Biden Plan Directs $1 Billion To Impact Meat & Poultry Processing, Strengthen P&SA, Add New Labeling Rules

The Biden Administration announced Monday it will spend $1 billion in American Rescue Funds to expand independent meat processing capacity as part of a broader initiative to break up what it calls a meat and poultry processor monopoly.

President Biden's action plan also promises new, stronger rules under the Packers & Stockyards Act, and to issue new “Product of USA” labeling rules. Included in today's announcement was a “joint initiative” between the Justice Department and USDA to better coordinate their efforts.

“Over the last few decades, we’ve seen too many industries become dominated by a handful of large companies that control most of the business and most of the opportunities—raising prices and decreasing options for American families, while also squeezing out small businesses and entrepreneurs,” the White House said in a statement. “The meat and poultry processing sector is a textbook example, with lack of competition hurting consumers, producers, and our economy.”

In July, President Biden announced a plan to improve competition and resilience in the meat and poultry sectors. Monday’s announcement included a four-prong Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain the White House hopes will “loosen the grip that consolidated corporations currently have on the industries.” The new Action Plan also seeks to support workers and independent processors, strengthen protections for farmers, ranchers and consumers, enforce fair competition and increase pricing and market transparency.

Details of the President's Plan 

USDA said it reviewed nearly 450 comments in response to its request for input on how best to increase independent processing capacity. Through analysis of stakeholder input, USDA identified an urgent need to:

• Expand and diversify meat and poultry processing capacity;
• Increase producer income;
• Provide producers an opportunity to have ownership in processing facilities;
• Create stable, well-paying jobs in rural regions;
• Raise the bar on worker health, safety, training, and wages for meatpacking jobs;
• Spur collaboration among producers and workers;
• Prompt state, tribal, and private co-investment; and
• Provide consumers with more choices

What the Plan Means for Farmers and Ranchers 

Specifically for farmers and ranchers, the White House Action Plan promises in 2022 the administration will:

• Issue new, stronger rules under the Packers and Stockyards Act—the law designed to combat abuses by the meatpackers and processors. The law was systematically weakened by the Trump Administration USDA, and in the Biden Administration, USDA has already begun work on three proposed rules to provide greater clarity and strengthen enforcement under the Act. USDA is also currently working with the Federal Trade Commission to prepare a report on access to retail and competition’s role in protecting new market entrants in meat processing.
• Issue new “Product of USA” labeling rules so that consumers can better understand where their meat comes from. Under current labeling rules, meat can be labeled “Product of USA” if it is only processed here—including when meat is raised overseas and then merely processed into cuts of meat here. We believe this could make it hard for American consumers to know what they are getting. USDA has already begun its top-to-bottom review of the current labeling rules and consumers’ understanding of the labels, with the goal of new rule making to clarify “Product of USA” standards.

Plan to Promote Competition

It is the policy of the Administration to promote vigorous and fair enforcement of the existing competition, and to ensure “all of government” works together to promote competition:

• DOJ and USDA are announcing a new joint initiative to better coordinate their efforts—including launching within 30 days a new portal for reporting concerns about potential violations of the competition laws. The President’s Executive Order on Promoting Competition established the White House Competition Council to coordinate a “whole of government approach” to promoting competition. In furtherance of this approach, Competition Council members USDA and DOJ will provide a new joint channel for farmers and ranchers to report complaints of potentially unfair and anticompetitive practices in the agricultural sector to them—whether under the Sherman and Clayton Acts or the Packers and Stockyards Act. This joint channel will facilitate the agencies’ ability to work together based on a common understanding of farmers’ and ranchers’ concerns. The agencies will protect the confidentiality of the complainants to the fullest extent allowed under the law.
• The agencies also announced their commitment to the strongest possible whistleblower protections. DOJ and USDA further announced that they will enhance their collaboration on referrals, information sharing, and identifying areas of the law in need of modernization.

Turning up the Heat on Transparency

The Biden-Harris Administration will work to increase transparency in cattle markets so that ranchers can get a fair price for their work:

• USDA is using its existing authorities to increase transparency to the extent possible. Right now, meatpackers have outsized power in setting the prices for beef. The dominance of opaque contracts and insufficient competition undermine price discovery and fairness in the independent livestock markets, which ultimately lock producers into prices that aren’t the product of free and fair negotiation. In August, USDA began issuing new market reports on what beef processors pay to provide additional insight into formula cattle trades and help promote fair and competitive markets. USDA is looking at what more can be done under existing authorities.
• The Biden-Harris Administration will also work with Congress to make cattle markets fairer and more transparent. The Administration is encouraged to see bipartisan legislation in the Senate by Senators Grassley, Fischer, Tester, and Wyden, and in the House by Representatives Axne and Feenstra, that seeks to improve price discovery in the cattle markets and facilitate actual negotiation of prices between livestock producers and packers. We look forward to working with Congress on these important issues, and we hope that they will also look for ways to ensure farmers and ranchers have fair access to processing capacity.