More than $223M will help meat processors, USDA says
OMAHA, Neb. — The Agriculture Department has announced more than $223 million in grants and loans to help small and midsize meat processing plants expand to help boost competition in the highly concentrated industry.
The effort is expected to increase cattle and pig slaughter capacity by more than 500,000 head a year and help poultry plants process nearly 34 million more birds while adding more than 1,100 jobs, mostly in rural areas where the plants are located.
The Biden administration wants to add meat processing capacity to give farmers and ranchers more options where to sell the animals they raise, while hopefully cutting prices for consumers by increasing competition because the biggest companies now have so much power over pricing.
In beef, the top four companies control 85% of the market, while the top four firms control 70% of the pork market. The four biggest poultry processors have control of 54% of that business.
The USDA’s announcement Wednesday comes as President Joe Biden is highlighting his achievements to voters before Tuesday’s midterm elections. Several of the administration’s recent announcements have targeted rural areas in states that generally support more Republicans than Democrats.
The Greater Omaha Packing company, one of the biggest of the 21 grant recipients nationwide that will share $73 million, will use its grant to expand beef processing capacity by 700 head per day and add 275 more jobs.
Some of the other grants will go to helping Pure Prairie reopen an idle poultry processing plant that will employ hundreds of people in Charles City, Iowa. And the Cutting Edge Meat Company in Leakesville, Mississippi, expects to be able to reduce its current six-month backlog for beef and pork processing by expanding its capacity.
The other $150 million in funding announced this week will go to 12 loan programs that will help independent meat processors continue operating as they work to expand.
The big meat processors maintain that supply and demand factors — not industry concentration — drive prices for beef, pork and poultry products. And they say processing capacity has been restrained by the ongoing shortage of people to work at these plants, which are typically in rural areas with small populations.
The worker shortages were highlighted during the pandemic when a number of major meat processing plants had to shut down because so many workers became ill or had to quarantine. That contributed to shortages of meat in grocery stores that drove up prices.
The price paid for slaughtered animals has long been a point of contention because even as meat prices soar with inflation and tight capacity in the industry, farmers and ranchers receive a relatively small share of the profits. Federal data show that for every dollar spent on food, the share that went to ranchers and farmers dropped from 35 cents in the 1970s to 14 cents recently.