USDA will offer $655M to smaller meatpackers in bid to add competition

By: - July 9, 2021 6:41 pm

U.S. Agriculture Secretary Tom Vilsack, in Iowa, announces $655 million in federal grants and loans aimed at expanding small and medium-sized meatpacking operations. At left is U.S. Rep. Cindy Axne. (Screenshot via USDA Facebook page)

The federal government will spend $655 million on loans and grants to help launch new meat-processing facilities to help compete with four major corporations that control the market, U.S. Agriculture Secretary Tom Vilsack announced Friday.

Included is a $500 million program aimed at establishing new or expanded operations, said Vilsack, a former Iowa governor, during an appearance in in Council Bluffs, Iowa. The money will come from the American Rescue Plan pandemic relief bill.

“I think it sends a strong message to those who are currently in the business that they are not necessarily going to have that capacity, and that they need to be sensitive to the needs of producers,” Vilsack said. “It’s not in in their best interest, it’s not in the best interest of the nation, to seek future consolidations or to to drive people off the farm.”

“We have to expand the processing in this country. We can no longer rely on four packers. We are breaking new ground today,” Vilsack added.

That announcement came the same day President Joe Biden signed an executive order requiring the U.S. Department of Agriculture to write rules under the Packers and Stockyards Act to give farmers more of a say in the price they get for their livestock.

“Four large meatpacking companies dominate over 80% of the beef market and, over the last five years, farmers’ share of the price of beef has dropped by more than a quarter — from 51.5% to 37.3% — while the price of beef has risen,” a White House fact sheet noted.

Vilsack said the grants and loans will help expand small- and medium-sized packing operations and, over time, add new ones.

“These things aren’t built overnight,” Vilsack said. 

He also announced an additional $155 million for aid to existing small and medium-sized meat processing operations to help offset the costs of federal inspections and to promote expansions. 

Biden’s move to give farmers more power to negotiate livestock prices and to fix their own farm equipment drew quick opposition from meatpackers and praise from unions. 

Sarah Little, spokeswoman for the  North American Meat Institute, told Agri-Pulse: “The bottom-line is, the current level of four-firm concentration has existed for more than 25 years and it has not ensured packer profitability at the expense of producers. No sector — cow-calf, feedlot, nor packer — has realized positive margins every year.”

United Food and Commercial Workers International, which represents many meatpacking company employees, said the help is needed.

“Meatpacking workers have been among the hardest hit by COVID-19 and today’s action puts workers and consumers first by strengthening oversight of meatpacking monopolies that suppress wages and drive up food prices at the grocery store,” UFCW President Mark Perrone said in a statement. “With stronger country of origin labeling for food, this executive order supports American jobs and protects the right of consumers to know where their food is from, whether it’s safe, and if it’s produced by American workers.”

Biden sought to address one more issue.

Biden said some tractors are designed to lock up if they malfunction, forcing the farmer to wait for the manufacturer to do repairs. That can be costly and in some cases unnecessary, the president noted in his White House announcement. The executive order gives farmers the right to fix their own equipment or hire an independent mechanic.

This story was produced by Iowa Capital Dispatch, which is part of States Newsroom. Follow Iowa Capital Dispatch on Facebook and Twitter.

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Perry Beeman
Perry Beeman

Perry Beeman is senior reporter for the Iowa Capital Dispatch, an affiliate of States Newsroom. He has nearly 40 years of experience in Iowa journalism and has won national awards for environmental and business writing. He has written for The Des Moines Register and the Business Record, where he also served as managing editor. He also is former editorial director of Grinnell College. He co-authored the recently published book, "The $80 Billion Gamble," which details the lottery-rigging case of Eddie Tipton.