Here’s how the beef industry in the U.S. used to work: Farmers owned land on which they raised cattle, whether free range or in factory farms, corn or grass fed. They tried to raise the most and best cattle the most efficiently, and sell them for a profit on the open market. When beef prices were good they made more because the market determined prices. Seems simple, right? However one feels about the ethics of meat, the industry was an example of how a free market should work: Fair and open competition.
Now the beef industry has become an example of how the free market fails without regulation. Four big packing companies now run most of the industry — Iowa Beef Packers, ConAgra, Excel and National Beef. These meat packing companies have contracts with most of the country’s meat producers, from big industrial operations to the few remaining small farmers. That means they determine the prices, not the free market. It doesn’t matter how much beef is going for on the market because the market isn’t setting the prices anymore. These four companies have an effective monopoly on the beef market and cattle growers don’t have anyone else to sell the meat to.
Last Thursday, a man named Dudley Butler resigned from his job. Not exactly a household name, Butler was appointed by President Barack Obama to the U.S. Department of Agriculture to try to battle monopolies in the U.S. meat industry. In fact, he was one of several such agribusiness investigators, and the last one to resign. The others had already given up.
Deregulation in the U.S. makes it tough for investigations like this to go anywhere, even with the Justice Department holding antitrust hearings (forming a monopoly is illegal in the U.S). But those hearings didn’t go anywhere and the investigators have all stepped down. Butler wrote a bill to force meat packing corporations to change their business practices in hopes of breaking up the monopoly. It was voted down in the House of Representatives.
This all adds up to a bad situation for American ranchers and farmers. A monopoly in the industry means no competition and that means lower profits and lower wages for ranchers. It’s also proof of the consequences of deregulation: Without government regulators stepping in, major industries can quickly wind up being controlled by monopolies composed of a couple large companies.
A true free market needs competition, and it’s been shown time and again that it takes government regulation to guarantee the market remains competitive.
Congress doesn’t seem interested in solving the problem — the same big agribusinesses forming these monopolies also fund re-election campaigns. It’s just one of hundreds of such examples of the government failing to do its job in protecting American citizens from the dangers of unregulated big business. But average citizens can still do something.
Buy locally. Purchase meat from small local farmers and encourage local restaurants to make contracts with local suppliers. Don’t support fast food chains and find out where your local grocery store gets its beef. The problem was created by the free market and we’re going to have to use the free market to solve it.
Now the beef industry has become an example of how the free market fails without regulation. Four big packing companies now run most of the industry — Iowa Beef Packers, ConAgra, Excel and National Beef. These meat packing companies have contracts with most of the country’s meat producers, from big industrial operations to the few remaining small farmers. That means they determine the prices, not the free market. It doesn’t matter how much beef is going for on the market because the market isn’t setting the prices anymore. These four companies have an effective monopoly on the beef market and cattle growers don’t have anyone else to sell the meat to.
Last Thursday, a man named Dudley Butler resigned from his job. Not exactly a household name, Butler was appointed by President Barack Obama to the U.S. Department of Agriculture to try to battle monopolies in the U.S. meat industry. In fact, he was one of several such agribusiness investigators, and the last one to resign. The others had already given up.
Deregulation in the U.S. makes it tough for investigations like this to go anywhere, even with the Justice Department holding antitrust hearings (forming a monopoly is illegal in the U.S). But those hearings didn’t go anywhere and the investigators have all stepped down. Butler wrote a bill to force meat packing corporations to change their business practices in hopes of breaking up the monopoly. It was voted down in the House of Representatives.
This all adds up to a bad situation for American ranchers and farmers. A monopoly in the industry means no competition and that means lower profits and lower wages for ranchers. It’s also proof of the consequences of deregulation: Without government regulators stepping in, major industries can quickly wind up being controlled by monopolies composed of a couple large companies.
A true free market needs competition, and it’s been shown time and again that it takes government regulation to guarantee the market remains competitive.
Congress doesn’t seem interested in solving the problem — the same big agribusinesses forming these monopolies also fund re-election campaigns. It’s just one of hundreds of such examples of the government failing to do its job in protecting American citizens from the dangers of unregulated big business. But average citizens can still do something.
Buy locally. Purchase meat from small local farmers and encourage local restaurants to make contracts with local suppliers. Don’t support fast food chains and find out where your local grocery store gets its beef. The problem was created by the free market and we’re going to have to use the free market to solve it.