A crackdown on meat processing consolidation is being pursued by the USDA

A crackdown on meat processing consolidation is being pursued by the USDA

As the U.S. Department of Agriculture keeps suggesting more rules for meat-processing companies, some local farmers and processors want the industry to become less consolidated.

According to data from the USDA, JBS Foods, Tyson Foods, Cargill, and Marfrig control 85% of the processing of beef in the U.S. Tyson and JBS also control big parts of the processing of poultry and pork. In a lot of lawsuits over the last few years, these businesses have been accused of setting prices.

Joe Heinrich, a livestock and crop farmer in the Maquoketa, Iowa, area who used to be vice president of the Iowa Farm Bureau, said, “It’s a real worry when you only have that few processors.” “This has been a trouble spot for years.”

Concerns from the public led USDA Secretary Tom Vilsack to bring back and improve rules that were first put in place in 1921 under the antitrust Packers and Stockyards Act.

These rules had been weakened by several court decisions. For example, in 2009, the 5th U.S. Circuit Court of Appeals made it very hard for people to sue processors for unfair business practices.

The person claiming had to show that the processors’ actions hurt not only them but also competition in the industry as a whole.

As of May 6, 2024, one of the new rules says that producers and growers who join cooperatives or look into doing business with rivals can’t be discriminated against or punished for doing so. The rule also says that contracts between processors and suppliers can’t leave out important details.

The public’s chance to comment on a proposed rule closed in September. It aims to make the unfair practices that are illegal under the Packers and Stockyards Act clearer and broader by including actions that hurt market participants as well as actions that hurt the market itself.

The USDA wrote in the Federal Register that a practice is unfair if it “causes or is likely to cause substantial injury to one or more market participants, which the participant or participants cannot reasonably avoid, and which (cannot be justified) by establishing countervailing benefits to the market.”

While the department works to improve the rules that it says will break up the market, it also helps smaller processors like Edgewood Locker grow. The Edgewood, Iowa, processor just got a $1.4 million grant from the USDA to help it process and store more food.

“It’s helping us with our project to grow and improve our equipment,” said co-owner Luke Kerns.

Kerns said that the 35,000-square-foot building would not get bigger, but that the money would be used to make its processes run more smoothly.

Heinrich said he was excited to see how the changes to USDA rules work out. He said that small processors like Edgewood Locker are “great” options to bigger companies.

New local processors are trying to sell themselves by leveraging the fact that they are local.

“People want to know where the meat comes from,” said Randy Vaske, who opened The Butcher Block in Cascade in 2023. “Everything we process comes from local farmers and is sold to people in the area.”

Kerns and Vaske both said they don’t think the government rules on packers and processors will have an effect on them.

Heinrich said that people can help break up the market by buying meat from nearby farms.

Heinrich said, “If we buy locally, we can cut down on their market share.” “Local processors will have to put their necks out there and customers will have to back them up.”

Heinrich did say, though, that big processing companies do offer conveniences that customers might find hard to give up.

It’s more efficient to work together, he said. “People want products that are all the same.”

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