Biden Is Taking On Big Ag With a Bid to Help Family Farmers
(Bloomberg) -- President Joe Biden’s sweeping executive order promoting competition across American industries aims to give a boost to farmers whose profits have dwindled as multinational companies increasingly dominate markets for crops, chemicals, seeds and meat.
Biden’s order includes directives on issues long pushed by some farm groups, such as rules that would help chicken farmers and ranchers win claims against poultry and meat packers, and better-defined “Product of the USA” labels. It also encourages regulators to limit equipment makers’ ability to restrict farmers from repairing their own tractors.
The order comes amid increasing political pressure on lawmakers to level the playing field in agricultural markets. The U.S. industry is heavily concentrated, with four companies controlling the world’s seeds while poultry and beef are similarly consolidated. The disparity came into focus in the coronavirus outbreak last year, when thousands of workers at meat plants caught the virus. Plants closed, sending meat prices surging while hog and cattle prices tumbled.
For farmers, market concentration “means they get less when they sell their produce and meat -- even as prices rise at the grocery store,” the order on Friday stated.
Rules with similar goals as some described in the order were proposed under President Obama, whose Agriculture Secretary Tom Vilsack now serves under Biden.
Making the Case
Among the final actions of the Obama administration were new rules making it easier for farmers and ranchers to sue the companies for anti-competitive behavior under the Packers and Stockyards Act of 1921, measures that were strongly opposed by the meat industry.
Under Obama, Vilsack and Congress couldn’t make the case that antitrust reforms would boost economic growth and encourage entrepreneurs in rural America, according to Christopher Leonard, who wrote about the efforts to reform the industry in his book The Meat Racket.
“This time seems to be different,” Leonard said in a message. “There is a groundswell of support for antitrust reforms on both the left and right in Congress. If a program like this could ever get implemented, it seems like now is the best time in the past 20 years.”
The United Food and Commercial Workers International Union, representing 1.3 million workers in the food, healthcare and pharmacy industries, said the order was a “strong step to support American workers.”
In an emailed statement on Friday, Rob Larew of the National Farmers Union said it “will go a long way towards building the resilient, equitable food system that farmers and consumers deserve.”
“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,” said Bill Bullard, CEO of rancher group, R-CALF USA, in an emailed statement.
Zippy Duvall, president of the American Farm Bureau Federation, said the group would examine the details of the order, and would work with the administration “to ensure changes are consistent with our grassroots policy, and farmers and ranchers are provided greater flexibility to remain competitive in our growing economy.”
The North American Meat Institute, a trade group representing meat and poultry producers, said it remained opposed to changes to the act that Biden was seeking to amend.
“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 the Meat Institute.
Company shares in the agricultural sector traded mostly higher amid a broad rebound in the stock market. Tyson Foods Inc., the biggest U.S. meat company by sales, rose as much as 1.6%.
Currently, if a farmer wants to sue a company for anti-competitive behavior under the act, the farmer would need to show the company’s actions hurt not only him, but the entire industry. That creates a very high bar that the Obama rules would have lowered. But the Trump administration withdrew the rules, leaving groups like the Organization for Competitive Markets disappointed.
Fred Stokes, the founder of OCM, and a cattle rancher in Porterville, Mississippi, is cautiously optimistic that the new order will “settle that once and for all and meatpackers would again be subject to action regarding their ill deeds,” he said.
Citing recent supply chain-interruptions, including a fire at a Tyson plant in Kansas in 2019, the pandemic and the recent cyberattack against top meat producer JBS SA, he said that packers use these opportunities to charge consumers more for meat, and pay ranchers less for cattle, inflating their profits. Without the changed rule, he said, individual ranchers have little legal recourse.
The USDA also announced plans to invest $500 million to increase meat-processing capacity, with the aim of giving farmers, ranchers and consumers more choices, according to an agency statement. The agency also announced more than $150 million for existing small and “very small” processing facilities to help them contend with the ongoing pandemic and compete.
“We have got to expand the amount of processing capacity in this country,” Vilsack said during a news conference in Iowa on Friday. “We can no longer rely on a handful of processing companies to do the job, to make the market competitive, to do right by farmers” and “to ensure as well that we have a resilient food supply system,” he said.
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