- The White House said on Friday that large meat processing companies are gouging consumers.
- Saying that four large firms control up to 85% of meat supply, it criticized their excessive profits.
- Last quarter, their gross profits collectively went up by more than 120% compared to 2019, and net income by 500%.
Groceries have been getting more expensive for Americans as of late. Part of the reason is because of unavoidable issues caused by the pandemic, but the other is a conscious decision by corporations to take excessive profits.
At least, that’s how the White House sees it. And they’re not happy about it.
On Friday, the same day that inflation hit a 39-year high, the White House released an aggressive statement condemning the biggest meat processing companies for price gouging, arguing that just four large firms control the bulk of the market and are taking too big a bite out of consumers’ wallets. In turn, rising grocery prices have been a huge part of the basket that made up the giant jump in inflation.
The Biden administration said that the price surges are harmful to consumers and farmers alike, the latter of whom they say meat companies underpay in order to maximize executive profit margins.
In September, the White House published a statement that named meat as the biggest contributor to the rising cost of groceries, citing the few large corporations that dominate meat processing. According to the November Consumer Price Index, that’s still true: pork, beef, and poultry made up a quarter of the overall hike in food prices last month.
Third-quarter earnings data for four of the largest meat-processing companies — Tyson, JBS, Marfrig, and Seaboard — showed that their gross profits increased over 120% collectively since the start of the pandemic, and that their net income has increased by 500%, according to White House calculations. Controlling about 55% to 85% of the market for pork, beef, and poultry, “these middlemen were using their market power to increase prices and underpay farmers, while taking more and more for themselves,” the White House said.
The Biden Administration said the Department of Agriculture and the Department of Justice are looking into price-fixing in the meat processing industry. It also says that the USDA’s investment into pandemic assistance is intended to provide relief to those working in the meat processing industry, such as farmers and small producers.
Companies keep citing inflation while clocking record profits
It’s true that inflation levels are higher than they’ve been since the early 1990s, and have been impacting the cost of producing goods.
Executives beyond the meat sector have been enjoying record profit margins. They’ve achieved them not just by passing costs on to customers, but by charging them even more, Insider’s Andy Kiersz and Dominick Reuter reported this month.
Insider reported in November that two notable exceptions were Walmart and Target, whose margin actually went down last quarter. Despite profits exceeding expectations for both firms, their stock was actually down each day they reported.
Overall, data from the US Commerce Department shows that the last time corporate profit margins have been this high was in 1950.
More than half of the retailers surveyed by the small business services reviews website Digital.com said that they were raising prices beyond what was required to make up for the rising cost of production.
So, inflation is bad, and the White House thinks there’s excessive profit-taking going on.