The high price of meat: It’s time to look at the packing industry

The Dallas Morning News (TNS)
A man shops in the meat section at a grocery store in Washington, D.C., on April 28, 2020. (Drew Angerer/Getty Images/TNS)

It’s not every day that the Biden administration and Texas Agriculture Commissioner Sid Miller agree. In fact, it’s more like a total eclipse of the sun.

But there is a crucial area where the two have found common ground, and that is their concern over the reason meat prices, and especially beef prices, are rising in this country.

Anyone who goes grocery shopping for their family knows that the cost of beef, pork and chicken has been rising at alarming rates. It’s become clear that those increases aren’t solely attributable to problems related to the pandemic or the national supply chain struggle.

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Both Miller and the Biden administration offer compelling information that the country’s four major meat processing companies have distorted the meat market to their gain and at great cost to ranchers, farmers and consumers.

A Dec. 10 report from White House economists notes that meat prices are the largest contributor to rising food prices. Meanwhile, ranchers and farmers across the country are facing the possibility of total ruin because so many can’t sell their animals at even a break-even price.

Yet the four companies that control the majority of the processing and packing market are enjoying record gross and net profits, meaning supply chain and pandemic costs aren’t impacting their bottom line.

Hugh Abell, president of the Texas & Southwestern Cattle Raisers Association, told us that “over the last 18-24 months, meatpackers have made record profits while cattle raisers struggle to keep their operations afloat. 2021 will have the fourth-largest beef cattle slaughter in the past 22 years, suggesting that cattle producers are selling off their herds in response to drought and unprofitability. This will tighten future beef supplies during a time of record demand, resulting in even higher prices for consumers.”

As early as May 2020, Miller raised the alarm about this problem. In a letter to then-U.S. Attorney General William Barr, Miller wrote: “Texas farmers and ranchers, our nation’s largest beef producers, are facing financial devastation due to low live-beef prices when retail prices of beef are at an all-time high. Something just doesn’t add up.”

This October, on Fox and Friends, the preferred soapbox of the ultraconservative, Miller noted that a rancher might lose $500 on a steer, while a processor might make $2,500 to $3,000 in profit.

“The farmer loses, the consumer loses; the only one winning in this scenario is the big four packers,” Miller said.

Biden administration economists tracked an increase in net profit margins of more than 300% among the four largest packing companies — Tyson, JBS, Marfrig and Seaboard — since the pandemic began.

An industry spokesperson told The New York Times in an article published this week that meatpacking consolidation is not driving price increases. That’s a hard pill to swallow when you look at the facts of a handful of middlemen making a profit, with producers and consumers paying the price.

We are not often eager to see the government interfere in markets. But smart regulation includes work to ensure that markets are not distorted through monopoly pricing power. If that is, indeed, why ranchers and farmers are losing out and why consumers are paying more, something should be done.

Even Sid Miller would call that good government.

— From The Dallas Morning News (TNS).