Oklahoma, as the second largest beef cow producing state, is expected to put to good use a significant portion of a $ 1 billion plan to strengthen the meat industry announced by the Biden administration on Monday. .
The plan is the result of a protracted bipartisan effort to put in place the measures demanded by ranchers in Oklahoma: increased competition and transparency in the meat industry. President Joe Biden virtually addressed agriculture leaders on Monday to discuss the initiative.
With funding from the American Rescue Plan, the “Biden-Harris Action Plan for a Fairer, Competitive and Resilient Meat and Poultry Supply Chain” provides millions in grants and loans to help processors independent meat and poultry producers to build additional infrastructure.
The measure also invests in training more workers for the meat processing industry and reduces inspection fees and other regulatory hurdles for processors trying to increase their capacity.
âFifty years ago, pig farmers were getting $ 0.40 to $ 0.50 for every dollar spent,â Biden said in his remarks Monday. âToday it’s about $ 0.19, and the big companies are making huge profits. As their profits increase, the prices you see in grocery stores increase in proportion.
âThe prices farmers receive for the products they bring to market are going down,â Biden said. âThis reflects the market distorted by the lack of competition. â¦ Capitalism without competition is not capitalism, it is exploitation. This is what we are currently seeing with meat and poultry in these industries. Small independent farmers and ranchers are driven out of businesses, sometimes businesses that have been around for generations. “
“For far too long, Oklahoma farm and ranch families have taken pennies and cut corners as four companies have grown rich with a virtual monopoly on meat packaging,” the representative said. State Andy Fugate, D-Del City, commenting on the plan. âPresident Biden’s announcement this week of $ 1 billion to strengthen independent meat packers means more competition for Oklahoma cattle, without increasing consumption costs. It’s a win-win situation for all Oklahoma families.
In November 2021, the price of meat, poultry and fish had increased by nearly 12% from the previous year, according to the national consumer price index. The price of beef increased by more than 20% and the price of pork increased by 14% during the year.
But farmers and ranchers are not seeing a commensurate increase in their profits. The Biden administration pointed to the fact that just four companies – Cargill, Tyson Foods, JBS and National Beef – control about 80% (over 25 million pounds) of the US beef supply in the wholesale market.
“Some argue that meat processors are forced to raise prices to where they are now because of rising input costs (for example, things like the cost of labor or transport), but their own data and income statements contradict that claim, âa White article read. Information sheet on the house. âTheir profit margins – the amount of money they earn in addition to their costs – have skyrocketed since the pandemic. Gross margins are up 50% and net margins more than 300% …
“If higher input costs led to higher meat prices, those profit margins would be roughly stable, as higher prices would be offset by higher costs,” the newspaper read. âInstead, we see the dominant meat processors using their market power to squeeze ever larger profit margins for themselves. Firms facing serious competition cannot do this, as they would lose business to a competitor who does not increase their margins.
Industry consolidation caused huge disruption last year when the COVID-19 pandemic, a Kansas factory fire and ransomware attack halted production at factories owned by the few major national processors.
Lawmakers, including U.S. Representative Frank Lucas of Oklahoma, have taken year-round action to address the issue of increased competition and transparency in the industry, passing the Cattle Contract Library Act in the House of representatives of the United States.
“For too long, beef producers have operated in volatile market conditions, forced to accept falling live cattle prices as the cost of beef rises at the grocery store,” Lucas said when the House called. adopted the measure. âIn order to ensure greater competition, price discovery and transparency, producers must be able to leverage marketing data while negotiating the price of livestock.
Beef cattle add more than $ 3 billion to Oklahoma’s economy each year, according to the Oklahoma Cattlemen’s Association.