You could say Monday was not Tom Vilsack’s first rodeo.
President Joe Biden was figuratively on the saddle to rescue both cash-strapped ranchers and consumers alike by a meat-packing industry in which four big players control over 85% of the market.
Vilsack, who was also Agriculture Secretary under Barack Obama, had done it before, when the effort was wiped out faster than can be said to be re-election.
But this time, Agriculture Secretary Vilsack is optimistic the outcome will be different, if only for another reason as Biden having $ 1 billion to increase the number of independent meat packers competing with the Big Four. industry: Cargill, Tyson Foods, JBS and National Beef packaging.
The theory goes like this: if there is another buyer in the auction barn, there will be competition which will naturally increase the price paid to ranchers for the cattle. The plan, announced this week, drew comments from Republican and Democratic politicians in Montana, signaling that they also wanted market reform. Livestock sales were about $ 1.5 billion to the state’s economy in 2020, but that number was $ 100 million lower than sales the year before, as supply issues hit farmers. breeders and consumers directly into their wallets.
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“With the US bailout, we have the resources to actually do something on the funding side, and we are putting the finishing touches on some rules and regulations that will be coming in 2022 to strengthen enforcement,” Vilsack told the Lee Montana Newspapers Wednesday.
âOur belief is that by increasing capacity, we increase competition. When you do this, you will help farmers take better advantage of the market. And you’re going to give consumers choice in the marketplace, which we think will moderate the price increases as well. And secondly, you want to make sure that there are two sides to it, you want to make sure that you have enough information so that farmers can determine whether or not they are getting fair treatment.
“And it touches on the transparency of market reporting that is necessary. I need Congress to continue to expand the mandatory reporting efforts that will allow us to get information. And you need, I think, Congress do what Sen. (Jon) Tester and Senator (Chuck) Grassley are interested in doing, which is to create more market transparency, to have the right level of cash transactions that gives you an idea of ââwhat really is the market.
The US Department of Agriculture will invest $ 375 million in gap funding grants for independent processors to meet a need for more processing capacity. One of the lessons of recent years is that a single disruption between the four major meat processors can derail the beef market for ranchers and consumers.
In August 2019, a fire at a Tyson Foods packaging plant in Kansas created a bottleneck at both ends of the United States’ meat supply chain. Pastoralists with livestock to sell have been supported by lower production, resulting in oversupply and lower livestock prices as a result. On the consumer side, less beef was arriving in supermarkets, leading to higher prices as supply failed to meet demand.
A few months later, a ransomware attack on JBS reduced the number of slaughtered cattle by 40,000 carcasses in just a day and a half.
The USDA will invest an additional $ 150 million in the 15 independent processor projects that are nearing completion. An additional $ 225 million will be invested in projects that can be put online by the summer. Federally backed loans totaling $ 275 million will be made available for independent meat processing in underserved communities.
In addition, $ 100 million will be spent to create a skilled workforce, which Montana meat processors said earlier this week is necessary for any independent processing expansion to be successful. There aren’t enough qualified meat cutters currently to staff Montana’s meat packaging industry, said Lyle Happel, of the Montana Meat Processors Association.
Demand for independent meat processing increased in the pandemic’s first year, as disease and death from COVID-19 hit packing plants at the four major slaughterhouses. At least 59,000 meat packaging workers have been sickened by COVID-19 in the first 12 months of the pandemic in the United States. At least 269 workers have died from COVID-19. These numbers were reported to the U.S. Coronavirus Crisis Subcommittee on October 27, 2021.
In Montana, where 31 meat processors are state inspected and 28 federally inspected, there is growth in the industry, although this can be difficult to measure as some activities are disguised as existing processors passing from a state inspection designation to a federal inspection designation. Federal meat inspection is what is required to sell meat across state borders, which attracts processors who are expanding into multi-state markets.
The USDA has $ 32 million available for 167 existing processors to go for federal inspection so they can reach more customers.
The new rules, to which Vilsack refers, to control anti-competitive practices, include ensuring that independent processors gain a foothold in retail markets.
Accessing space in grocery store refrigerators is no easy task, said Walter Schweitzer, president of the Montana Farmer’s Union. Just as big brands buy from shelves in the grain aisle, refrigerated spaces are real property that big meat suppliers can secure and crowd out from their competition.
âA big part of the piece of this puzzle is that if we’re going to have a more competitive market, we’re not only going to have to force these packaging companies to play fairly, but we’re going to have to force retailers to play fairly, too,â said Schweitzer.
The MFU rushed to reform country-of-origin labeling for meat. Currently, âProduct of USAâ labels on meat packaging in the store are not limited to beef raised in the United States. The largest meat processors process beef from Canada and Mexico at their 50 packing plants in the United States. When meat is mixed during processing, this country of origin label ends up being applied to the meat of all three countries.
The United States, under a law championed by Democratic Senator from Montana Tester, attempted to require a US-only COOL label, but Mexico and Canada opposed, arguing the label violated the label. ‘North American Free Trade Agreement. The World Trade Organization then concluded that Canada and Mexico could impose tariffs on other U.S. exports in retaliation, after which the federal government killed COOL without challenging the WTO.
How the labeling ended is a sore point at Schweitzer.
âYou know, this Product of USA label as it is now is fraudulent,â said Schweitzer. âThe United States being one of the largest beef importers in the world, and you have processing capacity owned by the Brazilian cartel (JBS). They mix it up. You know they are and they proudly do it. And then they put the label on it.
The MFU wants country of origin labeling to be mandatory and applied only to American beef. They support a tester bill to do it.
Vilsack said the labeling being rolled out under the Biden administration is voluntary, although the U.S.-only labeling requirements are there. The Agriculture Secretary expects that once independent processors become more involved and the US label is affixed to their product, the biggest packers of meat will feel market pressure to do the same.
Could they skip the labeling? “Well, sure, in which case when you go to the grocery store you can know that the product you are buying at one point had no connection with the United States, compared to this local producer who received a grant. or a loan from the USDA to produce its own processing facility that puts a label on it and says “not only is it a product of the United States, but it’s a product of Joe Smith’s farm on the road” , said Vilsack. “I guarantee you. I believe people will buy a package for Joe with the Joe Smith label on it. And that will increase the market share, if you will, to labeled products, as opposed to unlabelled products.”