Concentrated power in the meat industry is a serious problem. It’s a serious problem for the animals raised for slaughter, for buyers of meat, for small farmers, for packhouse workers and farmworkers, for communities near to and downstream from packing plants and huge farms, for biodiversity, for resilience in the face of shocks (climate-induced and otherwise). It’s a serious problem for doing honest—let alone critical—research on how the industry works. And it’s a serious problem for any effort at reforming the food system.
Since the Blog last covered these problems in 2020, some headway has been made toward reform (a coincidence??). The big conglomerates that run the chicken, pork, beef, and turkey industries have been hit with price fixing lawsuit after price fixing lawsuit, settling many and pleading guilty to others. At least one of these could lead to major reforms in pricing practices. Moreover, consistent with President Biden’s Executive Order on Competition (see also), the USDA has promulgated or proposed several regulations, including one that imposes some fairness restrictions on the price-setting process in the poultry industry, one that requires disclosures on poultry contracts, one that prohibits discrimination based on protected status, retaliation, and misrepresentations, one that would prohibit abuses of power without requiring proof of “harm to competition,” and one that would regulate the bidding process for fed cattle. (I should disclose that I consulted with the USDA on the scope of its regulatory authorities—though my views are not its and its views are not mine.)
Antimonopolists have been calling for more, not least the breakup of the big vertically- and horizontally-integrated firms that dominate the industry. Other critics of Big Ag are generally on board with that approach, while also emphasizing the need to develop more sustainable and humane practices of raising animals, worker empowerment, or even transitioning away from mass slaughter of animals for food altogether.
But what exactly is the medium- to long-term direction for change? Here at The Blog we hosted some disagreement about one aspect of that question: whether empowering farmers is worthwhile and consistent with empowering farmworkers. I want to raise another doubt about a common antimonopoly narrative about the meatpacking industry and how it should be reformed. This one is about the relationship between competition, decentralization, and exploitation.
What Changed in Midcentury Meatpacking?
Here’s the general narrative I want to contest (endorsed, for instance, here, here, and here): today’s problems with concentrated power in the meatpacking industry began in the 1980s when antitrust got Borked and a merger wave began. Before that, antitrust enforcement—including a consent decree actively enforced between 1920 and 1979—kept the industry competitive and relatively decentralized. This open competition gave farmers autonomy in deciding on farming practices and gave them bargaining power that allowed them to collect relatively more income from meat production. It made it possible to support more humane and sustainable farming practices rather than having to cut every labor cost, dump every pollutant, and squeeze every worker, animal, and acre of land in the name of “efficiency.”
Either explicit or implicit in this narrative is the notion that reversing the neoliberal era of antitrust policy and letting competition reign will bring about a fair and humane meatpacking industry. Reforms along these lines would include breaking up the big meatpacking/agribusiness conglomerates and maybe also the big factory farms, requiring more transactions to take place on regulated exchanges with multiple competing buyers, and mandating technology sharing and standardizing equipment, weights, and measures to prevent moat-building. The notion is that more competition will redound to farmers’ and farmworkers’ benefit by giving them more choices and by enhancing their bargaining power. It might also produce a more varied food system with more biodiversity, farming techniques, and so on, which would be more resilient in a changing climate and perhaps more conducive to regulation.
My central problem with this narrative is that (as I discuss in a forthcoming article), while the fierce competition in the industry at midcentury did put pressure on previously dominant players, it did so in large part by undermining the unionized labor force and the Progressive- and New-Deal regulatory regimes that previously dispersed power. By disrupting the status quo, this competition laid the groundwork for the merger wave to come. To understand how this happened, and what we can learn from it, requires winding the clock back further.
From roughly 1880 to 1920, the meatpacking industry was dominated by a four-to-six company “Meat Trust” that bought, slaughtered, and sold nearly all the meat—mostly beef and pork—for the entire country out of their headquarters in Chicago, with branch offices in other major railroad entrepots. They bought meat in stockyards that they had collectively built and collectively ran, dividing up supply and rigging bids to coordinate on prices. In the 1910s, they were integrating forward, into butchery and wholesaling and even grocery stores, and sideways, into the distribution of canned goods through their network of railroad cars.
