In April of 2022, Farm Action’s Angela Huffman spoke at the world’s largest antitrust conference, hosted by the American Bar Association, on a panel titled “Is Competition in Agriculture Suffering a Drought?”
For this event, the Farm Action team produced a research report demonstrating the importance of the Packers and Stockyards Act (P&S Act) and antitrust law for American farmers raising livestock and poultry. We recount the rise of these protections and document the effects of the concentrated market power made possible by their fall. We then illustrate the failed attempt of the Obama administration to step up enforcement in the early 2000s. Finally, we chart a path forward for the Biden administration to foster a healthy, competitive, and resilient economy where farmers, ranchers, and rural communities thrive.
On August 9, 2019, a fire in Holcomb Kansas shuttered a Tyson plant that handled five to six percent of beef processed in the U.S. By Monday morning, the packers’ dire warnings of shortages caused retail grocers to make a run on beef in order to secure the expected Labor Day sales. Beef packers simultaneously cut the price paid to cattle producers with excuses about lost processing capacity.
By August 24th, the result was a 67% spread in what beef packers paid the cattle producer and how much they charged the retail grocery. To put this in perspective, this spread reflected a 143% increase over the average from 2016-2018. What is most telling about the market power of the dominant beef packers is that in the three weeks that followed the fire, the beef industry actually slaughtered 5,000 more cattle than the three weeks prior to the fire. In reality, the packers had the processing capacity to replace the Holcomb plant’s capacity all along.
Today, meatpackers use the pandemic and its related supply chain issues to hike prices excessively. While farmers earn less and consumers pay more than ever, companies like Cargill and Tyson are reporting record-high profits.