State Attorneys General Press USDA to Further Police Competition in Livestock and Poultry Markets

A bipartisan coalition of state attorneys general of sixteen states penned a letter to the United States Department of Agriculture (USDA) urging stronger enforcement of the Packers and Stockyards Act of 1921. The Act stands independent of the nation’s antitrust laws but nevertheless is, as described by the USDA, intended to “promote fairness and competition in livestock, meat, and poultry for the benefit of producers, growers, and the public.”  

The letter calls on the USDA to show more resolve in exercising its power under the Act in light of “[s]tructural changes in these markets, including increased concentration and changes in sales and marketing practices,” which have “threatened producer viability, resulting in attrition, and reducing the number of producers participating in the livestock markets.” The attorneys general argue that three areas are of particular concern and in need of action by the USDA: market concentration, vertical integration, and data sharing.  

First, the attorneys general emphasize that the Act prohibits conduct “restraining commerce” or “creating a monopoly” and point to the “problematic” trend of corporate consolidation in the poultry and livestock markets. A mere four competitors in each of the chicken, pork, and beef markets control the vast majority of market share, causing “the number of cattle, hog, and chicken farms [to] drop[] dramatically” over the years. The attorneys general encouraged the USDA to take more aggressive enforcement action. Second, regarding vertical integration, the attorneys general expressed concern that meat packers and processors have created “captive supply chains” and monopsony power through exclusive contracts with meat producers. The attorneys general recommended the USDA conduct a study to determine whether implementing rules for minimum procurement levels would alleviate the problem. Lastly, the attorneys general urged regulatory action on data subscription services which provide information so detailed that market participants can glean “key competitor information” from it.    

In a final note, the attorneys general called for greater cooperation among the USDA, DOJ, and state attorneys general to ensure that any issues are promptly brought to the attention of the proper enforcement agencies.