Over the past year, you’ve probably noticed a big increase in your grocery bills. You may have just blamed all of this on inflation, and it certainly played a major role. But the White House and consumer protection groups allege that some meat producers are raising prices far beyond inflation – a practice known as price gouging.
Food prices in the country have risen by almost 11% since last April, more than headline inflation (8.3%), but the cost of meat, milk and eggs in particular has climbed well beyond these two measures. From April 2021 to April 2022, egg prices increased by 22.6%, chicken by 16.4%, milk and beef by almost 15% and fish and seafood by 11.9 %.
But most plant-based staples — like beans, rice, bread, fruits and vegetables — have risen more slowly than the general inflation rate for groceries (as have cheese and ham, two of the few exceptions in the meat and dairy aisles) .
Tyson Foods, the largest meat producer in the United States, attributes the company’s price increases to increased demand for meat as well as rising labor and fuel costs combined with rising the price of grain for livestock. Meanwhile, the poultry industry has been ravaged by bird flu, which has prompted producers to cull nearly 38 million birds this year – mostly turkeys and laying hens using rather gruesome methods.
Consumer protection advocates say these supply-side factors are partly to blame for the price hikes, but they also suspect big meat producers like Tyson Foods are charging consumers more to fatten their profits.
Claire Kelloway of the Open Markets Institute, an anti-monopoly nonprofit, points to Tyson’s second-quarter earnings to understand how he could use inflation as a hedge to make more money.
” [Tyson had] about $1.5 billion in higher costs, but that’s $2 billion in price increases,” she told me. “So that’s a solid half a billion dollars that’s not tied to an increase in the cost of doing business. It’s purely an exercise in their market power and ability to charge more, and their profits really speak for that.
John Hansen of the Nebraska Farmers Union, which represents the interests of ranchers and independent farmers, put it more bluntly: “There is no doubt that there has been price gouging during the Covid disaster, and there is no there is no doubt that these price gouging continue.
Tyson Foods declined a request for an interview, but directed me to economists and analysts who refute the idea that meatpackers are price gouging, and Tyson Foods CEO Donnie King’s testimony given to the US House Agriculture Committee in late April on the issue. King repeated that strong demand and rising labor and input costs were the main reasons for the rise in meat prices.
“Meat companies don’t set prices for consumers,” Sarah Little of the North American Meat Institute told me over email. “Retailers do that. She quoted a Texas A&M economist who said the price of some wholesale cuts of beef fell while their retail price rose. Tyson’s King also told the House committee that the high prices had nothing to do with industry consolidation.
But that’s something pundits like Hansen and Kelloway — and President Biden — dispute.
Kelloway says there’s also heavy market concentration in parts of the produce aisle, but it’s usually not as intense as for meat: In an article for Vox last year, she reported that the top four companies in each industry slaughter 73% of all beef, 67% of all pork, and 54% of all chicken in the United States. “When there are so few players, it’s not hard to keep track of everyone and what’s called ‘tacit connivance’ and all are moving in the same direction on price. … So I think that definitely seems to be happening,” she told me. “While this is evidence of excessive market power, it is not actually a violation of antitrust laws. »
“We basically have four meat processors across the country,” President Biden said a few weeks ago. “They process the meat that goes into the burgers you buy, so they set the price. When there is no competition, they can set the price higher and higher.
Michael Mitchell of Groundwork Collaborative, a progressive economic policy group, says some ranchers are also being roughed up. Increasingly, American beef comes from ranchers who sign contracts with meat packers to sell their meat at fixed rates, and Mitchell says packers aren’t raising those rates along with their record profits: “It really creates an environment where breeders are in a rush,” Mitchell said. “Because the demand for meat is still relatively strong…meat packers can make a very, very healthy profit and ranchers don’t see it. »
Congressional efforts are underway to rein in alleged price hikes in the meat market, which long predate this period of high inflation. And last month, the USDA proposed long-awaited rule changes to the Packers and Stockyards Act, a 1921 law designed to prevent anti-competitive behavior in the meat industry, which competition advocates say was weakly applied. The new rules would create more transparency around farmers’ contracts in the poultry industry, and further proposed rule changes are expected.
But whatever the price, demand for meat remains strong because it tends to be inelastic – economist-speak for the fact that price increases have little effect on overall sales. While untangling competition issues in the meat industry could take years, for those looking to save on their grocery bills now, the fastest way is to switch to cheaper plant-based foods. .
Eat plants, cheaply
Oxford University researcher Marco Springmann and his colleagues published a study last year that found that in high-income countries, a flexitarian diet — a diet low in meat and dairy — reduced food costs by an average of 14 percent. ” In the [US]it’s even a little more – more like 25% [cost savings] because American diets contain so much meat and dairy, so there’s a lot of potential for savings,” he told me. All-vegetarian and vegan diets reduce food costs even more than flexitarianism.
However, there is one major caveat. The flexitarian, vegetarian and vegan diets analyzed by the researchers include whole plant foods, such as fruits, vegetables, grains and legumes, almost all of which require cooking and preparation. They don’t include the packaged meat, milk and plant-based egg alternatives that now line grocery store shelves and actually tend to cost more than their animal-based counterparts.
They are not more expensive due to the basic ingredients, which are usually inexpensive components like wheat, soy, peas, and vegetable oils. On the contrary, startups that manufacture plant-based products do not benefit from the economies of scale enjoyed by large meat producers.
Meat, milk and eggs of animal origin are also relatively cheap, partly thanks to government support. For decades, corn and soy fed to farm animals has been heavily subsidized by the US government, and the industry has benefited from extensive government-funded research on how to make factory farming more efficient. The meat industry also benefits from business-friendly regulations.
Despite the high cost of plant-based alternatives, prices are starting to drop. Plant-based startups often say price parity with conventional meat is a primary goal, and at least one claims to come close: Rebellyous Foods in Seattle, which makes plant-based chicken.
Factory advocacy groups say more government funding for R&D, like the meat industry has benefited from, would help startups like Rebellyous get there faster. This could give startups an edge, as a recent survey found that lower prices in the herbal aisle could attract more consumers.
Springmann also says his findings should allay policymakers’ financial concerns about measures to increase plant-based diets, such as making more plant-based meals available in schools or updating federal dietary guidelines. “People are often concerned about the cost [flexitarian, vegan, vegetarian] diets are, but our study shows that in fact, if they’re healthier, more sustainable, and more plant-based, you don’t have to worry much about [cost].”
Even as plant-based meat sales have surged in recent years, U.S. meat consumption has steadily risen with it, hitting a record 224.8 pounds per person last year, with forecasts even higher. high in 2022. It’s not an immutable law of nature — Germany, the land of sausages, has seen a steady decline in meat consumption in recent years despite a strong economy, as have some other European countries.
But those of us here in the land of cheeseburgers and chicken wings have the opportunity to both help the environment and lower our grocery bill. Just follow the immortal words of parents around the world: “Eat your vegetables. And I’ll add one more: “Don’t forget the legumes. »
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