Dive Brief:
- The U.S. Department of Agriculture is preparing to issue subpoenas to grocery stores, major beef producers and other food industry players as federal officials study the impact of meatpacking consolidation on consumer prices and look to "more vigorously enforce" competition rules.
- Subpoenas will be focused on potentially unfair or deceptive fees and pricing practices "that may tilt the playing field in favor of those with market power," the department said.
- As USDA continues to study the effects of market concentration, it also intends to further adjust "market surveillance and investigative actions" in response to changing practices within the meat industry.
Dive Insight:
The threat of subpoenas comes as the USDA deepens its investigation into whether consolidation in the meatpacking and grocery industries has allowed big companies to manipulate prices through illegal tactics.
Four meatpacking companies harvested 81% of the nation's beef in 2021, according to the USDA's interim report on market concentration. The effect of these companies' staggering influence came into full picture during the COVID-19 pandemic, when outbreaks shuttered processing plants, created grocery store shortages and sent consumer meat prices soaring.
While policymakers have paid considerable attention to consolidation in the meatpacking industry, concentration in the grocery and food distribution sectors are also seen as significant barriers to entry for independent processors. Producers interviewed by the USDA say they must pay a range of fees to retailers and distributors to secure their products on grocery store shelves, in effect giving preference to the largest processors who have deeper pockets.
The USDA began studying concentration in meat markets in 2022 as part of an executive order from the Biden administration directing the department to improve competition and "address the unfair treatment of farmers."
The department has signaled it's prepared to crack down on anti-competitive practices in the food industry, and has introduced a number of rules around contract transparency and other issues to address "unfair practices" in the meat sector.
The USDA interviewed a range of meatpackers, distributors, retailers and trade groups for its interim report, though it noted that some large companies "have resisted" participating in the study. As it continues its investigation, subpoenas could better inform the department as it looks to propose regulatory action.
"While these are first steps, they represent USDA’s intent to more vigorously address practices in the food markets that may harm fair, open, and competitive markets, undermine fair prices for producers and consumers, and otherwise burden economic opportunity for small businesses and rural economies," the department said in a statement.
