Crops Livestock News

New executive order intended to promote competition in agriculture

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On Friday, July 9, President Joe Biden signed the Executive Order on Promoting Competition in the American Economy, which includes 72 initiatives by more than a dozen federal agencies to tackle major competition problems that face our economy.

According to the White House fact sheet, the executive order focuses on corporate monopolies across many industries, including agriculture, and will have antitrust agencies look into multiple sectors. The new ruling will allow these agencies to look into and enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge.

How it will affect the agriculture industry

For the agriculture industry, that means empowering family farmers and increase their incomes by strengthening the Department of Agriculture’s tools to stop the abusive practices of some meat processors. For example, the fact sheet references the four large meat-packing companies that dominate over 80% of the beef market. “Over the last five years, farmers’ share of the price of beef has dropped by more than a quarter — from 51.5 percent to 37.3 percent — while the price of beef has risen.” The fact sheet continues, “In short, family farmers and ranchers are getting less, consumers are paying more, and the big conglomerates in the middle are taking the difference.”

In the executive order, the president addresses:

  • Packers and Stockyards Act — The executive order directs the USDA to consider issuing new rules under the Packers and Stockyards Act making it easier for farmers to bring and win claims, stopping chicken processors from exploiting and underpaying chicken farmers, and adopting anti-retaliation protections for farmers who speak out about bad practices.
  • “Product of USA” labels — The executive order directs the USDA to consider issuing new rules defining when meat can bear “Product of USA” labels, so that consumers have accurate, transparent labels that enable them to choose products made here.
  • Increase access to markets — The executive order directs the USDA to develop a plan to increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly.
  • Right to repair — The executive order encourages the Federal Trade Commission (FTC) to limit powerful equipment manufacturers from restricting people’s ability to use independent repair shops or do DIY repairs — like when tractor companies block farmers from repairing their own tractors.

Although the executive order did not outline the exact rules just yet, it does put the FTC in charge of creating rules that would address competition concerns. For more details on the executive order, read the fact sheet here.

 

Many across the agriculture industry are pleased to see an emphasis being put on competition within the industry.

R-CALF USA CEO Bill Bullard said, “If these rules are brought to fruition, they will go a long way toward rebalancing the disparate market power between the highly concentrated beef packers and the widely disaggregated independent cattle feeders, backgrounders, stockers and cow/calf producers.”

American Farm Bureau Federation President Zippy Duvall said, “AFBF notes President Biden’s effort to address several pressing issues facing America’s farmers and ranchers comes at a time when many in the farm supply chain are frustrated. Growing concern about livestock market fairness is accelerated by the continued rise in grocery store meat prices while ranchers struggle to break even on the cattle they raise and poultry farmers being locked into agreements with very little recourse if they’re underpaid. It’s time to get to the bottom of what’s driving these imbalances. More opportunities for farmers and ranchers to sell their products will ensure they are paid fairly while providing more options for America’s families.” However, Duvall did say that AFBF will closely examine the details of the executive order and work with the administration to ensure changes are consistent with their grassroots policy.

United States Cattlemen’s Association (USCA) President Brooke Miller said, “USCA applauds President Biden for hearing the calls from cattle country regarding increased consolidation in the U.S. cattle industry, and then issuing his own call for prompt action within his Administration.” Miller continued, “A centralized food system is a threat to our national security. USCA believes in pushing forth policy solutions that strengthen the bottom lines of U.S. agricultural producers in order to strengthen our nation’s food security. President Biden’s Executive Order is an important step towards restoring a fair and equitable food system.”

However, not every agriculture group supported the order. North American Meat Institute President and CEO Julie Anna Potts said, “President Biden’s executive order calling for USDA to change the Packers and Stockyards rules will have unintended consequences for consumers and producers. Government intervention in the market will increase the cost of food for consumers at a time when many are still suffering from the economic consequences of the pandemic. These proposed changes will open the floodgates for litigation that will ultimately limit livestock producers’ ability to market their livestock as they choose. These proposals have been considered and rejected before and they are counter to the precedent set in eight federal appellate circuits.”

The signing of the executive order comes on the same day that U.S. Agriculture Secretary Tom Vilsack announced that the USDA intends to make significant investments to expand processing capacity and increase competition in meat and poultry processing to make agricultural markets more accessible, fair, competitive, and resilient for American farmers and ranchers.

Executive orders have become commonplace during the Biden administration — he has signed 50 so far (by comparison, former President Trump signed 55 total in four years, while former President Obama signed 69 over eight years). The issues that are the focal point of this latest order have long been topics among farmers.

For example, for many years, farm groups have been pushing for some type of so-called right-to-repair legislation. However, those actions never came to fruition, and farmers have been frustrated often dealing with technology restrictions when trying to repair equipment. This prevents farmers from being able to properly repair machinery themselves or have an independent contractor do the work — instead paying top dollar for repairs direct from manufacturer experts.

Additionally, labeling is at the forefront, especially when it comes to Made in the USA or Product of the USA labels. In the livestock industry, those in favor of the tightest regulations tend to favor a perspective that an animal should be born, raised, and harvested in the United States, not just fit the criteria of one of those three things. Other stakeholders want the wording to say “Processed in the USA,” to best reflect the reality of the food chain and to protect discrimination in trade dealings with Canada and Mexico.

 

This article was updated at 3:49 p.m. ET and will continue to be updated as more information becomes available.

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