This post is part of our symposium on the Law and Political Economy of Meat.
America once had a competitive meat industry. Not anymore.
For four decades, the U.S. government has watched idly as a handful of largely foreign-owned meat corporations grew horizontally by killing off or gobbling up their competitors and vertically by gobbling up their supply chains. Today four massive companies – JBS, Tyson Foods, National Beef, and Cargill – control over 80 percent of America’s beef. Three companies – JBS, Tyson, and Smithfield Foods – control 63 percent of America’s pork. Two of those – JBS and Tyson – also control 38 percent of poultry. The grain, seed, farm equipment, agrochemical, livestock genetics, and animal pharmaceutical industries have likewise become highly consolidated.
This isn’t America’s first time contending with a meat oligopoly.
In the early 1900s, five meat companies referred to as the “Meat Trust” dominated the U.S. meat industry. Like today’s modern Meat Trust, these companies possessed dominant market power as both sellers of meat and buyers of livestock, which they used to raise prices for consumers and lower prices paid to farmers.
At that time, roughly one in four employed Americans worked in farm occupations, compared to about one in sixty-six today. Livestock producers – fed up with being paid low prices for their animals – demanded action. President Woodrow Wilson directed the newly formed Federal Trade Commission (FTC) to investigate anti-competitive practices in the meatpacking industry. The FTC soon produced a series of damning reports detailing how the meatpackers were “unfairly and illegally” using their power to manipulate the market, cripple competition, and profiteer.
In response, Wilson’s attorney general forced the big five meatpackers into a consent decree requiring them to divest from retail markets, cold storage warehouses, terminals, railroads, market newspapers, stockyards, and other food sectors unrelated to meat. Congress also enacted the Packers and Stockyards Act of 1921, which gave the U.S. Department of Agriculture (USDA) broad authority to safeguard livestock farmers from anticompetitive practices. By enforcing anti-monopoly laws, the three agencies sharing antitrust oversight of the meat industry – the USDA, FTC, and DOJ – mostly succeeded in ensuring competitive livestock markets for the next fifty years.
But in the 1970s, the largest meat companies once again began to grow rapidly and absorb their competitors. Firms and processing plants began to shrink in number and swell in size. But this time the federal government did little to rein the big corporations in. Instead, it empowered them.
In 1971, President Richard Nixon appointed Earl Butz – who at the time served on multiple agribusiness boards – to lead the USDA, opening a revolving door between the industry and the agency that has swung non-stop ever since. Butz “plunged a pitchfork into the New Deal agricultural policies that sought to protect farmers from the big agribusiness companies whose interests he openly pushed,” wrote journalist Tom Philpott. Butz eliminated the supply management program that had protected farmland and stabilized food prices since the Dust Bowl and instituted a new era of “get big or get out” food policy aimed at maximizing production of commodity crops. Subsidies for fossil-fuel-intensive monocultures led to a glut of cheap grain, which in turn led to factory farmed animals. “Since factory farms could buy grain for less than it cost farmers to grow it, they could now fatten animals more cheaply than farmers could,” wrote Michael Pollan.
Meanwhile, the courts and antitrust enforcement agencies embarked upon a “get big or get out” era of their own. As Zephyr Teachout describes in her new book, two new premises began to dominate U.S. competition policy and enforcement during this period, steered by the logic of “Chicago school” law and economics. The first premise is that the purpose of antitrust law is the promotion of “consumer welfare,” measured by changes in price. The second is that the appropriateness of antitrust action is a technical question best decided by the courts, advised by professional economists– rather than a political question best decided by the public and our representatives in Congress.
As Sandeep Vaheesan wrote recently on this blog, the result of this reinterpretation of antitrust laws “has been not bountiful consumer welfare, but oligarchy unleashed.”
The “consumer welfare standard” has failed on its own terms, as Austin Frerick has pointed out. From the 1970s to the 1990s, as animal agriculture rapidly industrialized, meat prices did fall. But prices have risen in the decades since. Food prices overall have risen faster than inflation since 2000, and the price of meat has increased faster still. In the last year, top companies in every major American meat sector – beef, pork, chicken, and turkey – have been subject to civil suits and/or federal investigations for conspiring to keep prices high. One lawsuit estimates that chicken industry price-fixing alone costs the average American family of four $330 per year.
