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- Meat prices spiked during the pandemic.
- While many are worried about widespread price inflation, the White House blames meat prices on something different.
- In a new report, officials discuss breaking up the meat monopolies to lower prices for shoppers.
- See more stories on Insider's business page.
If a pack of 32 frozen Great Value beef burgers at Walmart costs roughly $23 today, it would've been roughly $19 before the pandemic. For a lot of Americans, that nearly 15% increase in prices since January 2020 adds up to a severely bloated grocery bill.
But the White House isn't blaming broader, economy-wide inflation for this one. Instead, it's saying meat industry players are collaborating to raise prices for shoppers - and not passing along the extra profits to farmers.
In a White House briefing Wednesday, National Economic Council Director Brian Deese said half of the overall increase in at-home food prices is due to spikes in the cost of beef, pork, and poultry. And this has helped major industry players see record profits so far this year.
"It raises a concern about pandemic profiteering - about companies that are driving price increases in a way that hurts consumers who are going to the grocery store, and also isn't benefiting the actual producers - the farmers and the ranchers," Deese said in the briefing.
In addition to the 15% increase in the price of beef and veal since January 2020, the chart below shows that pork is up nearly 14% and poultry up 12.5%. Meanwhile, prices for the broader category of food bought to be eaten at home (as opposed to in a restaurant) are up just 6.5% overall, which is much closer to the overall inflation rate during the pandemic.
That means the White House has a point - while overall inflation has been relatively high over the last several months, meat prices have been downright skyrocketing.
Deese also pointed out that prices have actually gone down in recent months for food such as eggs and fresh fruits and vegetables.
So what's going on with meat? Deese and Secretary of Agriculture Tom Vilsack are blaming Big Meat.
According to their report, just four big companies control the majority of the market in these three categories. During the pandemic, they've all raised their prices and spent 2020 and 2021 funneling capital back to their investors. The White House report focused on two in particular: JBS and Tyson Foods.
JBS is the world's largest food processor, based in Brazil with US headquarters in Colorado, and the White House noted that it increased shareholder payouts by roughly 75% in 2020. The second-largest - Arkansas-based Tyson Foods - also ramped up its shareholder payments, with a 6% increase in dividends and a $200 million stock buyback program between September 2020 and July 2021.
At the press briefing, Deese said, "If you look at that market, the thing that is striking is - across beef, poultry, and pork - significant consolidation in those industries. So anywhere from 55% to 85% of the market is controlled by the top four producers in those industries."
In a statement released Wednesday, Tyson said it "categorically rejects" Deese and Vilsack's comments. The company says price hikes are due to the "unprecedented market shocks" of the coronavirus pandemic and severe weather hampering meat processors' abilities to meet a rise in demand. It also blamed labor shortages.
JBS did not immediately respond to Insider's request for comment.
For a macro look, check out the chart below. It shows how much of these three markets - beef, pork, and poultry - is owned by just four companies.
Put simply, the fewer players that control a market, the more power they have over where the money goes, and this means that consumers and small businesses lose out, Deese said: "Promoting more competitive practices and more competition across industries could actually lower prices for consumers and benefit middle-class families."
source https://www.businessinsider.com/why-are-meat-prices-high-monopoly-inflation-white-house-report-2021-9