海角大神

Mike Callicrate doesn鈥檛 mince words: 鈥淏reak 鈥榚m up,鈥� says the Kansas cattleman of the four meatpackers that dominate his industry. 鈥淲e鈥檝e got to have a different model going forward. It鈥檚 going to be a smaller, more local, regional model.鈥�

It鈥檚 a notion that is gaining attention, and not just in agriculture. While few would go as far as breaking up companies, the idea that concentrated corporate power needs more government oversight is catching on. From academia to Congress to the White House, people are reconsidering 鈥渂igness.鈥�

The industries getting the most scrutiny so far are Big Tech and meat.聽Complaints about the reach and influence of giant technology companies聽such as Meta (formerly Facebook) are聽rising from both sides of the political spectrum. And shutdowns of huge packing plants before and during the pandemic, which sent meat prices soaring, have caused the White House 鈥� as well as bipartisan groups of rural-state senators 鈥� to propose new steps for reform. The idea is: Reliance on a few players with big, efficient operations may be hurting the economy鈥檚 resilience in the face of unexpected challenges.

Even some economists are beginning to reconsider their devotion to efficiency and are asking: 鈥淪hould we start thinking about sacrificing some cost and efficiency to guard against future pandemics?鈥� says Azzeddine Azzam, an agricultural economist at the University of Nebraska, Lincoln.

Big meatpackers have survived public scrutiny before, such as food-safety scandals in the early 1900s and price-fixing concerns in the 1920s. Today鈥檚 talk of resilience, however, poses a bigger challenge because it goes to the heart of how the industry is set up. 鈥淚t represents a larger potential for change than food safety,鈥� says Bill Winders, a sociologist at Georgia Tech in Atlanta and co-editor of 鈥淕lobal Meat,鈥� a 2019 book on the industry.聽

Four big companies

Four international corporations control 85% of U.S. beef processing capacity, according to the White House: JBS S.A., the world鈥檚 biggest meat supplier; Tyson Foods Inc., the biggest U.S. meat company by sales; Cargill Inc., the nation鈥檚 largest privately held corporation; and National Beef Packing. The other popular meats 鈥� pork and poultry 鈥� are also highly concentrated and controlled by some of the same players. But beef is drawing the most attention, in part because it鈥檚 the most concentrated and also because it鈥檚 an inflation leader, with an 11% jump that鈥檚 the fastest 12-month rise in beef prices in four decades.聽

The Biden administration blames much of that price rise on the lack of competition within the meat industry. 鈥淐apitalism without competition isn鈥檛 capitalism. It鈥檚 exploitation,鈥� President Joe Biden said last month in announcing his plan to help smaller processors, the same phrase he used last July when signing an executive order taking on Big Tech鈥檚 anticompetitive practices.

But the reality is more complex. Weather, an historic drought in the West, the constant supply adjustments by ranchers to price signals, plus changes in consumer demand brought on by the pandemic have had a big impact on meat prices. 鈥淭he Biden Administration continues to ignore the number one challenge to meat and poultry production: labor shortages,鈥� Julie Anna Potts, president and CEO of the North American Meat Institute, said in聽a statement聽last month.

With bigness, efficiency

Nor is it clear that bigness is always bad. A聽2021 study聽for the National Bureau of Economic Research found that while concentration increased in consumer-facing industries over the past quarter-century (think airlines or rental cars), product concentration actually went down. In other words, the more dominant corporations became, the more fiercely they competed with each other, crashing rivals鈥� markets with new products of their own. And the efficiency of the big packers has kept meat prices low for American consumers over the long term, certainly lower than in Europe, which has adapted a model closer to what reformers are proposing.

And while the big processors have been squeezing ranchers, taking a bigger and bigger share of the consumer dollar spent on beef, their extreme efficiency has allowed them to afford to pay ranchers more than they otherwise would get, says professor Azzam, the University of Nebraska economist.聽That sounds contradictory, but packers don鈥檛 want to build an expensive plant and then wipe out their suppliers, he points out. The packers鈥� efficiency-powered profits give them more leeway to pay ranchers what they need to stay in business.

But there are also costs to bigness 鈥� some apparent and some hidden. (Neither the meat institute, which represents the processors, nor three of the biggest processors themselves responded to emails for comment.)聽

One is wages. By moving plants from the Corn Belt to the Great Plains to get plants closer to ranchers, processors were also able to shed unionized workers and replace them with rural, poorly paid, nonunion 鈥� and eventually immigrant 鈥� labor. Another is聽manipulating聽prices. JBS, Tyson, and pork-processing giant Smithfield Foods have all settled lawsuits for price fixing.聽

Then there are the environmental聽and聽health聽problems. Because the processing plants are so big, they generate enormous amounts of waste. Last year, for example, Tyson agreed to a $3 million settlement for releasing thousands of gallons of partially treated wastewater into an Alabama river, killing an estimated 175,000 fish. The five largest meat processors also were hit hard by the pandemic, with at least 269 worker deaths attributed to COVID-19聽in the first year of the pandemic, according to a聽House select subcommittee.聽

To counter this market power, the Biden administration has a plan that would extend $1 billion in federal aid to small processors聽and聽expand and strengthen regulations to try to level the playing field.聽聽

A new political climate in Congress

Efforts at reforming the industry are also underway in Congress 鈥� and in a bipartisan way. Republican Sens. Chuck Grassley of Iowa and Deb Fischer of Nebraska have joined with Democratic Sens. Jon Tester of Montana and Ron Wyden of Oregon to require that packers buy a certain amount of their beef on the cash market, rather than rely on private contracts whose terms are not disclosed. The idea is to make price-setting more transparent.

Last fall, a larger bipartisan group of senators also introduced a bill to reinstate the American Beef Labeling Act, so U.S. meatpackers would no longer be allowed to put a U.S. label on beef imported聽from abroad.聽Even small processors who might benefit from the Biden program doubt that such measures will come close to leveling the playing field. 鈥淲e really appreciate what the Biden administration is trying to do,鈥� says Mike Lorentz of Lorentz Meats, a niche meat processor based in Cannon Falls, Minnesota. And 鈥渨e have grown exponentially in the past 20 years. But we are still not even a blip on the radar.鈥澛�

The difference in operating scale is just too great to overcome 鈥� and not just in beef, but in pork and poultry as well. Mark Curran and Bill Kuhnert, partners in Vermont Family Farms, which buys cattle and hogs from small farms and aggregates them into lots that can be sold to niche processors, say they can get 120 hogs processed a day. But they point out that Smithfield鈥檚 Tar Heel, North Carolina, plant, the world鈥檚 largest, processes 32,000 hogs a day. 鈥淚t鈥檚 just so far apart,鈥� Mr. Curran says. 鈥淵ou鈥檇 need a whole lot of plants to get close to matching that or have any meaningful impact.鈥�

The political power is also tilted in favor of the bigs.聽

When President Biden was vice president, President Obama proposed strengthening federal laws against price fixing in agriculture, 鈥淭he power of those big processors undermined it, says Philip Howard, a professor in the department of community sustainability at Michigan State University at Lansing. 鈥淚t鈥檚 a different political climate now. [But] it鈥檚 going to be difficult to see substantial change.鈥