Consumers feel the impact of inflation, but origins are on fire | Dave bergmeier
Consumers see higher prices for meat, whether it’s beef, pork, poultry or lamb.
It’s a given, but the issue of inflation has captured the attention of people all along the chain and has reached the top echelon of the White House. How much blame should be assigned is another story.
Officials in the Biden administration believe supply chain disruptions affect prices, but they also say there is another culprit: Dominant companies in uncompetitive markets profit from their market power. to raise prices while increasing their own profit margins, according to the White House blog written by Brian Deese, Sameera Fazili and Bharat Ramamurti. Deese is the US economic and political adviser who is the director of the National Economic Council. Fazili is the deputy director and Ramamurti is a member of the COVID-19 congressional oversight committee.
In their blog post, they highlighted meat prices and that beef, pork and poultry prices represent a quarter of the overall increase in home food prices in November.
âAs we noted in September, only four large conglomerates control around 55-85% of the pork, beef and poultry market and these middlemen use their market power to raise prices and underpay farmers,â while taking more and more for themselves. “
The blog noted that the meat processing companies they based their findings on were Tyson, JBS, Marfrig and Seaboard. They also noted that some processors are private companies and do not report publicly on their profits, margins or revenues.
âAccording to the latest quarterly income statements from these companies, their gross profits have collectively grown over 120% since before the pandemic and their revenues have jumped 500%. They also recently announced more than $ 1 billion in new dividends and share buybacks, in addition to the more than $ 3 billion they have paid to shareholders since the start of the pandemic. “
Quickly noted disagreement
It’s not so quick what the North American Meat Institute said in a press release claiming the blog post was a desperate attempt by the White House Economic Council to blame record-breaking food inflation on the meat and poultry industry.
“The White House Economic Council once again demonstrates its ignorance of agricultural economics and the fundamentals of supply and demand,” said Julia Ann Potts, president of the Meat Institute. âThis is just a flush and repeat of their September attempts to blame the meat and poultry companies for inflation that is not confined to food, but is felt throughout the world. economy.
âBeef, pork and poultry all have their own market fundamentals of supply and demand. The calculations used by the Economic Council clumsily and deceptively combine these sectors, and the Council’s analysis conveniently excludes data on rising input costs, rising fuel costs, supply chain difficulties and labor shortages that impact the price of meat on retail shelves. Additionally, recent economic data indicates that (wholesale) packer margins have fallen by 30-60% depending on the species as the industry grapples with the historic supply chain disruptions of the past 18 months.
Potts said the blog post came out on the same day that the Consumer Price Index noted that gas and energy prices had risen by almost 60% in the past 12 months, representing almost 10 times the rate of food inflation.
Potts said demand for meat and poultry products has never been higher, and she said members of the Meat Institute are doing their part to keep the farm economy moving.
In the White House blog post, the author said that the US Department of Agriculture’s approach to helping small-scale meat processors will increase meat and meat processing capacity and that it will be a good news for agricultural producers and consumers.