Beef Magazine is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

President issues executive order promoting competition

Alex Wong/Getty Images Biden signs executive order promoting competitinon.
COMPETITION PROMOTION: U.S. President Biden signed an executive order on “promoting competition in the American economy."
Biden takes on antitrust and growing monopolistic powers at play in agricultural industry.

A new executive order signed July 9 by President Joe Biden looks to address the growing concerns over competition and concentration in the U.S. economy, including the agriculture sector as well as the transportation sector.

The order includes 72 initiatives by more than a dozen federal agencies including USDA to promptly tackle some of the most pressing competition problems across the economy. Specifically, the White House fact sheet looks to “empower family farmers and increase their incomes by strengthening the Department of Agriculture’s tools to stop the abusive practices of some meat processors.”

While speaking at a local beef retailer in Council Bluffs, Iowa, on Friday, Secretary of Agriculture Tom Vilsack says when campaigning in Iowa, Biden heard about the concerns from farmers regarding the lack of competition and impact on producers. Through the executive order and the establishment of a recent supply chain resiliency task force, the President is directing USDA to focus on creating a more competitive market for agricultural producers and encouraging USDA to look at ways to create more resiliency in our food supply chain. 

"It’s an opportunity for more stable farm income, opportunity for fairer markets, opportunity for a more resilient food system, and a more sustainable food system that supports more family farms," Vilsack says.

The White House fact sheet explains over the past few decades, key agricultural markets have become more concentrated and less competitive. The markets for seeds, equipment, feed and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for these inputs.

The four largest meatpacking companies dominate over 80% of the beef market and, over the last five years, farmers’ share of the price of beef has dropped by more than a quarter—from 51.5% to 37.3%—while the price of beef has risen, the fact sheet lays out.

“Overall, farmers’ and ranchers’ share of each dollar spent on food has been declining for decades. In short, family farmers and ranchers are getting less, consumers are paying more, and the big conglomerates in the middle are taking the difference,” the fact sheet adds.

American Farm Bureau Federation President Zippy Duvall says the President's efforts to address several pressing issues facing America’s farmers and ranchers comes at a time when many in the farm supply chain are frustrated.

"Growing concern about livestock market fairness is accelerated by the continued rise in grocery store meat prices while ranchers struggle to break even on the cattle they raise and poultry farmers being locked into agreements with very little recourse if they’re underpaid. It’s time to get to the bottom of what’s driving these imbalances. More opportunities for farmers and ranchers to sell their products will ensure they are paid fairly while providing more options for America’s families," Duvall says.

This Executive Order comes just weeks after the Senate held a hearing on the cattle market. U.S. Cattlemen’s Association Vice President Justin Tupper testified before the committee on the detrimental effects of a U.S. cattle and beef industry controlled by just four major meatpackers, two of which are foreign-owned and operated.

“USCA’s testimony was loud and clear – the Big Four meatpackers have held their thumb on the scales for far too long, tilting the playing field to their advantage, and forcing more and more independent cattle producers out of business,” notes USCA President Brooke Miller. “President Biden’s Executive Order is an important step towards restoring a fair and equitable food system.”

Related: USDA promises fix for ‘Product of USA’ meat labeling

In recent weeks, Vilsack says USDA will propose new guidelines for the Product of the USA label for meat which more closely aligns with consumers’ understanding. The EO directs USDA to consider issuing new rules defining when meat can bear “Product of USA” labels, so that consumers have accurate, transparent labels that enable them to choose products made here.

Vilsack also promised action on renewing its focus on the Packers and Stockyards Act. The EO directs USDA to consider issuing “new rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.”

Related: USDA again looks to strengthen Packers and Stockyards protections

According to R-CALF USA CEO Bill Bullard, of particular interest to cattle producers are provisions directing USDA to promulgate rules to fully deploy the P&S Act, in part by specifying packer conduct that would violate the act’s prohibitions again unfair, deceptive and unjustly discriminatory practices. He says it also directs USDA to write rules to clarify that individual livestock producers do not, in every case, have to prove injury to competition in order to seek protections under the P&S Act.

Vilsack says he plans to work aggressively and advance a rule through the process "as quickly as possible" to improve the criteria required for producers to file challenges under the P&S Act and draw clear, bright lines on what is unfair. He says the new rule will make the burden of proof more "producer-balanced" than it is today which requires a producer to prove the entire industry was harmed.

Bullard says it is precisely because these two pro-competition rules have never been implemented that the P&S Act has been a toothless tiger – completely ineffective in preventing the concentrated meatpackers from purging competition from the U.S. cattle market.

The EO also encourages the Federal Trading Commission to “limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs—such as when tractor companies block farmers from repairing their own tractors.”

Duvall adds business purchases—from robotic milkers to high-tech combines—require a substantial investment, and when those tools break down farmers need to get back up and running quickly. "Limiting who can work on a piece of machinery drives up costs and increases down-time. Ensuring farmers have the ability to perform cost-effective repairs on their own equipment will keep America’s farms running and financially sustainable,” he says.

Anti-trust challenges

The Order also encourages the leading antitrust agencies to focus enforcement efforts on problems in key markets and coordinates other agencies’ ongoing response to corporate consolidation. Specifically, it calls on the leading antitrust agencies, the Department of Justice and Federal Trade Commission, to enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge.

In addition, the White House announced a policy that enforcement should focus in particular on labor markets, agricultural markets, healthcare markets (which includes prescription drugs, hospital consolidation, and insurance) and the tech sector.

According to research from the Family Farm Action Alliance, four companies currently control 85% of beef processing, 80% of soybean processing and 67% of pork processing.

“No greater concentration of corporate power, monopolistic practices, and exclusion of economic prosperity exists than in the food and agriculture markets,” says Joe Maxwell, president of Family Farm Action Alliance, a Missouri farmer, and former lieutenant governor. “Today’s Order is one of several recent signs that the tide may be turning, coming as it does on the heels of actions by the USDA and FTC to rein in corporate power.”

R-CALF’s Bullard adds, “We’ve urged Administration after Administration for the past 20 years to begin proper enforcement of both antitrust laws and the 100-year-old Packers and Stockyards Act and this is the first Administration to actually take action.”

Shipping concerns

In maritime shipping, the global marketplace has rapidly consolidated. In 2000, the largest 10 shipping companies controlled 12% of the market. “Today, it is more than 80%, leaving domestic manufacturers who need to export goods at these large foreign companies’ mercy,” the fact sheet notes.

Related: Port congestion issues causing havoc for ag shippers

“This has let powerful container shippers charge exporters exorbitant fees for time their freight was sitting waiting to be loaded or unloaded. These fees, called “detention and demurrage charges,” can add up to hundreds of thousands of dollars,” they add.

In the order, the president “encourages the Federal Maritime Commission to ensure vigorous enforcement against shippers charging American exporters exorbitant charges.”

TAGS: Marketing
Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish