Congress Hears Testimony on Meat Sector Concentration
This article features Government Accountability Project’s whistleblower client, Trina McClendon, and was originally published here.
A congressional committee heard testimony both for and against measures to break up concentration in meat and poultry processing as a way to deal with rising retail prices.
Some of the most dramatic testimony before the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law came from Trina McClendon, a poultry farmer from Mississippi. She talked about how Sanderson Farms, with whom she and her husband had a 15-year contract, tried to impose a 9% pay cut in August, after the announcement of its proposed merger with the Wayne Farms unit of Continental Grain Co., in partnership with Cargill. They and other local farmers fought Sanderson and it dropped the pay cut for now.
McClendon said that the Sanderson contract is “one-sided” and leaves them with all the costs of running the poultry operation, along with a debt of $1.4 million.
“I’m asking you to stop this buyout and send a clear and concise message to Sanderson Farms, Cargill and Continental Grain that the consolidation of our fabulous industry is detrimental to continue the practice of a free and fair market economy,” McClendon said in remarks quoted by Progressive Farmer/DTN. She urged a moratorium on big mergers in the food and agribusiness in general.
Other witnesses, however, downplayed or discounted the role of concentration in the meat and poultry market.
Geoffrey Manne, founder and president of the International Center for Law and Economics, said other factors were to blame for food price inflation, including increased demand caused by fiscal stimulus programs, “supply and demand shocks,” and an increase in the money supply. “What is not a plausible explanation is increased concentration and the exercise of market power in the food supply chain,” Manne said.