Politico: Senators seek USDA special investigator after meatpacking disruptions

Senior farm-state senators are pushing to designate a special investigator at the Agriculture Department to focus on antitrust issues and national security concerns in the meatpacking industry, POLITICO has learned.

The effort stems from the recent ransomware cyberattack against JBS, the world’s largest meat packer, which controls almost a quarter of U.S. beef processing. The shutdown of the company’s U.S. plants last week reignited bipartisan calls for the government to chip away at consolidation in the industry, after a series of disruptions since 2019 that have caused sharp swings in the livestock and meat markets.

Sens. Jon Tester (D-Mont.) and Chuck Grassley (R-Iowa) are filing legislation on Thursday that would create a “special investigator for competition matters” within USDA’s Packers and Stockyards Division. That’s the department’s primary unit in charge of monitoring the meat processing sector for unfair trade practices and monopolistic behavior that can harm producers and consumers.

“It’s really to put some teeth in the Packers and Stockyards Act,” Tester said in a telephone interview, referring to the decadesold antitrust law governing meat and poultry firms. “It will give them subpoena power and the ability to address what I believe are anti-competitive prices by meat packers.”

Retail meat prices have remained high since the pandemic started, because of heavy demand and limited slaughterhouse capacity. But most livestock producers didn’t benefit even as large processing companies were raking in profits.

The new USDA office would include a team of investigators tasked with enforcing antitrust laws in coordination with the Justice Department and Federal Trade Commission.

“This special investigator isn’t about saying, ‘You guys are crooked and we’re going to shut you down,'” Tester said. “It’s about making sure they’re living by the laws that are on the books right now. I don’t think they’re being enforced.”

He pointed as a sign of “nefarious behavior” to recent antitrust actions against top meat packers, such as the $108 million criminal fine paid by JBS subsidiary Pilgrim’s Pride after the poultry processing giant pleaded guilty to fixing prices and rigging bids for broiler chicken products.

JBS separately agreed in March to pay $20 million to settle claims by consumers that the company conspired with competitors to inflate pork prices.

The North American Meat Institute, which represents meat packers, argues that livestock prices are following natural supply and demand factors, such as labor constraints that were exacerbated by the pandemic.

“There are new facilities coming online now that have the same problem as existing packing facilities: a labor shortage,” Sarah Little, a spokesperson for the group, said in an email. “The capacity is not being utilized as fully as packers and producers would like. Drought and higher prices for feed have come together with labor shortages to lower cattle prices for producers.”

Sen. Mike Rounds (R-S.D.) is also cosponsoring the bill, and Tester said he’s spoken to several other senators in both parties about signing on.

The special investigator sought by Tester and Grassley would also serve as a bridge to the Department of Homeland Security on national security threats to the food system.

The JBS hack caused wholesale beef prices to immediately tick higher in the days after the plant closures – highlighting the vulnerability of a food system that depends on a small group of dominant companies. The beef facilities were back online within days, but market analysts said that a longer-lasting disruption would have a more drastic impact on consumer prices.

USDA is launching its own effort to bolster the food system, in part by helping small and midsize processors gain a foothold in the industry. Secretary Tom Vilsack has also vowed to reconsider new Packers and Stockyards regulations to improve fairness and transparency in livestock markets.

“There were a number of rules that were pending during the Trump administration that are being reviewed, and there were a number of rules promulgated at the end of the Obama administration that deserve a refresh and a re-look,” Vilsack told reporters on a conference call earlier this week. “The expectation would be over the course of the next several months that we will do just that.”

https://www.politico.com/news/2021/06/11/usda-special-investigator-meatpacking-disruptions-493320