The US government has said it is to spend US$1bn on meat processing and issue new rules on labelling as part of moves to create “a more competitive and more resilient” supply chain.
President Biden yesterday (3 January) provided more details on his administration’s plans to shake up the country’s meat sector, an industry he believes is too concentrated to the detriment of farmers and consumers.
The announcement, which also includes funds for R&D and lower inspection costs for small processors, follows the Biden administration’s arguments in recent months the US meat industry is not as competitive as it should be and has been a notable factor in rising food prices in the country.
It also comes six months after the US government outlined measures – including more than $600m of funding for processing capacity – to invest in production and “revitalise” trading rules.
Meat industry associations questioned the new announcement. Mike Brown, president of the National Chicken Council, said: “While we haven’t seen any proposals, for the chicken industry, this looks like a solution in search of a problem.”
In a lengthy statement ahead of a virtual meeting between Biden and farmers, ranchers and what the White House called “independent processors”, the administration set out plans for “a more competitive, fair, resilient meat and poultry sector, with better earnings for producers and more choices and affordable prices for consumers”.
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Biden’s team has consistently pointed to the market share of the country’s largest processors, citing, for example, the 85% of the beef market divided among four companies.
The White House believes competition needs to be increased and, through the US Department of Agriculture, grants totalling $375m will be made available to build capacity.
Access to credit will be improved through a $275m scheme for independent processors while there will also be USDA funds for innovation “to help independent business owners” and reduced inspection costs for smaller plants.
On labelling, Biden wants to bring in new “Product of USA” rules. Under current regulations, meat can be labelled Product of USA “if it is only processed here – including when meat is raised overseas and then merely processed into cuts of meat here”, the statement read. “We believe this could make it hard for American consumers to know what they are getting. USDA has already begun its top-to-bottom review of the current labelling rules and consumers’ understanding of the labels, with the goal of new rulemaking to clarify Product of USA standards.”
The USDA will also work with the US Department of Justice to set up a way “for farmers and ranchers to report complaints of potentially unfair and anticompetitive practices in the agricultural sector to them”.
In July, the administration said it would look to strengthen the country’s Packers and Stockyards Act, a law passed a century ago to protect farmers from unfair trading practices. The USDA has started work on three proposed rules to “provide greater clarity and strengthen enforcement under the Act”, the statement added.
At the National Chicken Council, Brown said the White House was using the meat industry “as a scapegoat for the significant challenges facing our economy”.
He added: “This administration should be looking at the chicken industry as a model of success, instead of creating a boogeyman to justify an unnecessary and expensive foray into our meat supply.
“The chicken industry is the least consolidated in all of animal agriculture and the market share of the top four companies has been virtually the same for the past 20 years.”
A spokesperson for trade body The North American Meat Institute said: “The market has already begun to balance itself. All of the government spending announced again today is too late for consumers and producers. According to USDA data, cattle producers are getting the highest prices on record since [the] record prices they received in 2014. This is because packers have begun to clear the backlog of cattle created by the pandemic. The herd size is shrinking while demand remains high.
“Labour remains the biggest challenge. Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce. New capacity and expanded capacity created by the government will have the same problem.”
She added: “There are many questions and few details about this government intervention in the market: How much extra capacity does the Administration think is needed? How high should cattle prices be right now? How long will the government-sponsored processors receive government money? How much will the government-sponsored processors be required to pay employees? “
On the plans to change labelling regulations, Brown said US rules “already require that chicken sold at retail clearly and accurately identify the product’s country of origin”.
He said: “Consumers seeking USA chicken can already find the ‘Hatched, Raised & Harvested in the U.S.’ label on American chicken. More than 99% of the chicken we consume is of domestic origin and can easily be identified. We hope that this trusted and accurate label is not diminished for the American consumer.”