Source: Jack Murphy
Americans are now paying more for meat as prices soared over the past year under President Joe Biden, with beef prices up a massive 20 percent.
Earlier this month, the Biden administration announced a $1 billion plan to tackle the issue.
But economists, and even a rancher currently serving in Congress, disagree with this assessment.
A handful of large meat and poultry processors control the majority of their markets, the White House notes.
The administration then criticizes the companies as “dominant middlemen” seeking to “increase their own profits” at the expense of consumers and farmers.
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The White House wants to correct this by spending $1 billion in taxpayer funds on “independent processing projects” to introduce more competition into the meatpacking industry.
One economist said that blaming the “lack of competition” for rising prices was ridiculous, considering the current level of competition that has existed for decades.
The assistant professor in the Department of Agricultural Economics and Agribusiness at the University of Arkansas, James Mitchell, explained the real causes for hikes are labor shortages and supply chain issues, all of which are the fault of the Biden administration.
He added that the “lack of competition” excuse is misinformed at best.
Economist Walter Block also argues “concentration ratios are being misused as competition.”
So because four companies control 85 percent of the beef processing market does not imply a lack of competition, which is what Biden is claiming.
Block gave an example:
“If there is only one grocer in a small town, he has control over 100% of the grocery industry,” Block told The Western Journal.
“Mainstream economists would unduly deduce from that fact that there is lack of competition.”
Block notes that “to the extent that there is any lack of competition in the meatpacking industry,” the lack of competition was due to Biden’s enforced government regulation.
Block added that regulations make it “more difficult for new firms to enter this industry.”
Pro-free-market think-tank, the Acton Institute, said the cost of following federal U.S. Department of Agriculture guidelines is so high that only powerful processors can stay in business.
So the government’s increasing regulations lead to less competition in the processing sector, which in turn affects prices.
According to Mitchell, COVID restrictions at meatpacking facilities are “slowing the line speeds as well as increasing the costs for meat processors.”
Biden could remedy this by reducing excesses of federal regulations, but he chose to distribute a whopping $1 billion.
Rep. Thomas Massie, a rancher and a Republican from Kentucky, said Biden’s plan “is over the target.”
Massie agrees with Biden’s assessment about competition but also notes that “there’s a better answer though that’s free.”
Thread.— Thomas Massie (@RepThomasMassie) January 3, 2022
The Biden administration is over the target. Four companies control the majority of meat processed in the United States. This quad-opoly of corporate middlemen have driven up prices in stores while depressing prices paid to struggling farmers.https://t.co/aQEZSzZrPc