Meatpacking Competition And Pricing

Author : Lauren Ottmers
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Download or read book Incentivizing the Beef Packing Industry to Invest in Competition Through a Tax Credit for Small Meat Packers written by Lauren Ottmers and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Every year, nearly 17,000 cattle ranchers across the United States lose their businesses and livelihoods. One of the many reasons for this is the low prices meat packing plants - particularly the Big Four packing plants that control the industry - pay farmers and ranchers for their cattle. Cattle ranchers and producers are forced to accept these low prices because they are limited to few local meat packing plants with enough available capacity to take the cattle for processing. If producers had more local and regional options to choose from, packing plants would have to offer competitive prices to receive the rancher's cattle supply. Small packing plants, which would increase competition, struggle to compete against big packers due to several challenges such as capital needed for infrastructure improvements.Antitrust laws have not been used to enforce nor create fair competition within the meat processing industry, despite their purpose and intention. Previous court-ordered break-ups across industries reveal why breaking up the Big Four meat packers is not a viable solution. Grants are not enough to create continued growth and efficiency within the meat packing industry. Many throughout the cattle ranching industry are also opposed to increased regulations such as mandated cash trade proposed by the Cattle Price Discovery and Transparency Act. Texas legislators must take the necessary steps to incentivize and facilitate more competition throughout the meat packing industry without controlling or limiting the marketing options ranchers have.This Comment does four things. First, it examines previous attempts to preserve competition within the industry. The Packers and Stockyards Act of 1921 is one major piece of legislation that was meant to reduce market concentration within the meat packing industry. On the other hand, regulations such as the Hazard Analysis and Critical Control Points Systems rule have added to the costs of processing cattle and have hindered small meat packers with limited resources. Second, this Comment explains how courts are unable to provide a proper solution. One issue with relying on the judicial system is that the court must find a violation of an antitrust law to act on any antitrust claim. Based on previous cases, it appears unlikely that the Supreme Court would find sufficient evidence of collusion or engagement in monopolistic practices. Another issue with relying on the judicial system is that breaking up a company that has found ways to thrive within a difficult industry could send the message to other companies that working hard to get to the top and finding your niche position may lead to dissolution of the entity. Third, reasons are provided explaining why other proposals are not long-term solutions. Providing meat packers with limited grants can only help them compete for so long; eventually, they must become profitable on their own after grant money runs out. Mandating cash trade through the Cattle Price Discovery and Transparency Act is another insufficient solution. Such a mandate would limit a rancher's ability to sell his or her cattle in whatever ways they see fit. Finally, a legislative solution is presented that would provide a property tax credit benefiting small meat packing plants in Texas that invest in the modernization and expansion of their facilities. These incentivized investments would increase the efficiency and capacity of beef processing plants, leading to increased competition and efficiency throughout the market as a whole. A market full of prospering small packers increases competition for the Big Four, which inevitably helps ranchers and producers who have devoted their lives and legacies to feeding America.