Over the past year, you’ve probably noticed a surge in your grocery bills. You may have attributed it all to inflation, and that’s for sure played a big role† But both the White House and consumer protection groups claim that some meat producers are pushing prices well above inflation – a practice known as price gouging.
Food prices at home have almost risen 11 percent more than headline inflation (8.3 percent) since April last year, but the cost of meat, milk and eggs in particular has increased much further than both measures. From April 2021 to April 2022, egg prices rose by 22.6 percent, chicken by 16.4 percent, milk and beef by nearly 15 percent, and fish and seafood by 11.9 percent.
But most plant-based commodities — such as beans, rice, bread, fruits and vegetables — have risen more slowly than headline inflation for groceries (much like cheese and hamtwo of the handful of exceptions in the meat and dairy aisles).
Tyson Foods, America’s largest meat producer, attributes the company’s price increases towards greater demand for meat and higher labor and fuel costs coupled with the rise in the price of grains fed to farm animals. Meanwhile, the poultry industry has been ravaged by bird flu, which has prompted producers to kill nearly 38 million birds this year – mainly turkeys and laying hens released gruesome methods†
Consumer protection advocates say these supply-side factors are partly responsible for the price increases, but they also suspect that major meat producers like Tyson Foods are charging consumers more to boost their profits.
Claire Kelloway of the Open Markets Institute, an anti-monopoly nonprofit, points to Tyson’s second quarter earnings to understand how it can use inflation as a cover to make more money.
†[Tyson had] about $1.5 billion in higher costs, but that equates to $2 billion in price increases,” she told me. “So that’s a solid half billion dollars that has nothing to do with higher operating expenses. That’s purely an exercise of their market power and ability to demand more, and their profit really speaks of that.”
John Hansen of the Nebraska Farmers Union, which advocates for independent ranchers and ranchers, said it more bluntly: “There’s no question that there has been a price push. due to the Covid disasterand there is no doubt that that price push continues.”
Tyson Foods declined an interview request, but pointed me out: economists and analysts that refute the idea that meat processors are price gouges, and testimony from Tyson Foods CEO Donnie King on the matter to the US House Agriculture Committee in late April. King repeated that: strong demand and increased labor and input costs were the main reasons for higher meat prices.
“Meat companies don’t set prices for consumers,” Sarah Little of the North American Meat Institute told me via email. “Retailers do that.” She quoted a Texas A&M economist who says some wholesale beef cuts have fallen in price while their retail price has risen. Tyson’s King also told the House committee that high prices have nothing to do with industry consolidation.
But that’s something experts like Hansen and Kelloway — and President Biden — dispute.
Kelloway says there’s also strong market concentration in some parts of the production path, but it’s usually not as intense as for meat: In an article for cafemadrid last year, she reported that the top four companies in each industry slaughter 73 percent of all beef, 67 percent of all pork and 54 percent of all chicken in the US. “When there are so few players, it’s not hard to keep up with everyone and what’s called ‘tacit collusion’ and all moving in the same direction on price. …So I think that definitely seems to be happening,” she told me. “Even though that’s evidence of excessive market power, it’s not really a violation of the antitrust law.”
“We actually have four meat processors across the country,” President Biden said. said a few weeks ago. “They process the meat that goes into the burgers you buy, so they set the price. If there is no competition, they can push the price higher and higher.”
Michael Mitchell of the Groundwork Collaborative, a progressive economic policy group, says some ranchers are also getting a rough deal. American beef is increasingly coming from ranchers who sign contracts with meat processors to sell their meat at fixed rates, and Mitchell says the packers don’t raise those rates together with them record profits“It really creates an environment where farmers are squeezed,” Mitchell said. “Because the demand for meat is still relatively strong… the processors can make a very, very healthy profit and the ranchers don’t see that.”
There are Congressional efforts underway restrain alleged price gouging in the meat market, which has long predates this period of high inflation. And last month, the USDA proposed the long-awaited proposal: rule changes to the Packers and Stockyards Act, a 1921 law designed to prevent anticompetitive behavior in the meat industry, which antitrust lawyers say has been weakly enforced† The new rules would bring more transparency around farmer contracts in the poultry industry, and more proposed rule changes are expected.
But whatever the price, demand for meat remains strong because it is usually inelastic – economists speak of price increases having little effect on overall sales. While untangling competition issues in the meat industry can take years, the quickest way for those looking to save on groceries now is to switch to cheaper plant-based foods.
Eat plants, cheap
University of Oxford researcher Marco Springmann and his colleagues published: an investigation last year it was found that in high-income countries a flexitarian diet – a diet low in meat and dairy – cuts food costs by an average of 14 percent. “In the [US]it’s even a bit more – more like 25 percent [cost savings] because American diets have so much meat and dairy, so there’s a lot of savings potential,” he told me. Completely vegetarian and vegan diets cut food costs even further than flexitarianism.
There is, however, one important caveat. The flexitarian, vegetarian and vegan diets analyzed by the researchers include whole plant foods, such as fruits, vegetables, grains and legumes — almost all of which must be cooked and prepared. They do not include the packaged alternative products to meat, milk and eggs that are now on supermarket shelves and which actually cost more than their animal counterparts.
They are not more expensive because of the basic ingredients, which are usually cheap components such as wheat, soy, peas and vegetable oils. On the contrary, the startups that produce plant-based products do not benefit from the economies of scale enjoyed by large meat producers.
Animal meat, milk and eggs are also relatively cheap, in part because of government support† For decades, the corn and soybeans fed to farm animals have been heavily subsidized by the US government, and the industry has benefited from: extensive government funded research on how to make factory farming more efficient. The meat industry also benefits from business-friendly regulations.
Despite the high cost of plant-based alternatives, prices are starting to rise to come downstairs† Plant-based startups often say price parity with conventional meat is a primary goal, and at least one claims it is to come closer: Rebellious Foods in Seattle, which makes plant-based chicken.
Plant-based advocacy groups say: more government funding because R&D, which has benefited the meat industry, would help startups like Rebellyous get there faster. That could give startups an edge, such as a recent survey found that lower prices in the plant-based aisle could attract more consumers.
Springmann also says his findings should alleviate policymakers’ financial concerns about measures to increase plant-based eating, such as increasing plant-based meals in schools or updating federal dietary guidelines. “People often worry about how expensive [flexitarian, vegan, vegetarian] diets are, but our research shows that if it’s healthier, more sustainable, and more plant-based, you really don’t have to worry about [cost]†
While plant-based meat sales have risen in recent years, meat consumption in the US has steadily increased, reaching an all-time high of 224.8 pounds per person last year, with predictions to be even higher in 2022. But skyrocketing meat consumption is not an immutable law of nature – Germany, the land of bratwurst, has a steady decline meat consumption in recent years despite a strong economy, just like some other European countries.
But those of us here in the land of cheeseburgers and chicken wings have the opportunity to both help the environment and lower our grocery bill. Just follow the immortal words of parents everywhere: “Eat your veggies.” And I’ll add one more:Don’t forget legumes†
A version of this story was originally published in the Future perfect newsletter. Sign up here to subscribe!