The United States Department of Agriculture (USDA) has announced that it is to provide $500m to expand meat factory processing capacity, with the ambition of making “agricultural markets more accessible, fair, competitive and resilient for American farmers and ranchers”.
This is an initiative by the USDA to open up the marketplace and give farmers more options for selling their produce.
It pointed out that four large meat packing companies control 80% of beef processing alone.
“Dominant companies can use their power to engage in abusive practices and make it harder for farmers, ranchers and consumers to get a fair price," according to the USDA, and “farmers' share of every dollar spent on food has declined from 35 cents in the 1970s to just 14 cents in recent years.”
In the Republic of Ireland, the three largest beef processors have around two-thirds of the beef kill, while, north of the border, ABP will have about 40% of the kill when the Linden Foods factory is added to the Lurgan and Newry factories later this year.
On sheep, the big three handle close to three-quarters of the processing, while, in the north, ABP and Dawn’s Dunbia factory are the only processors of sheepmeat in large volumes.
US meat processing capacity operates close to full capacity, which meant that during COVID disruption, livestock was unable to be processed and this created an overhang of stock that is still being worked through.
It is an exceptionally ambitious government policy that seeks to reverse market dominance by large players through the investment in small companies or new businesses.
Both in the US and Ireland, as well as elsewhere, there are successful meat processors operating outside the main groups.
These will have found their own place in the market through the ingenuity of the entrepreneurs.
It is not possible to wish for new entrants that will displace the established companies; it needs the mix of entrepreneurship combined with Government having in place policies that enable business succeed – throwing money alone isn’t enough.
There is also a valid debate on the merits of large processing blocks, properly regulated in relation to competition and transparency.
A major meat processing group is in a much better negotiating position with a large supermarket group or burger chain than a small business, though the unfair trading practices legislation may be of some help here.
Farmers lack confidence in large factory groups in Ireland, not because they are large, but because they have no evidence that they as small suppliers are being treated fairly.