WASHINGTON – The US Department of Agriculture followed President Biden’s executive order directing a “whole of government” response to competition issues across a range of industries with an announcement of a $500 million investment toward expanding US meat processing capacity.
The USDA intends to invest $500 million in American Rescue Plan funds to expand meat and poultry processing capacity. The agency also announced more than $150 million for existing small and very small processing facilities to help them weather COVID, compete in the marketplace and reach more customers.
The USDA plans to “revitalize” the Packers and Stockyards Act, issue new rules on “Product of USA” labels and develop plans to expand farmers’ access to new markets.
“The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike," said Agriculture Secretary Tom Vilsack. "It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else. To shift the balance of power back to the people, the USDA will invest in building more, better, and fairer markets for producers and consumers alike. The investments the USDA will make in expanding meat and poultry capacity, along with restoration of the Packers and Stockyards Act, will begin to level the playing field for farmers and ranchers.
“This is a once-in-a-generation opportunity to transform the food system, so it is more resilient to shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds. I am confident the USDA’s investments in expanded capacity will spur millions more in leveraged funding from the private sector and state and local partners as our efforts gain traction across the country.”
Reactions to the announcements were mixed.
“It is clear the Secretary intends to open the bottleneck created in the cattle industry, because there are too few remaining beef packers to effectively and timely harvest the tens of millions of cattle produced each year by America’s cattle producers,” said Bill Bullard, chief executive officer of R-CALF USA. “This exemplifies today’s broken cattle supply chain in which there is no shortage of cattle, just a shortage of marketing outlets for which to bring those cattle to market."
Mike Brown, president of the National Chicken Council (NCC) said the initiatives were “...a solution in search of a problem, although the NCC had not seen any proposals for the chicken industry."
"The chicken industry is a model of success — from farm to table — and one of the least consolidated industries in animal agriculture,” he said. “The vast majority of chicken farmers are thriving helping to produce America’s number one protein. In fact, chicken companies have waiting lists of potential family farms that want to partner with them and enter into the chicken business.
“This is a surprising announcement from the administration, given President Biden’s long history of support for the chicken industry, stemming from his 30 plus years as a senator representing Delaware, a state where chickens outnumber people and where chicken is the number one agricultural commodity.We will work to bring the concerns of chicken producers in Delaware and nationally to the attention of the president and his team and we look forward to working with them when the proposals are available.”
Proposed changes to the Packers and Stockyards Act were of concern to the North American Meat Institute (NAMI), which warned of unintended consequences for consumers and producers. The USDA is proposing several changes:
- A new rule that would strengthen enforcement of unfair and deceptive practices, undue preferences and unjust prejudices
- A new poultry grower tournament system
- A rule to clarify that parties do not need to demonstrate harm to competition in order to bring an action under section 202 (a) and 202 (b) of the Packers and Stockyards Act
“Government intervention in the market will increase the cost of food for consumers at a time when many are still suffering from the economic consequences of the pandemic,” said Julie Anna Potts, president and CEO of NAMI. “These proposed changes will open the floodgates for litigation that will ultimately limit livestock producers’ ability to market their livestock as they choose. These proposals have been considered and rejected before and they are counter to the precedent set in eight federal appellate circuits.
“Meat and poultry markets are dynamic, a fact highlighted by the recent challenges attributable to labor shortages and the COVID pandemic and not market structure. The members of the Meat Institute – and their livestock suppliers – benefit from, and depend on, a fair, transparent and competitive market. The North American Meat Institute is prepared to discuss these issues and work with the administration and Congress on the issues facing the industry.”
President Biden also directed the USDA to issue new rules defining when meat products can bear a "Product of the USA" label. On July 1, Mr. Vilsack announced the USDA will issue new rules on labeling following a top-to-bottom review that will help the agency determine what the “Product of USA” label means to consumers.
Mr. Brown noted that Agricultural Marketing Service (AMS) regulations already require that chicken sold at retail clearly and accurately identify the product’s country of origin.
“Consumers seeking USA chicken can already find the 'Hatched, Raised & Processed in the U.S.' label on American chicken,” he said. “More than 99% of the chicken we consume is of domestic origin and can easily be identified. We hope that this trusted and accurate label is not diminished for the American consumer.”
The Meat Institute said it will participate in the rulemaking process.
Joe Maxwell, president of Family Farm Action Alliance and former Lieutenant Governor of Missouri, said “No greater concentration of corporate power, monopolistic practices, and exclusion of economic prosperity exists than in the food and agriculture markets.”
But the executive order and steps taken by the USDA and the Federal Trade Commission, among other entities, are signs that the tide may be turning, according to Mr. Maxwell.
“On July 11, the USDA’s spring regulatory agenda contained critical changes to the Packers and Stockyards Act, most notably with regard to competitive injury,” Mr. Maxwell said. “Then, at a public meeting on July 1, the FTC passed the 'Made in the USA' (MUSA) Rule, which requires all meat and meat products to be 100% 'born, raised, and slaughtered' in the US. Hours later, the USDA announced a complementary initiative to heighten transparency for meat and meat products using the 'Product of USA' label. In tandem, both labeling rules will protect honest companies and consumers from the misleading practices of meatpacking companies.
“Thanks to bold actions like these, the balance of power in our food and agriculture system is tipping toward farmers, ranchers, and the American people.”