Meat wars: why Biden wants to break up the powerful US beef industry

Sarah Mock

Both the planet and US politics have heated up in tandem over recent decades, but few sectors have stewed in controversy quite like America’s beef industry. Four super-powered meatpackers control more than 80% of the US beef market, an extraordinary concentration of market power that the Biden administration is not happy about.

A recent executive action signed by the president aims to increase competition in the beef industry, with the White House noting that, over the past five years, “farmers’ share of the price of beef sales has dropped by more than a quarter – from 51.5% to 37.3% – while the price of beef has risen”.

But how were the big four meatpackers able to capture so much of the US beef processing capacity? They had help.

When explaining the history of consolidation in US meatpacking, it is normal to begin in the age of Upton Sinclair’s 1906 novel The Jungle. In the wake of Sinclair’s muckraking exposé on the industry of the time, Congress passed the Pure Food and Drug Act and the Federal Meat Inspection Act, aimed at cleaning up the meat supply for consumer health and challenging the nearly unrestricted power of these players.

Josh Specht, an environmental and business historian, offers another interpretation of this starting point. “These acts accepted the state of the meatpacking industry as of 1906,” he writes in his book, Red Meat Republic. “Big meatpacking was no longer questioned, it was regulated.”

A third act, passed in 1921, the Packers and Stockyards Act, was specifically intended to break up the vertical integration of the big companies by forcing them to sell off their interests in businesses that owned, for example, railroads or refrigerated trucks.

This did much to check the power of big packers, Specht says, though labour movements of the 1940s and 50s were just as important. But eventually the industry would revive the old playbook of earning steep profit through immense scale and labour exploitation, and today, all four of the largest beef processors of Sinclair’s time are still around in some form.

Today’s big four – Tyson, JBS USA, Cargill and National Beef – are more than just the heirs to the American meatpacking legacy. They are also multinational giants, two of which are majority-owned by Brazilian companies. In fact, in 2020, many packers were criticised for the amount of meat that was exported at a time when processing was limited due to Covid outbreaks in processing plants, driving up prices and creating shortages at grocery stores that affected US consumers.

But today’s big four didn’t grow into behemoths overnight. In the mid-1970s, they controlled as little as 20% of the meatpacking market. What changed? The answer, in part, lies beyond the meatpacking sector, with corn farmers and grocery stores.

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Not exactly written from my point of view, but still some interesting info and links are provided.

Not really discussed is the fact every time Congress passed a new law increasing the control over and the regulation  of   the industry, the number of firms eventually decreased and the concentration increased.  The DC Deep Thinkers keep raising the costs of entry, including regulatory barriers, and then seem astounded that competition is decreased.