Dive Brief:
- President Donald Trump ordered a federal investigation into U.S. food-related industries and foreign-controlled companies for potential price fixing as the administration faces pressure to address rising grocery costs.
- The president directed the Department of Justice and the Federal Trade Commission to establish task forces and determine the extent of anticompetitive behavior within food supply chains, particularly among companies owned by foreign entities.
- The executive order empowers the DOJ and the FTC to bring enforcement actions against companies and propose new regulatory approaches. The Office of the Attorney General could also commence criminal proceedings, including grand jury investigations, upon evidence of collusion.
Dive Insight:
The Trump administration is under mounting pressure to address sky-high food costs, which have consumers paying 32% more per month on average for groceries compared to 2019, according to the Urban Institute.
In the executive order, Trump called out meat processing, seed, fertilizer and equipment companies as having "vulnerabilities to price fixing and other anti-competitive practices." The president added that anticompetitive behavior from foreign-controlled corporations in particular threatens "the stability and affordability of America’s food supply."
Two major meatpackers have ties to other countries: Brazil-based beef giant JBS and pork producer Smithfield Foods, which is owned by China's WH Group. Earlier this year, WH Group spun off Smithfield's North American operations amid concerns around China's influence over the U.S. agricultural industry.
The Trump administration is refocusing its attention on meat processors as beef costs shoot to record highs. The president recently walked back food tariffs on items such as beef and coffee in an attempt to bring down costs.
Groups representing meat processors say they aren't to blame for the high prices and are hemorrhaging profits due to an ongoing cattle shortage. Tyson Foods recently disclosed plans to lay off more than 4,000 workers and close one of its largest beef processing plants as it struggles with supply constraints.
“Despite high consumer prices for beef, beef packers have been losing money because the price of cattle is at record highs,” said Julie Anna Potts, president and CEO of the Meat Institute, which represents processors. “For more than a year, beef packers have been operating at a loss due to a tight cattle supply and strong demand."
