Biden Executive Order Targets Consolidation in Ag Sector
Biden Executive Order Targets Consolidation in Ag Sector
In Executive Order:
A sweeping executive order aimed at promoting economic competition and signed Friday by President Joe Biden called on the Federal Trade Commission to institute rules to curb anticompetitive restrictions that limit consumers’ ability to repair gadgets on their own terms. Tucked into the executive order that covered 72 initiatives to promote competition in the US economy, Biden specifically asked the FTC to crack down on “unfair anticompetitive restrictions on third-party repair or self-repair of items, such as the restrictions imposed by powerful manufacturers that prevent farmers from repairing their own equipment.” Right to repair argues that anyone should have access to the OEM parts, manuals, and software needed to perform those repairs. Major gadget makers have lobbied to prevent this kind of repair accessibility, but the right to repair movement has been picking up momentum in recent years. Specifically, Biden took aim at cell phone makers and other tech companies, including tractor manufacturers, that “impose restrictions on self and third-party repairs, making repairs more costly and time-consuming, such as by restricting the distribution of parts, diagnostics, and repair tools.”
A wide-ranging executive order that President Joe Biden signed Friday seeks to address consolidation throughout the economy and includes a special focus on actions the Department of Agriculture could take to address the meat industry and antitrust enforcement.
In particular, the order will require the department “to consider issuing new rules under the Packers and Stockyards Act (PSA) making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices,” according to a fact sheet released Friday by the White House.
"Big ag is putting a squeeze on farmers," Biden said in signing the order. "Small and family farms, first-time farmers -- like veterans coming home and Black and Latino and Indigenous farmers -- they're seeing price hikes for seed, lopsided contracts, shrinking profits, and growing debt."
At a press conference in Iowa Friday, Agriculture Secretary Tom Vilsack said the department would move "aggressively" to adopt new rules to improve the poultry grower ranking system, which is used to determine the prices growers receive for their flocks. Regarding changes in the P&S Act, he said USDA would also be acting as swiftly as it can "to draw clear and bright lines" on what constitutes an unfair practice.
In particular, he said it should not be necessary for producers to show harm to the entire industry, which he called "virtually an impossible standard."
Reacting to the order, National Chicken Council President Mike Brown said, "This looks like a solution in search of a problem. The chicken industry is a model of success — from farm to table — and one of the least consolidated industries in animal agriculture." Brown said "chicken companies have waiting lists of potential family farms that want to partner with them and enter into the chicken business."
The executive order formalizes what USDA has already announced. Last month, the department said it would in the coming months "propose a new rule that will provide greater clarity to strengthen enforcement of unfair and deceptive practices, undue preferences, and unjust prejudices."
The department "will propose a new poultry grower tournament system rule, with the current inactive proposal to be withdrawn," USDA said, and "will re-propose a rule to clarify that parties do not need to demonstrate harm to competition in order to bring an action under section 202(a) and 202(b) of the P&S Act."
In a press release issued Friday, USDA reiterated its intentions: "The rulemakings will clarify the conduct that USDA considers a violation of the Packers and Stockyards Act, including conduct that is unfair, deceptive, or unjustly discriminatory against farmers and growers. Second, they will address oppressive practices in chicken processing. Third, the rulemakings will reinforce the longstanding USDA position that it is not necessary to demonstrate harm or likely harm to competition in order to establish a violation of the Act."
Corporate consolidation has been bad for farmers and ranchers, limiting their options when it comes to selling their products, the White House says. “That means they get less when they sell their produce and meat — even as prices rise at the grocery store.”
As an example, the fact sheet cited the “Big Four” meatpacking companies — Tyson, JBS, Cargill and National Beef — without mentioning them by name.
“Four large meatpacking companies dominate over 80% of the beef market and, over the last five years, farmers’ share of the price of beef has dropped by more than a quarter — from 51.5% to 37.3% — while the price of beef has risen,” the fact sheet says.
The North American Meat Institute said it would have more to say after the official unveiling of the order — which Biden is expected to sign Friday afternoon at the White House — but NAMI spokesperson Sarah Little said, “The bottom-line is, the current level of four-firm concentration has existed for more than 25 years and it has not ensured packer profitability at the expense of producers. No sector — cow-calf, feedlot, nor packer — has realized positive margins every year.”
The United Food and Commercial Workers International Union, however, was quick to praise the new order. UFCW International President Marc Perrone, who will join Biden at the White House for the signing of the order, said “today’s action puts workers and consumers first by strengthening oversight of meatpacking monopolies that suppress wages and drive up food prices at the grocery store.
"With stronger country-of-origin labeling for food, this executive order supports American jobs and protects the right of consumers to know where their food is from, whether it’s safe, and if it’s produced by American workers,” he added.
As already reported, the order also directs USDA “to consider issuing new rules defining when meat can bear ‘Product of USA’ labels, so that consumers have accurate, transparent labels that enable them to choose products made here,” the fact sheet says, noting that “under current labeling rules, meat can be labeled ‘Product of USA’ if it is only processed here — including when meat is raised overseas and then merely processed into cuts of meat here.”
Ag Secretary Tom Vilsack, who will be speaking about the order in Council Bluffs, Iowa, Friday, has already announced a ”top to bottom” review of “Product of the U.S.A.” meat labels.
U.S. farmers and ranchers are “getting squeezed by foreign corporations importing meat from overseas with labels that mislead customers about its origin,” the fact sheet says.
“Overall, farmers’ and ranchers’ share of each dollar spent on food has been declining for decades,” it says. “In short, family farmers and ranchers are getting less, consumers are paying more, and the big conglomerates in the middle are taking the difference.
“Meanwhile,” it continues, “the law designed to combat these abuses — the Packers and Stockyards Act — was systematically weakened” by the USDA during the Trump Administration.
The order also targets consolidation in the ag industry, calling on “the leading antitrust agencies, the Department of Justice (DOJ) and Federal Trade Commission (FTC), to enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past administrations did not previously challenge.”
The Biden administration’s policy will be that “enforcement should focus in particular on labor markets, agricultural markets, health care markets (which includes prescription drugs, hospital consolidation, and insurance), and the tech sector.”
The fact sheet says farmers and ranchers have few choices when it comes to sourcing inputs. “The markets for seeds, equipment, feed, and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for these inputs,” it says. “For example, just four companies control most of the world’s seeds, and corn seed prices have gone up as much as 30% annually.”
The order also addresses another key element of farmers’ operations — their equipment.
“Corporate consolidation even affects farmers’ ability to repair their own equipment or to use independent repair shops,” the fact sheet says. “Powerful equipment manufacturers — such as tractor manufacturers — use proprietary repair tools, software, and diagnostics to prevent third parties from performing repairs.”
As an example, the White House says, “When certain tractors detect a failure, they cease to operate until a dealer unlocks them. That forces farmers to pay dealer rates for repairs that they could have made themselves, or that an independent repair shop could have done more cheaply.”
To tackle the issue, the order “encourages the FTC to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs — such as when tractor companies block farmers from repairing their own tractors.”
Lastly, to specifically address competition in agriculture, the order “directs USDA to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly,” the fact sheet says.
Areas of focus outside of specific farm policy concerns could also have an impact on farmers and ranchers. The order also includes language calling on the Federal Maritime Commission "to ensure vigorous enforcement against shippers charging American exporters exorbitant charges." There's also a push to restore the "Net Neutrality" rules pushed during the Obama administration that were ultimately repealed by the Federal Communications Commission in 2017.
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