Biden announces $1B plan to help combat higher meat prices

President Joe Biden met virtually with independent farmers and ranchers on Monday to discuss initiatives to reduce food prices by increasing competition within the meat industry, part of a broader effort to show his administration is trying to combat inflation.

"Capitalism without competition isn't capitalism — it's exploitation," Biden said.

He outlined plans to use $1 billion to aid independent meat and poultry producers, aiming to undercut the four powerful meat producers — including Minnetonka-based Cargill and JBS, which has a pork plant in Worthington and a Pilgrim's Pride chicken plant in Cold Spring.

The Biden administration has alleged the big four are responsible for surging consumer prices. The White House issued a fact sheet saying that the top four companies control 85% of the beef market. In poultry, the biggest four processing firms control 54% of the market. And for pork, the figure is 70% for the four biggest firms.

Many industry groups are pushing back against the administration's planned oversight of the food industry.

Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, said the coronavirus and higher costs for energy and labor are driving meat prices higher, not the corporate structure of the industry.

Bradley said the administration is practicing politics instead of economics and "government intervention would likely further constrain supply and push prices even higher."

Higher than expected inflation has thwarted Biden's agenda, hurt his public approval rating, become fodder for Republican attacks and prompted Sen. Joe Manchin, D-W.Va., to cite higher prices as a reason to sideline the Democratic president's tax, social and economic programs. In November, consumer prices rose 6.8% over the prior 12 months — a 39-year high.

On food costs, Biden is building off a July executive order that directed the Agriculture Department to more aggressively look at possible violations of the 1921 Packers and Stockyards Act, which was designed to ensure fair competition and protect consumers. Meat prices have climbed 16% from a year ago, with beef prices up 20.9%.

The president said the higher prices have been the subject of frustration at his own kitchen table. His wife, Jill, was talking on Sunday with her sister and a friend about a pound of hamburger meat costing $5 a pound, compared with less than $4 before the pandemic.

The stakes are particularly high in the beef industry, where prices in November rose by a staggering 21% relative to last year, according to federal data. Food prices have also increased more broadly — by a significant 6.4% — with the index for meat, poultry, fish and eggs jumping 13%, Bloomberg reported.

Yet farmers have complained that the money from the cost increases are not trickling down to them.

The steps include $375 million in grants to help independent meat producers; $275 million in capital; $100 million in training for the meat and poultry workforce; and $100 million to reduce inspection costs on "small and very small processing plants," Bloomberg reported a White House statement said. The White House said the funding comes from the $1.9 trillion American Rescue Plan passed by Democrats through Congress in March.

Mike Brown, president of the National Chicken Council, said: "This looks like a solution in search of a problem." He said the administration is using the food industry as a "scapegoat for the significant challenges facing our economy. "

The Justice Department and the Agriculture Department will launch a joint effort to make it easier to report anti-competitive actions to the government. The administration will also seek to improve the transparency of the cattle market, with Biden saying, "A free market isn't truly free without transparency around prices."

The effort is part of a broader attempt to regain control of America's economic narrative. Besides inflation, the repeated waves of coronavirus outbreak have dampened people's opinions about the economy despite strong growth over the past year.

Biden will have an opportunity to highlight the economy's strengths with the December jobs report being released Friday. Economists surveyed by FactSet expect that the United States added 362,000 jobs last month with the unemployment rate ticking down to 4.1%. Gains of that magnitude would indicate that the U.S. added roughly 6.5 million jobs last year, more than in any other previous year in a reflection of population growth and government spending.

Includes reporting from Bloomberg.