In its first move of the new year, the Biden administration announced plans yesterday to combat anti-competitive practices in the meat industry it says is hurting American consumers.
The White House said the Department of Agriculture will allocate $1 billion from the American Rescue Plan to help jump-start independent meat processing projects, provide worker training, strengthen financing systems for independent processors, and make changes to regulations that will help smaller processing plants keep up with demand.
The Biden administration also announced other changes will be made, including new rules on using the label “Product of USA” for meat products and efforts to make the meat industry “fairer and more transparent.”
The White House blames rising meat prices on “dominant middlemen” who “control so much of the supply chain, they can increase their own profits at the expense of both farmers — who make less — and consumers — who pay more.”
It says, “Four large meat-packing companies control 85% of the beef market. In poultry, the top four processing firms control 54% of the market. And in pork, the top four processing firms control about 70% of the market” which creates a “lack of competition hurting consumers, producers, and our economy.” And these efforts can help change that.
But how will any of that help lower your grocery bill?
Well, it probably won’t.
The administration’s new plan really seems aimed to help farmers the most. The White House says, “Most farmers now have little or no choice of buyer for their product and little leverage to negotiate, causing their share of every dollar spent on food to decline. 50 years ago, ranchers got over $0.60 of every dollar a consumer spent on beef, compared to about $0.39 today. Similarly, hog farmers got $0.40 to $0.60 on each dollar spent 50 years ago, down to about $0.19 today.”
“Even as farmers’ share of profits have dwindled,” the White House continues, “American consumers are paying more — with meat and poultry prices now the single-largest contributor to the rising cost of food people consume at home.”
But even if the $1 billion in spending and changes to regulations do help farmers increase their profit, the changes will likely do little to help lower your grocery bill.
The price of food is rising due to a multitude of factors. It’s not just one or two or even just a handful of things moving food prices higher. There are a million factors all adding to food price increases from energy to labor. Helping farmers won’t directly help consumers.
Unfortunately there is little you can do to control food prices. You have more control over the weather. But you can hedge against rising food prices.
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