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WASHINGTON — The White House announced Monday that it will devote $1 billion to aiding independent meat and poultry producers, aiming to undercut the four powerful meat producers that Iowa Republicans have long said sell farmers short and that the Biden administration asserts are responsible for rising prices.
Facing immense political pressure over inflation, the White House has responded in recent weeks by criticizing large corporations and arguing that more competition will drive down prices.
Republicans and even some Democrats have said the White House needs to acknowledge that their own policies could be driving up costs, and price increases have persisted much longer than some policymakers predicted. By trying to shift blame toward corporations, the White House is acknowledging that price pressures continue to be a major concern for many Americans less than 12 months before the midterm elections.
"I've said it before and I'll say it again: Capitalism without competition isn't capitalism. It's exploitation," President Joe Biden said at a White House event to discuss meat and poultry supply chain issues. "That's what we're seeing in meat and poultry and those industries now. Small, independent farmers and ranchers are being driven out of business — sometimes businesses that have been around for generations. It strikes at their dignity, the respect and the family legacy so many of them carried for generations."
Concentration of meatpacking operations became a public concern during the early days of the pandemic when grocery stores placed limits on the meat consumers could buy. But since meat processing plants have overcome temporarily closings over COVID-19 and increased worker safety, their profits have soared, critics say — partly at the expense of cattle and hog farmers.
In 1977, the four largest beef packers accounted for 25 percent of the market, according to Democratic Iowa Attorney General Tom Miller. But as of 2018, the four largest packers controlled 85 percent of the market. The four largest processors of pork in 1976 controlled 33 percent of the market, he said, while in 2018 the largest four processors accounted for 70 percent of the market.
The stakes are particularly high in the beef industry, where prices in November rose by a staggering 21 percent relative to last year, according to federal data. Food prices have also increased more broadly — by a significant 6.4 percent with the index for meat, poultry, fish and eggs jumping 13 percent.
The White House unveiled measures on Monday designed to boost competition in the meatpacking sector. The steps include $375 million in grants to help independent meat producers; $275 million in capital; $100 million in training for the meat and poultry workforce; and $100 million to reduce inspection costs on "small and very small processing plants," a statement said.
The White House said the funding comes from the $1.9 trillion American Rescue Plan passed by Congress in March.
In November, Iowa Republicans U.S. Sens. Chuck Grassley and Joni Ernst, among others, introduced legislation they said was needed to bring fairness to the cattle marketplace.
At the time the measure was proposed, Grassley said he “hears from Iowa’s independent cattle producers about their struggle to get a fair price for their cattle while the nation’s four largest packers operate in the shadows.” He said the measure was meant to introduce transparency into process that the meat processors use to set the cash prices they buy cattle from producers.
“The system that exists today is broken and especially harmful to small and medium-sized producers,” said a statement from Iowa Farm Bureau President Brent Johnson, who was among those who met with Biden. “We are grateful for the administration’s attention to this issue that impacts not only farmers’ profitability and rural vitality, but also affects consumers at the grocery store. We must work toward a more stable, resilient food supply chain that can better endure unforeseen challenges and ensure farmers are paid an honest price for their product.”
But industry groups and many economists have been critical of the administration's attempts to redirect blame for inflation to large companies. They argue that high consumer demand — supercharged by the pandemic relief plan — is responsible.
Tyson Foods, for instance, has said rising prices are the result of the "drastic" drop in meat production caused by the pandemic and severe weather.
According to Mike Brown, president of the National Chicken Council, the chicken processing industry is the least consolidated in animal agriculture, with the market share owned by the top four companies virtually unchanged for the past 20 years. Biden’s plan, he said, "looks like a solution in search of a problem."
While the demand for beef during the pandemic has skyrocketed, statistically Americans have been swapping out beef for chicken. According to the U.S. Department of Agriculture, in 1976, total per capita beef consumption in the United States was 94 pounds; chicken was 42. Last year, beef was 58 pounds and chicken consumption rose to 97 pounds per person.
Fiona Scott Morton, an economist at the Yale School of Management, said some of the White House's measures, such as subsidizing independent meatpackers, would be unlikely to change consumer prices this year. But the steps could cause the large producers to rethink their prices and payments to workers and farmers, which she said could make an immediate impact.
The Washington Post contributed to this report.