000390 Large Firms Dominate Meat Packing Industry

Washington - Consolidation and low-cost labor has helped large firms dominate the U.S. meat packing industry, raising concerns from lawmakers about a lack of competition in the industry, USDA said.

Using data from the U.S. Census Bureau, the USDA said the meat packing industry has experienced both a dramatic increase in plant size, and an equally dramatic decrease in the number of plants.

For example, four firms now handle nearly 80% of all steer and heifer slaughter. Just two decades ago, concentration was less than half as high.

“Such changes in beef packing, and to some extent pork packing, have raised concerns about industry competition both in Congress and within farm groups,” the USDA said in a news release.

The report finds that the largest hog and cattle packers can deliver meat to buyers at costs 3% below those of plants only a quarter as big.

Declines in unionization and increases in the use of immigrant workers have cut labor costs substantially for large firms, the report said

“In such an environment, even a modest cost differential can affect a plant's chances of survival, reinforcing the trend toward consolidation,” the USDA said.

Slow growth in demand for beef and pork has also limited the possible number of large plants needed to supply consumers with meat products.

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