Starting with the 1920 consent decree, a series of regulatory and enforcement actions created a ring fence around the Meat Trust while imposing substantive and procedural regulations. The consent decree itself required the packers to divest ownership of stockyards, mostly prevented them from integrating forward or sideways, and restricted their ability to merge. The 1921 Packers and Stockyards Act gave the USDA authority to regulate stockyards as organized exchanges (predating similar regulation of securities and commodities) and to create sector-specific enhanced competition regulation for packers. The transformative tenures of Robert Jackson and Thurman Arnold at the Department of Justice created an antitrust regime that made growth through merger much more difficult while declaring a number of vertical restraints per se illegal. And—what is often neglected in antimonopolist accounts but is the subject of an extensive literature among social and labor historians—the National Labor Relations Act made it much easier to engage in the industrial unionism that the CIO used to finally break through in organizing packhouse workers, creating pattern bargaining agreements across the whole industry that were enforced by a militant interracial rank-and-file.
This regime did prevent further consolidation in the meatpacking industry and it did force packers to share more of the income generated with farmers and workers. It likely also made entry and internal growth (rather than getting bought out by a dominant player) easier, which likely drove technological and efficiency improvements. However, it was these same new players who blew the whole thing up well before the merger waves of the 1980s.
The Competition that Kills
So-called “New Breed” packers started to vigorously compete with incumbents in the 1960s. They cut costs by locating their facilities in rural areas rather than urban centers (taking advantage of the newly created national highway system’s end run around the railroads), which allowed them to save on land costs and build huge horizontal facilities with more advanced equipment that sped up the work and reduced the number of workers required. Locating in rural areas also allowed these militantly anti-union firms to recruit workers without any history of union involvement.
Meanwhile, the chicken industry, which was not subject to the consent decree and only partially covered by the PSA, grew from nothing to a major competitor in only a couple decades. Located mostly in former cotton-growing regions in Arkansas, Georgia, and Alabama, its basic business model evolved to look a lot like sharecropping—with “growers” renting chicks from “integrators” who paid by weight upon the chickens’ return. Integrators themselves operated non-union facilities with high turnover, recruiting from often-desperate racialized rural and immigrant workforces.
These new competitors reduced concentration in the industry and increased the intensity of business rivalry. But the competitive pressure they created was not just, or even primarily, to offer farmers better deals. It was to break unions, to speed up work, to move facilities into rural areas, to use trucks rather than trains, to dump waste into rivers, to recruit children and undocumented immigrants to exploit. To be sure, many of the innovations that resulted during this time seem to have genuinely increased productive efficiency—especially in the chicken industry, where innovation in breeding techniques alone made it possible to produce several times more pounds of chicken per farm, per hour of labor, and per pound of feed each decade. And the cost of meat went down, even after the merger wave began. But these innovations were also part of a broader set of business strategies that undermined the regulatory regime that would have forced big firms to share their gains up and down the supply chain. (They also had major health effects on the chicken themselves.)
Antimonopolists are absolutely correct that the 1980s brought a wave of mergers that led to the reconsolidation of the industry and, eventually, a concentration of control that exceeds that of the heyday of the Meat Trust. But it was well before 1980 that these insurgent firms started to reorganize the industry and even to start to acquire some of the incumbents. And it was the force of competition that led the pork and then, in part, the beef industry to begin to “chickenize.”
Looking Forward
This is not a mere historiographical correction. Rethinking the history of meatpacking in this way should encourage hesitation before developing a reform agenda that focuses on increasing competition or even decentralization in the name of dispersing power. The relationship between those things is not as simple as we often hear it portrayed in antimonopolist accounts. (Another narrative complication worth pondering: farm consolidation began much earlier than 1980—more like 1940—and it actually leveled off in the 1970s).
I hasten to add that this narrative correction also does not provide (unqualified) support for the notion that progressives should embrace concentration in the name of reducing cost, or in the name of making labor organizing, sectoral bargaining, and centralized regulation easier. Productive efficiency in meatpacking often means not just more effective exploitation but domination of local communities, increased pollution of air and water (although reducing greenhouse gas emitted per animal raised), loss of biodiversity, and loss of independence among farmers and farmworkers. And the merger controls, quantity and price controls, and standard-setting regimes of midcentury did make it easier to be an independent farmer and spread the wealth more broadly and did manage risk in a more equitable way.
Rather, the purpose of correcting the narrative is to encourage antimonopolists not to become too starry-eyed about “competition” as a market regulator, nor to conflate it with deconcentration. Competition certainly can have a role to play in market governance, but it also can have downsides—not least in undermining working conditions and hard-fought (even if non-ideal) regulatory regimes. It must be channeled if its benefits are to be shared.
What exactly this reconsideration implies for reform of the meatpacking industry today I leave for another day. For now I only emphasize that we should not let the urgency of reforming the meatpacking industry push us into easy answers about how it should be done.
