The Biden administration on Monday announced a series of initiatives aimed at making the U.S. meat-processing industry more competitive and resilient. 

The announcement preceded a virtual meeting Monday afternoon between President Joe Biden and family and independent farmers and ranchers to discuss boosting competition and reducing prices for consumers.

Among the steps being taken, the Biden administration is dedicating $1 billion in American Rescue Plan funds to expand independent processing capacity. 

The White House says the meat- and poultry-processing sector is now dominated by a handful of large companies, resulting in higher prices and fewer options for families while also hurting small businesses and entrepreneurs. 

“Capitalism without competition isn't capitalism. It's exploitation,” Biden said at the start of Monday’s meeting. “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. It strikes at their dignity, their respect and the family legacy so many of them carried for generation after generation.”

According to a White House fact sheet, four large meatpacking companies control 85% of the beef market, the top four poultry-processing companies control 54% of that market, and the four biggest pork-processing firms control 70% of their market. 

That leaves farmers with limited buyers for their products and little leverage when negotiating prices, the Biden administration said. For example, a half-century ago, ranchers received 60 cents of every dollar consumers spent on beef; today they earn 39 cents, according to the White House.

“Fifty years ago, ranchers got over 60 cents for every dollar a family spent on beef. Today they get about 39 cents," Biden said. "Fifty years ago, hog farmers got 40-50 cents for each dollar spent, today its 19 cents. The big companies are making massive profits. While their profits go up, the prices you see at the grocery store go up commensurate.”

“Our farmers and ranchers have to pay whatever these four big companies say they have to pay by and large, but that's only half of it,” Biden added. “These companies can use their position as middlemen to overcharge grocery stores and, ultimately, families.”

Reliance on a small number of processing companies also makes the supply chain more susceptible to shocks from disasters such as the COVID-19 pandemic, fires or cyberattacks, the Biden administration said.

Monday’s announcement comes as rising inflation, largely related to global supply-chain issues, is overshadowing other economic gains during Biden’s first year in office. In November, consumer prices were up 6.8% compared to a year earlier, the biggest increase in 39 years. Food prices had climbed 6.4%, and beef prices rose 21%.

Biden’s action plan builds on an executive order he signed in July aimed at promoting business competition while making the economy more resilient and dynamic. Based on input it received, the U.S. Department of Agriculture identified a number of areas in need of urgent attention, including expanding and diversifying meat and poultry capacity, providing producers an opportunity to have ownership in processing facilities, and providing consumers with more choices.x

As part of the $1 billion investment, $800 million will be awarded in grants and loans to increase production capacity, help create a pipeline of well-trained workers in rural areas and address innovation challenges, said Agriculture Secretary Tom Vilsack, who was also at Monday’s meeting. 

“There are stories of woe out there, but we are committed to making a difference,” Vilsak said.

The Justice Department and USDA are also launching a portal for reporting concerns about potentially unfair and anticompetitive practices in the agriculture sector. 

“The work that we do, especially the work that we do together to ensure competition in our economy, has a direct impact on the lives of the American people every single day,” Attorney General Merrick Garland said. “When we talk about promoting competition in the agricultural sector, we are talking about whether a farmer or rancher will be paid a fair and competitive price for their goods and labor. When we talk about protecting consumers in this context, we are talking about whether food will be affordable for everyone in America.”

In addition, the USDA has begun a review of the current labeling rules for items to meet the “Product of USA” standard. Currently, meat can be labeled “Product of USA” if it is processed domestically but raised overseas, potentially confusing consumers.

Biden added that he’s pleased to see that a bipartisan group of senators is working on a bill to make cattle markets more transparent, adding that he plans to invite them soon to the White House to discuss moving the proposal forward.

"We're encouraged to see bipartisan legislation in Congress and will work closely with the House and Senate to make cattle markets fairer and more transparent," White House assistant press secretary Emilie Simons wrote on Twitter in response to Iowa Sen. Chuck Grassley, who expressed hope that Biden would urge support for a bipartisan bill he co-sponsored aimed at improving fairness in the cattle marketplace.

The bill, sponsored by Sens. Grassley, Deb Fischer, R-Neb., Jon Tester, D-Mont., and Ron Wyden, D-Ore., would establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades and require the U.S. Department of Agriculture to establish and maintain a publicly available library of marketing contracts between meat packers and producers, among other initiatives aimed at restoring fairness to the cattle marketplace.

"It’s important for [President Biden] to recognize the significance of the meat industry and our hardworking family farmers and ranchers," Fischer wrote on Twitter on Monday. "This industry is vital to Nebraska’s economy and it’s critical that all segments of the supply chain can succeed."