Give or take, there are 630,000 cattle, 2,675,000 hogs and 179,000,000 chickens slaughtered weekly in the US (Source: NASS). At least 50% and up to 80% of these three protein “commodities” are controlled by three to five companies. With this level of concentration, it is attracting Department of Justice antitrust investigative scrutiny. Recently, DOJ announced that it is heightening its focus on competition in the meat and poultry industry, among other sectors of our economy. (Source: Bloomberg Law as reported in Meatingplace, 9-13-2022)

President Biden’s DOJ is ramping up its antitrust division by hiring trial attorneys from big law firms. These lawyers are not like the popular TV series Breaking Bad “Better Call Saul” attorney, Jimmy McGill, nor have they matriculated at law schools like his alma mater, the fictional American Samoa School of Law. No, they’re from much more prestigious ones like Harvard, Yale, Georgetown, etc. The law firms from which these new DOJ attorneys earned their stripes are some of the largest and most respected on the East Coast. With such a highly qualified and aggressive investigative cadre, do you think these attorneys and the DOJ smell blood? (Bad pun, I know.)

When you couple this DOJ antitrust activism with the USDA handing out tranches of money to smaller meat companies under the guise of helping them to become more competitive, it may be a litigious couple of years for the largest companies in our meat and poultry industry. Is such government scrutiny and profligate granting of funds really necessary? Is our industry in such bad shape that it will soon devolve into a select few companies controlling the entire process from animal conception to consumer consumption? I don’t think so, and here is why:

We were just recovering from the pandemic induced sales doldrums, when we got hit with a drought severely impacting live animal production. Then, fairly or not, we had to shoulder some of the blame for reduced beef availability and concomitant rising retail prices, which were more a result of reduced slaughter availability due to lack of labor and animals than some unconscionable effort to simply raise prices. But all the consumer saw was beef, pork and chicken prices much higher than before the pandemic.

Beef and chicken prices still haven’t come down, but the internecine competition among the few large protein companies hopefully will foster a more attractive price for consumers or the antitrust activist lawyers will have a field day. These protein companies are also seeing increased export activity again due to their competitive production processes.

However, with this DOJ antitrust emphasis and the obvious consolidation in our industry that is sure to draw scrutiny from the litany of lawyers, what do we do, if anything?

First, let me ask you, does having 80% of the beef industry controlled by four large conglomerates stifle competition? On its surface, the obvious answer is yes. But, a less learned answer would be no. We are fortunate in the US to have the lowest costing food, and that includes protein, in the world. We have this low cost protein as a result of the consolidated companies who are the most efficient meat and poultry processors as compared to those of lesser size who must not only cover overhead with their production volume but generate a sales profit as well. Sadly, however, these smaller companies can’t compete in this efficiency driven commodity environment. The larger companies are stifling competition because they are simply better at what they do. The answer for the smaller, less efficient companies is the niches of breed specificity or product uniqueness, to name just a few.

We can only hope that DOJ will see the folly of their litigious effort against the meat and poultry industry’s “monopolistic” controlling few and drop their investigative effort like they did when they abandoned their effort to break up Microsoft in 2001.

In my view, other than egregious forms of anticompetitive behavior, I think antitrust action in our industry is putting a thumb on the scale of justice. It is not warranted and biased for an underperforming few.

Do not blame the efficiencies of the larger companies for the woes of the smaller, less efficient ones. It is not antitrust; it is pro economies of scale. Let’s not disincentivize production progress with antitrust activism.

Beware! The Litigators are Coming! The Litigators are Coming!

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