Biden Announces Plan to Expand U.S. Packing Plant Capacity, Help Struggling Cattle Producers

Wasington, D.C. (January 3, 2021)  Many ranchers who raise cattle are complaining about declining profits lately, and with good reason.  Fifty years ago, ranchers got over 60 cents of every dollar a consumer spent on beef, compared to about 39 cents today. Similarly, hog farmers got 40 to 60 cents on each dollar spent 50 years ago, down to about 19 cents today.  The culprit, according to the White House, is that 85% of the nation’s meat processing capacity is in the hands of four multi-national companies.  The President’s statement said those processors can reduce the amount they pay cattle producers while raising the amount they charge grocery stores for their product.

The President announced a plan today in which the Federal Government will chip in millions of dollars to help independent producers build their own processing plants.  The plan also calls for strengthening the lending system for independent beef producers.  It also calls for a better training system that will build a pipeline of workers to staff beef plants.  Several of the largest processors have claimed that Covid-19 staffing shortages have contributed to the problem.

In addition to the investments in plant and staffing, the President promised more vigorous enforcement of the Packers and Stockyards Act, a law intended to promote a fair balance of power between producers and processors.  It also includes plans for a clearer system of “Product of USA” labeling, so consumers will know where they meat comes from.

Mark McHargue, President of the Nebraska Farm Bureau, reacted with cautious optimism about provisions of the Biden plan:

 “Increasing our nation’s meat processing capacity has been a Nebraska Farm Bureau (NEFB) priority for the past several years, and we appreciate the Biden administration providing needed funding for those looking to enter this highly concentrated and competitive market and for those who are looking to become a federally inspected facility. We also appreciate the administration providing necessary funding to cover holiday and overtime costs for very small and small meat, poultry, and egg processing facilities who have seen demand skyrocket since the beginning of the COVID-19 pandemic.”

“Combined, these actions will hopefully allow additional players to enter into the meat processing arena, provide expanded markets for livestock producers and more options for consumers. At the same time, NEFB will continue to monitor the marketing regulations also discussed in today’s announcement. While strengthening the ‘Product of the USA’ label and an endorsement of Sen. Deb Fischer’s efforts to provide more price discovery to the cattle marketplace are steps in the right direction, we continue to be concerned that other potential USDA regulations could be issued that would limit a livestock producer’s ability to enter into marketing contracts.”

“As the Biden administration moves forward with new regulations, they must ensure that existing laws are being followed while allowing the free-market system to work.”

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