would Apply to Family Members Visiting Injured Servicemembers Who Are Not Yet Medically Cleared to Travel Back to the United States WASHINGTON, D.C. — U.S. Representative Abigail Spanberger (D-VA-07) and Mike Carey (R-OH-15) introduced bipartisan legislation to waive passport fees for family members obtaining a passport for […]