The Biden administration plans to take a tougher stance toward meatpacking companies it says are causing sticker shock at grocery stores.
During Wednesday's press briefing, National Economic Council Director Brian Deese and Agriculture Secretary Tom Vilsack spoke about the actions the administration was taking to help alleviate what Deese called 'pandemic profiteering' from the top meat processing companies.
'One of the interesting findings of the report that we put out today, is that about half of the overall increase in grocery prices can be attributed to significant increases in prices in three products - in beef, in pork and in poultry,' Deese said from the podium.
National Economic Council Director Brian Deese (center) and Agriculture Secretary Tom Vilsack (right) spoke Wednesday about the actions the administration was taking to help alleviate what Deese called 'pandemic profiteering' from the top meat processing companies
'If you take out those three categories, we've actually seen price increases that are more in line with historical norms,' he continued. 'And we've seen some categories - for example fresh fruits and vegetable prices - have actually declined since the end of last year.'
Four companies control much of the U.S. meat processing market, and White House officials blamed those companies for rising food prices.
Deese said 55 to 85 per cent of beef, pork and poultry markets are controlled by four producers.
'And so when you see that level of consolidation, and the increase in prices, it raises a concern about pandemic profiteering - about companies that are driving price increases in a way that hurts consumers who are going to the grocery store and also isn't benefiting the actual producers, the farmers and ranchers that growing the product,' he said.
'The four top companies in these industries have seen record or near-record profits in the first and second quarter of this year and seen near or approaching record gross margins as well,' he continued.
As part of a set of initiatives, the administration will funnel $1.4 billion in COVID-19 pandemic stimulus money to small meat producers and workers, administration aides said in the blog post. They also promised action to 'crack down on illegal price fixing.'
The big four processors in the U.S. beef sector are: Cargill , a global commodity trader based in Minnesota; Tyson Foods Inc, the chicken producer that is the biggest U.S. meat company by sales; Brazil-based JBS SA, the world's biggest meatpacker; and National Beef Packing Co , which is controlled by Brazilian beef producer Marfrig Global Foods SA.
Neither Deese or Vilsack called out the companies by name at the briefing.
Price increases in beef, pork and poultry have driven half of the increased prices Americans have paid for food they eat at home since December, the White House said.
And the administration sees those companies collecting too much profit after the stimulus helped prop up demand for their products.
'We've helped sustain this market, and it's frustrating to see these companies turn around and raise prices,' Bharat Ramamurti, the deputy director of the White House's National Economic Council, said in an interview. 'What we see here smacks of pandemic profiteering and that is the behavior the administration finds concerning.'
Rising inflation has posed a serious threat to Biden's efforts to get a grip on the COVID-19 pandemic - his top priority as president - and engineer an economic recovery from the recession it caused.
The Biden administration has responded to these issues partly by ramping up efforts to crack down on what it sees as anticompetitive and monopolistic behavior that could be increasing prices.
A meeting of a new White House Competition Council created by Biden is set for Friday.
USDA and the Department of Justice have already been conducting an investigation into price-fixing in the chicken-processing industry.
'The goal of that over time is to bring these prices down,' said Ramamurti.
U.S. lawmakers are seeking increased oversight of the beef sector as concerns about anticompetitive behavior increase after the pandemic and a cyberattack on JBS USA.
The administration is 'encouraged' by bipartisan legislation that could aid more price negotiation in the meat market, it said in the blog.
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