Issue #16 - The Coming Meat-pocolypse
Centralization of Meat Processing
Hey! How’s it going? Long time, no see. I was distracted there for a bit as life got in the way of writing.
The last time we talked, we were looking at new technology in meat. You’ll recall this was the second of three posts on the harms of the current meat industry. The basic gist being this: shit needs to change. The current actions and composition of the meat industry are harming the environment, and, as we’ll see today is hurting both the economy and public health as well.
Technology has started to solve the problems of the meat industry in two ways: first, inventing new ways to make plants and legumes taste and look like meat as a short-term solution; and second, growing meat from cow stem cells to get real meat without the environmental or economic harms, and also without real cows being harmed in the process. As we discussed, the “experts” are predicting that within a few years’ time (let’s call it within the next 20 years or so), plant-based meat will comprise about 20% of our meat-like intake, with live animal meat and cell-based meat each comprising about 30-50% of our meat-like intake depending on which version of the future you subscribe to.
Over the last 50 years meat intake in the United States has been very stable. In 1961 we ate just under 89kgs of meat per year per capita; in 2017 we were right at 121kgs per capita. Interestingly, almost the entirety of the 42kgs per year increase has been in chicken1; the non-chicken change in consumption is an increase of a mere 3kgs per person per year. We eat a lot more chicken today than we used to.
Red meat consumption dropped from 43.33 kgs per year to 37.59. Experts predict that within the next 20 years only 40% of that 38kgs (15.2 kgs) will be live-animal meat. This will not only significantly reduce the climate footprint of the meat-industrial complex, but will relax demands on large processors.
Just 4 processors (JBS, Cargill, Tyson, and National) account for over 70% of red-meat processing in the United States2. 50 meat processors are responsible for 98% of the meat consumed in the United States.
In the last three years alone, a fire shut down a major Tyson foods processing facility, a ransomware attack shut down all of JBS for a period of time, and COVID-19 disrupted at least 25% of total meat processing capacity.
“As of February 1, 2021, 53,000 workers at 569 meatpacking plants in the United States have tested positive for the coronavirus, and at least 277 have died. The resulting illness, or fear of illness, contributed to absenteeism among plant workers [cite]. Some plants were forced to temporarily close to prevent spread of the pandemic virus. Plants remaining open slowed production lines in in order to comply with public health guidelines for reducing COVID-19 spread [cite]. As plants were idled or forced to limit operations, daily capacity at U.S. cattle and hog facilities declined as much as 45 percent in May 2020 [cite], with others [cite] citing similarly dramatic declines. … Estimates of the loss of production capacity because of plant closures rang[e] up to 25 percent for beef slaughter plants …”3
Resiliency is the product of susceptibility and adaptability; the less susceptible and more adaptable you are, the more resilient you are.4 Concentration in the meat processing industry has made our meat-supply very susceptible to disruption.
When something happens to one of the four largest meat processors, it has profound affects on our food supply. In July of 2021, Greater Omaha Packing5 had to recall 250,000 pounds of ground beef because of E. Coli contamination. In that same month Tyson had to recall almost 8.955 million pounds of ready-to-eat chicken because of listeria.6 In April of 2021, Smithfield Foods, one of the largest producers of pork in the United States, permanently closed its Sioux Falls, SD plant after hundreds of its 3,700 employees tested positive for COVID-19.7
In other words, in such a concentrated industry, in a period of just 4 months in 2021 the US industrial meat complex supplied 9 million pounds of listeria-infected chicken, hundreds of thousands of pounds of diseased ground beef, and 3700 people lost their jobs. Concentrated processing is bad for our health and bad for the economy.
The Secretary of the USDA, Tom Vilsack had this to say in September: “… Because of the concentration, we have two issues. One, we have the issue of fairness and two, we have the issue of resiliency. Any one of these facilities, whether it's a cyber-attack or COVID basically shutting down some of Tyson's facilities, it causes disruption in the market."
A USDA report on the subject is more subdued and is quick to note that the data is not clear that relying on a network of smaller processors is better. They posit that even if we assume that small, localized processing is less “susceptible” to the harms, it’s not clear at all that the smaller, local processors are able to adapt as well as the larger processors.8 Moreover, because of economies of scale, our current centralized processing system keeps meat really cheap.
But, this rationale depends on the harm in question and assumes susceptibility and adaptability should be valued equally. If we look at the COVID-19 pandemic, for example, small plants were less affected by mass employee infections (less susceptible), but larger plants were able to adapt better. Retail prices, though fluctuated little, stayed relatively stable across the board during the COVID pandemic.9 But at the cost of increased risk of death for both the people making the product and the people consuming the product. The USDA report punts on this ethical quandary; but I stand fully on the side of fewer dead people. I know, I’m taking a hard stand here.
