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Diving summary:
- President Donald Trump has ordered a federal investigation into the U.S. food-related industry and foreign-controlled companies into potential price stabilization as the administration faces pressure to address rising food costs.
- The president ordered the Department of Justice and the Federal Trade Commission to create task forces to determine the extent of anticompetitive behavior in food supply chains, particularly among companies owned by foreign entities.
- The executive order allows the Department of Justice and the FTC to take enforcement actions against companies and propose new regulatory approaches. The attorney general’s office can also initiate criminal proceedings, including grand jury investigations, upon evidence of collusion.
Diving Insights:
The Trump administration is under increasing pressure to address skyrocketing food costs, forcing consumers to pay 32 percent more per month for groceries than in 2019, according to a report by the Urban Institute.
In the executive order, Trump called meat, seed, fertilizer and equipment processing companies “vulnerable to price fixing and other anticompetitive practices.” The president added that anti-competitive behavior by foreign-controlled companies in particular threatens the “stability and affordability of America’s food supply.”
Two major meatpacking companies have ties to other countries: Brazil-based beef giant JBS and pork producer Smithfield Foods, owned by China’s WH Group. Earlier this year, the WH Group spun off Smithfield’s North American operations over concerns about China’s influence on the U.S. agricultural industry.
The Trump administration has refocused its attention on meat processors as beef costs hit record highs. The president recently lifted food tariffs on items such as beef and coffee in an effort to cut costs.
Groups representing meat processors say they are not to blame for the high prices and that they are making huge profits because of the ongoing cattle shortage. Tyson Foods recently announced plans to lay off more than 4,000 workers and close one of its largest beef processing plants as it grapples with supply constraints.
“Despite high consumer prices for beef, beef packers are losing because beef prices are at record highs,” said Julie Anna Potts, president and CEO of the Meat Institute, which represents processors. “Beef packers have been operating at a loss for more than a year due to limited beef supply and high demand.”
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