Why Not Just Nationalize Tyson Foods?
peoplespolicyproject.org
peoplespolicyproject.org
>A cartel is a group of independent corporations or other entities that join together to fix prices, rig bids, allocate markets, or conduct other similar illegal activities. Cartel conducts are mainly subject to criminal penalties under United States antitrust laws, although there are some cartel conducts, such as monopolization, resale price maintenance, etc. are subject to civil penalties.
The market is nothing at all like an oligopoly. Sure, there are only a few big "meatpackers" that compete for the freezer isle, but only if you ignore the tens of thousands of independent butchers and restaurant suppliers that don't source their meat through them.
In actuality you have one of the most diverse markets in America, marked by a couple of large, low margin players that compete in just one of the segments.
I shop for meat at a specialist butcher in town that sources their own beef from an independent Oregon farm. But even there, they just raised all of their prices and they are sold out of everything.
There has been a concerted effort as of late to blame all rising consumer prices everywhere as a lot of independent actors. But you can't get around that there is just a lot of extra money in the economy right now and no amount of finger pointing is going to stop prices from rising.
I tend to agree on two points, there is more money, and there are higher prices. However, there is a blind spot hiding in here which is easy to pass over and that's the assumption on the distribution of that extra money. The reason that this is important is that food scarcity for whatever reason, demand or supply constrained, is often the tipping point in an abrupt political developments, and we would like to avoid those if possible.
I haven't seen any significant supply constraint. The food would not be scarce if the prices actually raised at the pace of inflation.
If this were explained by across-the-board inflation, we would not have seen the decades long shift of the profits from those raising animals to the meat packers as the market consolidated.
Agriculture Secretary Tom Vilsack: Farmers are losing money on cattle, on hogs and poultry that they're selling at a time when consumers are seeing higher prices at the grocery store. And there are now record profits or near-record profits for those in the middle.
And I remember talking to a producer the other day at Council Bluffs, and he said, I don't get this. I just sold my cattle, and I lost $150 a head. But the processor made $1,800 a head. How can that be?
https://www.npr.org/2021/09/13/1036769709/a-handful-of-big-m...
I am pretty sure $150 is "Net", while $1800 is "Gross". Not to mention Meatpacker gets all the benefits of current market because of how and when the deal and distribution are structured. As is the case in every industry, I have no idea how to fix this.
Another point worth mentioning, US Beef pricing are much more susceptible to export market demand than pork or poultry.
(Unless of course, they sell at contracted prices that didn't account for... across the board inflation)
And again, none of this explains why my local butcher who doesn't buy from midwest feed lots raised their prices.
This usually happens when there is already a natural monopoly (or near to) - and usually results from regulatory capture [1].
I would say the issue is that antitrust officials stood idly by and allowed extreme market consolidation
>For four decades, the U.S. government has watched idly as a handful of largely foreign-owned meat corporations grew horizontally by killing off or gobbling up their competitors and vertically by gobbling up their supply chains. Today four massive companies – JBS, Tyson Foods, National Beef, and Cargill – control over 80 percent of America’s beef. Three companies – JBS, Tyson, and Smithfield Foods – control 63 percent of America’s pork. Two of those – JBS and Tyson – also control 38 percent of poultry.
https://lpeproject.org/blog/break-up-the-modern-meat-trust/
Historically, we last saw this sort of cartel acting in the US 100 years ago leading to legislation that has slowly been whittled away until the problem has returned.
My parents buy beef by the half cow, it's like a coop in MO. It comes out to about $3.69 /lbs. It is a lot of money of up front but much cheaper than the grocery store and much better quality than the average store bought beef (its not prime but its still good). It is hard for the farmers to do this any other way because in order for the farmer to sell to a store or local shop, there has to be an inspector on sight with the cow is slaughters, when it is processes, and when it is packed. This is impossible for a small time operation to do so they have to either do these coops or sell to the big guys that have the inspectors in the building.
The whole process is so wrapped in government regulations that it will always lend itself towards a few big players because they are big enough to have an entire staff of USDA inspectors in the building, a local butcher cannot.
It would be pretty easy to solve and actually save the government money. Inspect butcher shops and meat processors like restaurants, i.e. Annual and spot inspections of the facility and their processes, and make the processor put the information on the packaging of the meat.
Since we know that personnel levels were an issue for just about every industry with the pandemic raging, it would seem a more reasonable assumption that, if these meat processors are the bottleneck, the pandemic and their associated restrictions are the problem which are a the result of government regulation and recommendation. I am no fan of the Biden administration, but the solution they are taking currently is something I find myself more agreeable to rather than just stepping in and buying a major player in the market.
There are also quite well run government agencies. Parks Dept, Medicare, the food safety groups, etc.
Soviet Central Planning had a lot of other issues besides just being government agencies. It’s useful to understand where they government has done a good job, and where they haven’t, because blanket statements are an ineffective way of looking at a nuanced issue.