Reviews | Building a better meatpacking industry
After dismantling the big meatpackers in the early 1920s, the federal government held back the industry from consolidating for more than half a century, part of a broader commitment to controlling corporate power in the whole economy. Then, in the early 1980s, the Reagan administration decided to embrace consolidation.
“We have to recognize that case size does not necessarily mean badness,” Attorney General William French Smith said.
Cargill, one of the nation’s largest meatpackers, was one of the first companies to take advantage of the new policy, buying three meatpacking plants from a Midwestern co-op. When a rival meatpacker filed an antitrust lawsuit to block the deal, the Reagan administration stepped in alongside Cargill. The deal was done. Between 1977 and 1992, the market share of the four main companies rose from 25% to 71%.
The North American Meat Institute, a trade group for large meat packers, says the industry has consolidated because large plants are producing meat more cheaply and consumers have reaped the benefits. The price of beef, adjusted for inflation, fell significantly in the first decades of consolidation, but those declines had eroded significantly even before the pandemic pushed retail beef prices to new highs.
Efficiency was also a fancy word to take advantage of workers. Meatpacking companies replaced unionized workers with cheaper labor, including undocumented immigrants. In the first decade of consolidation, wages fell 35% after adjusting for inflation. Reported workplace accidents increased by 40% over the same period.
Big meat packers insist that cattle producers, like consumers, have benefited from industry consolidation, as more efficient plants can pay higher prices for cattle.
This is also the opinion that prevails among agricultural economists. In June, academics at a conference funded in part by the Department of Agriculture concluded there was no clear evidence that meat packers are using their market power to take advantage of livestock producers – a judgment which the conference report acknowledged was “not necessarily a popular position”.