An issue that has long been frustrating with the U.S.-centric model of capitalism is the declining level of competition within industries. Less competition today has been caused by antitrust regulators failing to enforce antitrust regulations over decades. In the face of this concentration, how do we begin to turn back the tide? The article in the url below tackles that question in the context of the meatpacking industry, where competition is woefully lacking:
"Corporate concentration is a growing problem across the economy, but meatpacking is especially afflicted. Four companies produce more than 80 percent of the nation's beef, and their dominance has come at the expense of cattle farmers, meatpacking workers and American consumers, who eat an average of 55 pounds of beef each year."
In response, a single cattle farmer (Chad Tentinger) is attempting to rally a number of small farmers to build their own meatpacking facility. The challenge is that, while the potential payoff is large, the effort requires a sizeable investment, at considerable risk to the individual farmers:
"The price tag for the plant is $450 million, about a third of which Mr. Tentinger hopes to raise from other farmers. He says he'll start building this spring with or without federal support, but government subsidies, in the form of grants, low-cost loans or loan guarantees, would improve the chances of survival."
The project is also challenging in ways that are not simply financial:
"It won't be quick … Mr. Tentinger doesn't plan to open his meatpacking operation until 2024. It also won't be easy. The government still needs to tighten regulation of existing producers, not least to prevent the big firms from buying up new meatpackers or pushing them out of business. And the Biden administration's approach is less likely to find a foothold in the chicken and pork industries, where corporate concentration has left fewer independent farmers."
Among the attempts to make the possible facility more friendly for farmers and workers, there are a number of innovations being considered. What caught my eye is that:
"Mr. Tentinger's company, Cattlemen's Heritage, aims to process about 400,000 head of cattle per year, or roughly 1 percent of the nation's beef. It's not the volume that makes the plant so intriguing — it's the business model. The company is offering a better financial deal to farmers, and if it succeeds, it's not hard to imagine other groups of farmers organizing to build more plants. (Indeed, a group in Nebraska already is working to build a similar plant.) Mr. Tentinger also is offering a better deal to workers. He chose Council Bluffs in the hopes of wooing workers from meatpacking plants across the river in Omaha with the promise of higher wages and better working conditions, including on-site day care. Consumers could benefit too. If productivity rises, prices could fall."
The project requires the vision to see past the upfront costs and hassle associated with innovation and through to the other side to a better meat processing industry. And it is better simply because it would make the industry that much more competitive.
Take care
David
David Chandler
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Building a Better Meatpacking Industry
By Binyamin Appelbaum
January 16, 2022
The New York Times
Late Edition – Final
SR8
