The Agriculture Department (USDA) might soon require poultry companies to be more transparent about how farmers are paid as the Biden administration pushes harder to consolidate the meat-packing industry.
The proposed measures from Thursday would oblige poultry giants — such as Tyson Foods Inc., Perdue Chicken, Sanderson Farms Inc., and Pilgrim's Pride Corp. — to disclose compensation information for chicken farmers who are paid under "tournament systems," which relegates farmers to compete for payment determinations.
Throughout this period of 40-year inflation highs, which directly affects the prices of meat, chicken, and other perishable proteins, White House officials have publicly blamed U.S. meat companies for leveraging their market power to increase prices with supermarkets and restaurants, while simultaneously underpaying farmers.
In January, according to The Wall Street Journal, the Biden administration called for $1 billion to be dedicated to expanding independent meat processing, as a means of fostering competition within an industry where the "four largest companies control an estimated 85% of beef production and 54% of poultry."
As a response to the White House's claims, meat-packing officials suggest that industry consolidation has remained steady for years.
However, many processing plants remain short-staffed, meaning they cannot buy and process cattle or chicken at prolific rates, thus reducing the meat packers' "ability to purchase livestock and pushing prices lower for farmers."
On the chicken front, the USDA wants poultry companies to provide more information about the feed and birds supplied, along with entering into contracts that guarantee a certain number of chickens per year.
However, the National Chicken Council (NCC), a poultry industry trade group, said the USDA's proposed measures would not lead to lower food prices, reduced inflation, or even more industry competition.
"This is a solution in search of a problem," NCC President Mike Brown said. "The performance-based structure of how chicken farmers are compensated is literally the definition of competition."
The NCC said Thursday's proposal runs similar to the poorly conceived concepts of the Obama administration.
Conversely, farmer groups, including the American Farm Bureau Federation and National Farmers Union embraced the USDA's proposal, saying farmers have long needed more transparency from meat companies.
"Poultry growers have endured an unfair contracting system for far too long, and all livestock producers continue to face heavily concentrated markets with insufficient protections from anticompetitive practices," Farmers Union President Rob Larew said. "This rule will ensure poultry growers have a fair marketplace."
According to the Journal, the Agriculture Department intends to address discrimination and retaliation against farmers later this summer.
The meat industry has previously faced pressure from lawmakers and regulators.
Last week, the House Agriculture Committee approved a bill that would allow a special USDA operative to investigate allegations of antitrust practices within the meat and poultry processing industries.
The Justice Department has also resumes an antitrust price-fixing case against several high-profile poultry company executives, according to the Journal.
After two mistrials since late 2021, the government will try the case again in June, after the top U.S. antitrust enforcer, Jonathan Kanter, explained to a Denver, Colorado-based court why the case should be tried for a third time.
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