It’s packers versus farmers in this meat war

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The livestock industry’s eyes are focussed squarely on the U.S. this week as the country considers anti-competition legislation that could have a big impact here.

The legislation is designed to give U.S. farmers a fighting chance against corporate giants and offer more homegrown revenue streams. And it all relates back to the cost of food, a huge concern for consumers everywhere.

Consider the many players involved in the food value chain, from farmers to processors to retailers. Every part of the chain is pushing for efficiency.

This is old hat to farmers. They’ve long been told by processors to keep their costs low. Processing is one of the most expensive parts of food production, and processors are likewise trying to keep their costs in check. Of course, profitability enters the picture here, too. Processors aren’t trying to cut costs only because consumers want cheap food.

Through the years, because of consolidation in the food sector, processors such as meat packers have become more powerful. If farmers don’t like a deal being offered by a processor, they have increasingly few options. Selling local comes to mind, and it can really work for some farmers who have developed individual relationships with retailers. For others who aren’t next to significant urban centres, or who produce commodities in great volumes, local sales are not as workable.

Consolidation is happening on both sides of the border, but in the US, farmers are particularly annoyed about it. This week, the Biden government is expected to do something about it. In what’s being termed a matter of rights, legislation will be introduced there that makes it easier for farmers to sue unscrupulous processors.

Initially, livestock producers are leading the charge. They say the lack of competition among processors has resulted in bullying tactics at best, to downright deception. Certain processors there are accused of forcing farmers to sign long-term contracts for beef, chicken or pork, with unsustainable and unprofitable conditions. If the cost of feed or energy or other inputs rise, too bad for farmers.

This is terrible public relations for the corporate food sector. No one who buys food at a grocery store wants to envision a behind-the-scenes battle raging among those who produce food. The negative implications for safe, reliable and quality production are obvious. They feed into all the stereotypical criticisms that the food industry wants to avoid.

Biden wants more competition. He thinks making it easier for farmers to sue will deter bullying.

Related to this, and of note to Canada, he is also planning to make country of origin labelling clearer. Biden doesn’t like the fact that meat from outside the country that is imported, processed and packaged there can be sold as Product of USA. He says it’s deceptive and he believes that many Americans would choose wholly U.S.-grown and processed meat if labels were more accurate.

This has particularly become an issue with consumers’ growing interest in grass-fed beef, much of which comes from Canada and is readily available. Processors and retailers in the U.S. are anxious to meet consumers’ needs and appear less concerned about where it comes from than whether or not it’s on store shelves.

Some beef organizations think differently, however, and have convinced Biden they’re right.

Who knows? Maybe Americans would flock to Canadian beef if it was forced to have a little maple leaf flag on the package, considering the product’s excellent reputation abroad. But that likely wouldn’t be the case – anything originating from outside the USA would likely be lumped together and regarded as foreign.

All this has huge implications for Canada’s beef sector. Will it have to lower prices to compete in U.S. markets? Developments this week will tell that tale.

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