Iowa Farm Bureau President Brent Johnson told President Joe Biden and other top administration officials last week that livestock farmers need access to more buyers and greater transparency regarding market prices in order to capture fair value for their animals.
“We don’t want special handouts or treatment, but we do need the ability to compete and to have a level playing field,” Johnson said in a virtual forum with Biden, U.S. Agriculture Secretary Tom Vilsack and Attorney General Merrick Garland. “The system that exists today is broken and especially harmful to small and medium-sized producers. We are grateful for the administration’s attention to this issue that impacts not only farmers’ profitability and rural vitality, but also affects consumers at the grocery store. We must work toward a more stable, resilient food supply chain that can better endure unforeseen challenges and ensure farmers are paid an honest price for their product.”
The Biden administration announced several measures in conjunction with the forum aimed at creating fairer markets for farmers and ranchers while reducing retail prices for consumers. Those efforts include investing $1 billion in new and expanded meat and poultry processing capacity, beefing up rules and enforcement of the Packers and Stockyards Act and creating new “Product of the USA” labels to promote U.S.-raised meat.
“Without meaningful competition, farmers and ranchers don’t get to choose who they sell to,” said Biden, noting that four companies control more than 50% of the markets in beef, pork and poultry. “Capitalism without competition isn’t capitalism; it’s exploitation. That’s what we’re seeing in meat and poultry — in those industries — now. Small, independent farmers and ranchers are being driven out of business — sometimes businesses that have been around for generations.”
Increasing concentration among meatpackers and processors has been a concern for several years, but problems have been exacerbated by the pandemic and other so-called “black swan” events that reduce meat processing capacity, Johnson said. While consumers have seen the retail price of meat skyrocket during the pandemic, livestock farmers are seeing fewer buyers for their animals and are receiving a reduced share of the food dollar, he said.
Johnson urged Biden to help expedite passage of bipartisan legislation co-sponsored by Iowa Sen. Charles Grassley to make cattle markets more competitive and transparent.
The Grassley bill, called the Cattle Price Discovery and Transparency Act, would establish minimum regional negotiated cash trade thresholds for packers, improve Livestock Mandatory Reporting to provide more data on meatpacker purchases and create a publicly available library of marketing contracts between packers and producers.
Plan to spur processing
Vilsack offered more details on how the USDA plans to spend $1 billion for new and expanded meat and poultry processing capacity announced last year as part of the American Rescue Plan.
The USDA will make $800 million available for grants and loans to address capacity, workforce and innovation challenges, including $375 million in grants for expanded facilities and construction of new facilities.
He said the USDA will begin accepting applications later this spring for $150 million available to help jump-start about 15 projects that are in late planning stages. Another $225 million of grants will be released this summer for projects that are in the earlier stages of planning.
“We want to get to work right away because farmers have been waiting a long time for this help,” said Vilsack.
The USDA will also spend $100 million to reduce the cost of inspections for existing small and very small processing facilities, Vilsack said.
The agency previously awarded $32 million to help 167 facilities become federally inspected, allowing them to sell their products across state lines.
Another $100 million will be made available for loan guarantees to address middle-level supply chain challenges, including cold storage and warehousing.
Added marketing options
The expansion of local and regional processing capacity will provide valuable marketing options for farmers, Johnson said.
“The increased capacity locally is going to be tremendous,” he said. “It all comes down to shackle space; the ability to have a place for that animal to go when it’s market ready. That infrastructure being placed in the right spot will create a relief valve so when market disruptions do happen, we have a second, third or fourth option to market our animals.”