Democrats Step Up Criticism of Meat Companies on Inflation

This article features Government Accountability Project’s whistleblower client, Trina McClendon, and was originally published here.

Democrats ratcheted up criticism of meatpacking giants Wednesday as a key lawmaker on antitrust issues charged that profiteering at the expense of consumers and farmers has reached “crisis” levels.

Representative David Cicilline, chairman of the House Judiciary Antitrust Subcommittee, said chicken farmers are living in poverty due to the dominant role of a handful of poultry integrators amid unprecedented concentration in the food sector.

Cicilline highlighted charges that the proposed acquisition of Sanderson Farms by Cargill is squeezing pay for Mississippi chicken growers in a hearing that amplified President Joe Biden’s criticism of meatpackers for soaring food inflation.

Inflation has risen to the top of voters’ concerns as annual consumer price increases hit a 40-year high in December amid a 7% jump. Meat and poultry soared 13% from a year earlier. Farmers complain they’re not seeing any of those gains.

Trina McClendon, a widowed poultry farmer from Magnolia, Mississippi who borrowed $1.4 million to build eight chicken houses before her husband died of a heart attack in 2017, said Sanderson imposed a new contract that cut her farm income by a third “a couple of days” after the announcement of its acquisition by Cargill and Continental Grain Co.

“This farm is all I have left to support myself and family,” McClendon said. “In the vertically integrated poultry industry, the farmer is not given a fair contract. It really is take it or leave it.”

Representative Hank Johnson, a Georgia Democrat, called her story “a classic case of exploitation.”

Mike Cockrell, chief financial officer of Sanderson Farms, disputed McClendon’s statement that her income was cut by a third.

The pandemic prompted the company to cut back the number of chickens produced, so farmers got fewer birds but received a higher per-pound price that was “revenue neutral” to its contract chicken growers, Cockrell said in a phone interview. “She’s been a very good grower and she’s performed well,” he said of McClendon.

Sanderson Farms said in a December regulatory filing that the Justice Department had requested additional information and documents for its review of the acquisition deal.

Democrats on the panel said meatpackers were exploiting their domination of processing capacity to gain record profits amid supply-chain disruptions. Four companies control 85% of beef processing while 54% of the poultry market is also controlled by four firms. Cicilline called for strengthening antitrust laws, saying corporate consolidation throughout the food supply chain has created “a dire need for reforms across the board.”

The North American Meat Institute, an industry trade group, blamed rising meat prices on labor shortages, rising consumer demand and supply-chain problems.

“Inflation is hurting consumers by erasing the wage gains workers received due to the tight labor market and the pandemic,” said Julie Anna Potts, president and chief executive officer of the North American Meat Institute. “It is no wonder the Biden administration and some members of Congress would rather hold press conferences and hearings instead of addressing the labor shortage and supply chain bottlenecks.”

Republicans on the panel also charged Democrats were trying to shift blame for inflation.

“To suggest that changes in antitrust law would heal what ails our economy at this moment is disconnected from reality,” said Republican Representative Ken Buck of Colorado.