But the biggest problem with the “consumer welfare” standard is that it only considers supermarket meat prices. It does not account for the staggering social and ecological costs of the industry’s consolidation. Big Meat’s rise to power and ability to produce cheap meat is not the result of entrepreneurial savvy exercised in a free market, as Pollan and others have written for years. The primary reason multinational meat conglomerates have flourished, and meat prices have remained artificially low, is that our government massively subsidizes them at everyone else’s expense.
Our government subsidizes Big Meat directly by allocating the bulk of federal crop subsidies to large farms growing animal feeds, by financing animal factory infrastructure, by buying billions of dollars of their products, and much more. In exchange for this support, taxpayers get hijacked federal agencies, policies shaped by pro-industry academic research, a less responsive democracy, and forceful industry lobbying to keep it that way.
Our government subsidizes the giant meat corporations indirectly by allowing them to push devastating costs onto the public with impunity. It does this by failing to regulate the environmental impacts of factory farming, including the industry’s role in contaminating air, poisoning drinking water, and driving the climate crisis; by failing to require safe conditions for slaughterhouse workers; by denying most farmworkers the rights to form unions and earn minimum wage and overtime pay; by exempting “common farming practices,” no matter how cruel, from most state animal anti-cruelty statutes; and by failing to restrict the industry’s use of antibiotics (used to speed growth and keep overcrowded animals alive) despite the resulting increase in drug-resistant infections.
Just as these meat conglomerates use their monopoly power to raise prices for consumers, they wield their monopsony power to lower prices paid to farmers, who now receive less than 15 cents on average for each dollar that Americans spend on food. That’s down from 41 cents in 1950. It is commonplace today for foreign-owned corporations like Smithfield Foods to offer rigged contracts to farmers – who often have no other buyers in their region – that treat them as “serfs on their own land” and pit them against their own neighbors. Ninety percent of chickens in America are now grown in this feudal system. Seventy percent of contract chicken farmers live below the poverty line, and most face crippling debt. Most small farmers can’t even make ends meet. In 2018, farmers with sales less than $350,000 had a median net farm income of -$1,524. Farmer suicide rates are now 3.5 times that of the general population.
The impact of industry consolidation on food animals has also been devastating. One of the many cruel experiences in food animals’ lives is the increasingly long trip from the farm to the slaughterhouse necessitated by slaughterhouse consolidation. It is now commonplace for pigs (and their diseases) to be trucked hundreds of miles across the country without food, water, bedding, protection from extreme temperatures, or adequate space. Nearly 10,000 slaughterhouses served local farmers across the U.S. in 1967. Today over 95 percent of our country’s cattle and hogs are slaughtered at about 60 supersized plants. Three pork plants process a whopping 15 percent of our pork.
Maximizing only for “efficiency” is problematic in other ways too. Efficiency can come at the cost of resiliency, as COVID-19 has laid bare. Two dozen slaughterhouses temporarily shutting down in the 1960s would have caused local ripples in the supply chain. Two dozen slaughterhouses temporarily shutting down in 2020 generated tidal waves of suffering for workers and their families, crushed farmer incomes, and led to the mass killing of millions of farm animals.
For the last half-century, the motto of U.S. meat production has been “get big or get out.” But now a growing number of interest groups – including farmers, slaughterhouse workers, rural communities, academics, environmentalists, animal protection activists, consumer safety advocates, and public health experts – are uniting to call for a new era: “Get the big out.” This coalition is pushing for a revival of robust oversight of Big Meat’s monopolistic abuses of power. At least some members of Congress are listening.
This fall, more than 300 diverse organizations endorsed the Farm System Reform Act. This bill, introduced by Sen. Cory Booker (D-NJ) and Rep. Ro Khanna (D-CA), is the type of bold legislation needed to break Big Meat’s political and economic stranglehold on our food supply. If enacted, it would block the construction of new factory farms, phase out large factory farms by 2040, offer a voluntary buyout to contract farmers who wish to transition to more sustainable farming methods, hold corporations liable for their pollution, and strengthen farmers’ protections against abusive contracts. We need ambitious legislation like this and more.
Our government has the tools – and the power to make more tools – to break up the modern Meat Trust. It’s time to put them to work.