President Biden Criticizes Corporate Consolidation on “Barnstorming” Tour While Farmers Await Further Action

Photo taken by Claire Kelloway

At Dutch Creek Farms in Northfield, Minnesota, President Joe Biden and Secretary of Agriculture Tom Vilsack announced that $5 billion from the Inflation Reduction Act will go to rural projects, including conservation agriculture, water infrastructure, and broadband. The event launched a series of Biden administration visits focused on federal investments in rural economic development.

The administration’s overall message: public investment in domestic industry and more vigorous competition, coined “Bidenomics,” helps rural America. By contrast, the past 40 years of free market, neoliberal orthodoxy, have not.

“We’ve had a practice in America, an economic practice, called trickle-down economics. And it hit rural America especially hard,” President Biden said. “It hallowed out main street, telling farmers that the only path to success was to get big or get out. … Meat-producing companies and the retail grocery chains consolidate, leaving farmers and ranchers with few choices about where to sell their products, reducing their bargaining power.”

The speech marked one of many commitments from the Biden administration to tackle agricultural consolidation, particularly in the meat industry. Antitrust enforcers have brought bolder cases against meatpackers and the U.S. Department of Agriculture (USDA) has invested $1 billion to build new meatpacking plants, among other actions. Yet with one year left in this current presidential term, some farmers are anxious to see more key promises fulfilled. Without further action to check domineering corporate conduct, new meatpacking plants could struggle to stay open or change the status quo for farmers.

Specifically, the President’s July 2021 Executive Order on Promoting Competition directed the USDA to issue rules under the Packers and Stockyards Act that would prevent retaliation by meatpackers, reform tournament payment in poultry, and lower farmers’ barriers to seeking justice.

So far USDA has proposed two such rules and finalized none. The first rule would require poultry companies to share more information about potential pay variations in their contracts. The second bans retaliation against all farmers and bans discrimination against “market-vulnerable individuals,” a new term that the rule defines as “membership in a group that has been subjected to, or is at heightened risk of, adversely differential treatment in the marketplace.”

USDA also sought public input on the use of ranking-based payment terms for contract poultry growers, which have been criticized for docking farmers’ pay based on factors beyond their control. Last summer, the Department of Justice alleged that these payment terms violated the Packers and Stockyards Act and reached a consent decree with two merging poultry processors (Sanderson Farms and Wayne Farms) to establish firm base pay for farmers. Neither USDA nor the DOJ has moved to expand this standard to the whole poultry industry.

Perhaps most importantly, the USDA has not clarified whether individual farmers and ranchers need to prove harm to industry-wide competition in order to bring a claim under the Packers and Stockyards Act. This steep legal standard has thwarted Packers and Stockyards cases for years, and several legal experts (including those at the Open Markets Institute) believe it’s a clear misinterpretation of Congress’s intent. Without addressing the “harm to competition” issue, any new Packers and Stockyards prohibitions will be extremely hard for farmers to enforce.

Looking beyond directives from the Executive Order on competition, the Packers and Stockyards Act gives USDA broad authority to level the playing field in the meat industry. The law can regulate abusive and unfair marketing practices by meatpackers that help dominant companies lock out competitors, such as exclusionary kickbacks to buyers. Fair marketing rules could give new packing plants a fighting chance. Bolder still, antitrust enforcers could restructure the meat industry altogether by breaking up the biggest agribusiness monopolies.

In response to public pressure, the competition czar at USDA, Andy Green, recently told Politico that he and his team are working hard to issue rules that can stand up to a potential legal challenge. “It’s not for lack of work, and it’s not for slow walking and it’s not for bureaucrats, you know, digging in their heels, it’s actually the opposite,” Green told Politico. “It’s for getting it right, to make sure that it sticks.”

Nonetheless, with roughly 14 months left in this Presidential term and an election on the horizon, the longer USDA waits to issue rules the more vulnerable the policies will be to a new administration or a new Congress. The last time USDA attempted to regulate meatpackers during the Obama administration, a Republican-controlled Congress blocked any rulemaking until the last year of President Obama’s second term. USDA proposed new Packers and Stockyards rules in Obama’s last month in office, but the Trump administration easily withdrew most of them.

What We’re Reading

• After a six-week trial, a jury in Chicago sided with Sanderson Farms and rejected charges that the poultry processor conspired to fix prices charged to distributors and supermarkets. (Reuters)

• The chairman for egg giant Cal-Maine testified at trial that trade association committees urged egg industry executives to reduce the egg supply. (Law360 / Bloomberg Law)

• The Occupational Safety and Health Administration is not allowed to enforce worker safety laws on farms with fewer than 11 workers unless the farms provide worker housing. OSHA wrongfully used this excuse to avoid investigating several worker deaths on small dairy farms that did, in fact, provide housing for workers. (ProPublica)