USDA Announces $500 Million Allotted to Address Concentrated Meatpacking Industry

On Friday, the United States Department of Agriculture announced that, under the American Rescue Plan, it plans to build the meat and poultry processing industry through $500 million in funding.  Reportedly these funds are designed “to expand processing capacity and increase competition in meat and poultry processing to make agricultural markets more accessible, fair, competitive, and resilient for American farmers and ranchers.”

According to the press release, the USDA is also taking additional steps to promote competition in the industry, including a $150 million allotment for “existing small and very small processing facilities.” This amount is designed to help smaller competitors survive hard business conditions during the COVID-19 pandemic and help them increase customer reach.  The USDA also announced that it is “revitalizing the Pakcers and Stockyards Act,” altering rules for including “Product of USA labels, and further level the field in the industry so that family farmers and ranchers have equal access to new markets. 

“The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike. It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else,” said USDA Secretary Tom Vilsack in the press release. “To shift the balance of power back to the people, USDA will invest in building more, better, and fairer markets for producers and consumers alike.” 

He further said that the pandemic has led to a “once in a generation opportunity” to make the food system more resilient and allow it to be more valuable to both producers and consumers. 

Although these steps are a response to the COVID-19 pandemic, they are also a response to a food market that is becoming more concentrated.  The press release noted that there are only a few dominating farm input companies producing seeds and fertilizer, and options for sale are also condensing.  Law Street Media has covered many antitrust lawsuits relating to the crop input companies and major meatpacking companies. The USDA said that this concentration can lead to a higher price for consumers and less money for family farmers and ranchers. 

“Concentration in food processing has contributed to bottlenecks in America’s food supply chain, too. Just a few meatpackers, with a few large processing facilities, process most of the livestock that farmers and ranchers raise into the meat that we buy. For example, just four large meat-packing companies control over 80 percent of the beef market alone. One of the lessons from the COVID-19 pandemic is that this system is too rigid and too fragile. When COVID slowed or shuttered meat processing, many farmers had no place to go. Farmers were forced to depopulate their animals, while grocery store shelves went bare and demand for food assistance spiked. These vulnerabilities are not new. And, given current concerns about climate and cybersecurity, these risks are likely to grow even more sharply in the future,” the USDA said. 

The press release explained that this is part of the USDA’s Build Back Better Initiative. The broader initiative, which is backed by $4 billion from both the American Rescue Plan and the Consolidated Appropriations Act, will reportedly give producers “a greater share of the food dollar,” improve nutrition of Americans, reduce healthcare costs, and “make agriculture a more compelling career.”