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The US meat processing industry has attracted the ire of the White House in recent days as it is held responsible for half the increase in food prices.
Since the end of last year, retail prices for beef have increased by 14%, pigmeat by 12.1% and poultry by 6.6%.
While US cattle prices have increased in recent weeks, for the first half of the year they were flat and broadly in line with where they were in 2018 and 2019.
[...] profitability of the leading processors will hit $12bn compared with just over $7bn last year
During this period the wholesale value of beef was the equivalent of €7.66/kg in 2019, but has increased to the equivalent of €7.66/kg in recent weeks.
At the same time, the large factory groups that dominate US meat processing have been posting record results. The White House briefing note has identified that if the results published for the first half of 2021 are repeated in the second half of the year, then the profitability of the leading processors will hit $12bn compared with just over $7bn last year.
Pushback
The North American Meat Institute which represents the major meat processors has pushed back by publishing a myths and facts document earlier in the year.
It points to COVID-19 causing processing difficulties and a carryover of cattle into 2021 because they were unable to get them processed at the height of the pandemic. It also correctly point out the exceptional level of transparency with information along each step of the supply chain.
The fact that many large processors have paid millions of dollars to settle antitrust issues over the past year adds to the suspicion
The administration is looking to encourage competition in the processing sector with the fact that the top four groups control 80% of the US cattle kill blamed for lack of competition.
The fact that many large processors have paid millions of dollars to settle antitrust issues over the past year adds to the suspicion.
Couldn’t happen in Ireland
While this has been a good year and farmers are broadly happy with the prices they are getting, it isn’t always the case.
When markets are bad, factories and supermarkets come into the firing line. The problem with any investigation of the Irish meat industry is that there is so little information in the public domain.
It would simply be impossible for the office of An Taoiseach to issue a similar briefing to what the White House have done because it isn’t in the public domain.
The debate in the US is informed by facts and the entire supply chain is open to scrutiny
In the US the administration and whoever else can challenge the industry on the basis of facts from information published.
The meat industry will push back in defence highlighting an abundance of cattle compared with slaughter capacity and beef prices being set not by the US markets but international markets where US exporters are on schedule to have a record year.
The debate in the US is informed by facts and the entire supply chain is open to scrutiny. It would be in the interests of not just Irish farmers but the entire industry if we could get in the position to do the same.
It will never in itself add a cent per kg to the value of an animal but it will assist in understanding why values are at a particular point at any given time.
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