Moreover, one could even argue that what helped make the larger processors “more adaptable” was capacity in the system (“slack”) from smaller processors. The biggest disruption in meat markets due to the pandemic was in foods away from home - a category that includes restaurants, food carts, and cafeterias10. Of course, over night foods away from home became almost zero while “food at home” became the only way to eat. Well, almost all of the food away from home is produced by one of the large producers because the law requires that category of food to be USDA inspected.11
Food at home can sometimes come from local processors. Thus, the local processors were able to fill gaps made by the larger suppliers in the short term and made the temporary loss of capacity easier to handle. Thus, while the large suppliers were able to eventually pivot to accommodate food at home, it was the slack at smaller processors that made it appear more seamless and adaptable than it otherwise would have.
In the meantime, the large processors raised prices to match the prices that were being charged by the smaller processors. Thus, even during the transition, the large processors were getting windfall profits on their food at home meats. I should note that these “windfall profits” on “Food at Home” were offset by the “windfall losses” in the “Food Away from Home” category. It doesn’t justify the price gouging, but it does mean that the big processors didn’t lose as much as they might have otherwise.
For more recent evidence of these “windfall profits” see the current USDA Meat Price Spreads. As you can see from that data, prices to farmers are decreasing while prices to wholesalers are increasing; meaning that processors are capturing a wider range than ever before. This has raised some eyebrows:
This has been an observation that's been made for some time now, as we've seen the spread between wholesale prices, which would be your middleman before retail prices, and cattle prices or hog prices that are widening right and now,” says Schulz (an agricultural economist with Iowa State University). “You're seeing retail prices at some of the highest levels we've ever seen. And so, there are people asking questions, ‘why is that the case?’
As noted at the beginning of this post, red meat consumption has stayed relatively constant for the past 50 years. I don’t think I’m going out on a limb to say that it’s not likely to grow rapidly in the near future. By the law of averages I (and you and you and you …) will eat about 38 kgs of red meat a year for the foreseeable future. With new technologies, it is predicted that only about 15 kgs will come from live animals. We will not need the processing capacity that has been built up; we will have large processors capable of processing 38kgs per person per year, but only demand for a mere 40% of that. Perhaps we should think about what “managed decline” should look like and start laying the ground work for what the live-animal meat industry will look like in the future.
16.4kgs in 1961 to 55.68kgs in 2017 is a gain of about 39kgs per person per year just in chicken consumption.
McCrimmon, Ryan. America’s meat supply is cheap and efficient. Covid-19 showed why that’s a problem. Politico. (Sept 23, 2021).
https://www.politico.com/news/2021/09/23/coronavirus-cheap-meatpacking-513559
Balagtas and Cooper. The Impact of Coronavirus COVID-19 on U.S. Meat and Livestock Markets. USDA. (March 2021)
https://www.usda.gov/sites/default/files/documents/covid-impact-livestock-markets.pdf
Balagtas and Cooper (2021).
Technically, Greater Omaha Packing isn’t owned by one of the big four, but its farmers are definitely “big meat” farmers, not an aggregation of small and mid-sized farms, it is a USDA inspected plant, and is one of the largest independent processors in the country. https://greateromaha.com/producers/
See Balagtas and Cooper, supra. “Resiliency to a particular risk depends on susceptibility to the risk, and ability to manage the risk if it is realized (Johansson, 2020). On the question of susceptibility, it is not clear that smaller, more localized meatpacking plants would have been less susceptible to the pandemic. If smaller plants are less susceptible, then more resiliency via smaller and more localized packing plants comes at cost of efficiency, as larger plants capture economies of scale that result in lower meat prices and higher livestock prices. It is possible there is a trade-off between efficiency in meat packing and ability to quickly pivot to operating under a pandemic and/or more quickly changing marketing channels.”
Prices, of course, fluctuated during the pandemic; but only until the past few months was meat more volatile than the economy in general. So, relatively speaking, meat has been pretty price stable.
For a fun discussion on the categories of Food Away From Home and Food At Home, you can check out this article I wrote all the way back in 2016 about food delivery services.
We haven’t talked about the specific legal system that supports the meat processing industry, but basically to sell meat at even modest commercial scale requires huge investments in equipment and a USDA inspector to be on-site. Only large processors can afford either of these requirements.
There are two distinct aspects to concentration in the meat industry. One is the concentrated ownership, the other is concentrated production in large plants. Also, there is a distinction between slaughter plants and further processing plants. Even further, USDA, FDA and State inspections can be quite different, possibly affecting safety.
Concentrated ownership tends to leave little power to farmers and employees. Concentrated slaughter leaves the farmer little to no choice as to where to sell livestock. Concentrated production by finished product type is most efficient due to automation and may indeed lessen product related illness. The plant size need not be huge with respect to employment. Generally USDA inspectors are omnipresent, whereas FDA Inspections are much frequent. Red meat is USDA and poultry is largely FDA. State inspected product doesn’t move interstate.
I assume vegetable based meat and maybe lab grown meat will be in the FDA domain?