Executive Order Aims to Boost Competition for U.S. Ag Sector
Read the major initiatives behind President Biden’s recent executive order and what industry leaders think about it.
On July 9th, President Biden signed an executive order aiming to address corporate consolidation trends and increase competition for small businesses. According to the order, more than 75 percent of U.S. industries are controlled by a smaller number of large companies when compared to two decades prior. American industries especially impacted by the growing consolidation trend include healthcare, financial services, and the ag sector.
A lack of corporate competition creates unintended consequences for both consumers and producers.
- Large players control pricing, leading to marked-up consumer costs for essential goods and smaller profits for producers.
- It prevents innovation and development of new businesses, which has declined nearly 50 percent since 1970, according to a report from the Economic Innovation Group.
- Consolidation suppresses wages as the number of employers shrink and workers are less able to bargain for a higher salary with fewer options available.
- The wealth inequality gap widens as competition declines and small, independent businesses find it harder to earn a fair return.
President Biden’s executive order is a major step in beginning to address the consequences of consolidation and level the playing field for small businesses across the nation. But how will this order affect American farmers specifically?
Four Ways the Executive Order to Promote Competition Impacts Agriculture
1. Reform the Packers and Stockyards Act
This executive order largely focuses on monopolization in the cattle market and poultry processors. It directs the USDA to consider new rules under the Packers and Stockyards Act that will make it easier for farmers and ranchers to file and win claims against processors without fear of retaliation.
2. Redefine ‘Product of USA’ Labeling
Another initiative included in the executive order is to limit the use of ‘Product of USA’ labeling for domestically raised meat only. Under the current law, meat with this label can still be raised overseas if it’s processed here. In fact, between 70 and 80 percent of grass-fed beef in the U.S. is imported, and a significant portion of that is misleading consumers into thinking they are buying American-raised meats through convoluted labeling.
3. Create Alternative Food Distribution Systems
Among the crackdown on anticompetitive practices in the livestock and poultry product sectors, the USDA has also been tasked with increasing food distribution alternatives outside of supermarkets—such as farmers markets—and developing new labeling standards that provide transparency for consumers to make more informed purchases that support fair treatment of American farmers.
4. Protect Farmers Right to Repair Equipment
As farmers increasingly embrace innovations in equipment technology to feed the nation more efficiently, the Federal Trade Commission (FTC) was tasked with limiting restrictions that prevent farmers from bypassing manufacturers, repairing farm equipment themselves, and lowering maintenance costs.
A Divided Opinion Among Industry Leaders and Experts
Many agriculture groups applauded this monumental step towards de-monopolization, including the National Farmers Union, American Farm Bureau Federation, and Family Farm Action Alliance.
“After suffering corporate abuse for so many years, it is reassuring that farmers may finally get a level playing field…which, taken together, will go a long way towards building the resilient, equitable food system that farmers and consumers deserve.”
Rob Larew, President of National Farmers Union
“We will closely examine the details of this executive order as we continue to work with the administration to ensure changes are consistent with our grassroots policy, and farmers and ranchers are provided greater flexibility to remain competitive in our growing economy.”
Zippy Duvall, President of American Farm Bureau Federation
“We thank President Biden for his bold and decisive actions today on behalf of family farmers and the American people. Thanks to bold actions like these, the balance of power in our food and agriculture system is tipping toward farmers, ranchers, and the American people.”
Joe Maxwell, President of Family Farm Action Alliance
Although many agricultural groups expressed support for President Biden’s executive order, several industry groups showed reservations regarding implementation and viability.
“While we haven’t seen any proposals, for the chicken industry, this looks like a solution in search of a problem. The chicken industry is a model of success– from farm to table — and one of the least consolidated industries in animal agriculture.”
Mike Brown, National Chicken Council President
The President of the North American Meat Institute—the oldest and largest trade association representing U.S. packers and processors—said government restrictions could lead to higher food costs for consumers at a time when many are still suffering from pandemic consequences.
“President Biden’s executive order calling for USDA to change the Packers and Stockyards rules will have unintended consequences for consumers and producers. These proposed changes will open the floodgates for litigation that will ultimately limit livestock producers’ ability to market their livestock as they choose.”
Julie Ann Potts, President and CEO of North American Meat Institute
Jim Wiesemeyer, Farm Journal Washington Correspondent, reflected honestly on these ‘unintended consequences’ but also provided insight into how the federal government can use mistakes of the past to create a more sustainable and fair future for both the farmer and the processor.
“Anytime you expand the potential market that livestock, poultry, and dairy can go to, I think that’s a good thing. The concern I have is if these new entities are not adequately financed for the long haul, the first major downturn in the marketplace in meat processing, they usually fold. I mean, that’s what history clearly says. So, it’s just not starting them up. It’s continuing to support them with resources.”
Jim Wiesemeyer, Farm Journal Washington Correspondent.
As an advocate and champion for the American Farmer, AgAmerica will continue to closely monitor the developments from this executive order and provide updates through our trade and legislation page.
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