After the breakup of the major meat processors in the early 1920s, the federal government prevented the industry from consolidating for more than half a century, as part of a wider effort to control corporate power throughout the economy. Then, in the early 1980s, the Reagan administration decided to embrace consolidation.
“We must recognize that greatness in business does not necessarily mean bad,” said Attorney General William French Smith.
One of the nation’s largest meat-packing companies, Cargill was one of the first companies to take advantage of the new policy, buying three meat-packing plants from a Midwestern cooperative. When a rival meat packer filed an antitrust lawsuit to block the deal, the Reagan administration intervened on Cargill’s side. The deal went through. Between 1977 and 1992, the market share of the four leading companies rose from 25 percent to 71 percent.
The North American Meat Institute, a trade group for major meat packers, says the industry has consolidated as large factories produce meat at lower costs and consumers are reaping the benefits. The inflation-adjusted price of beef fell significantly in the early decades of consolidation, but those declines eroded significantly even before the pandemic pushed retail beef prices to new heights.
Efficiency was also a fancy word for benefiting employees. Meat-packing companies replaced unionized workers with cheaper workers, including undocumented immigrants. In the first decade of consolidation, wages fell by 35 percent after adjusting for inflation. The number of reported occupational accidents increased by 40 percent in the same period.
The major meat processors claim that livestock farmers, like consumers, have benefited from industry consolidation, as more efficient factories can afford higher livestock prices.
This is also the prevailing view among agricultural economists. In June, academics at a conference funded in part by the Department of Agriculture concluded that there was no clear evidence that meat processors are using their market power to take advantage of livestock farmers — a verdict the conference report said was “not necessarily a popular position.” .