Why meat is so expensive right now - Vox.com

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Over the last year, you likely noticed a steep increase in your grocery bills. You may have just chalked it all up to inflation, and that’s certainly played a major role. But both the White House and consumer protection groups allege some meat producers are jacking up prices well beyond inflation — a practice known as price gouging.

Food prices at home have increased almost 11 percent since last April, more than overall inflation (8.3 percent), but the cost of meat, milk, and eggs in particular has soared well beyond both measures. From April 2021 to April 2022, egg prices went up 22.6 percent, chicken is up 16.4 percent, milk and beef are up almost 15 percent, and fish and seafood are up 11.9 percent.

But most plant-based staples — like beans, rice, bread, fruits, and vegetables — have risen slower than the general rate of inflation for groceries (as have cheese and ham, two of the handful of exceptions in the meat and dairy aisles).

Tyson Foods, America’s largest meat producer, attributes the company’s price hikes to higher demand for meat as well as increased labor and fuel costs combined with the rise in the price of grains fed to farmed animals. Meanwhile, the poultry industry has been ravaged by the bird flu, which has prompted producers to cull nearly 38 million birds this year — mostly turkeys and egg-laying hens using rather grisly methods.

Consumer protection advocates say these supply-side factors are partially to blame for the price hikes, but they also suspect big meat producers like Tyson Foods are making consumers pay more to fatten their profits.

Claire Kelloway of the Open Markets Institute, an anti-monopoly nonprofit, points to Tyson’s second quarter earnings to understand how it might be using inflation as a cover to make more money.

“[Tyson had] roughly $1.5 billion in higher costs, but that’s corresponded with $2 billion in price increases,” she told me. “So that is a solid half a billion dollars that is not related to an increased cost of business. That’s purely an exercise of their market power and ability to charge more, and their profits really speak to that.”

John Hansen of the Nebraska Farmers Union, which advocates on behalf of independent ranchers and farmers, put it more bluntly: “There’s no question there’s been price gouging through the Covid disaster, and there’s no question that that price gouging continues.”

Tyson Foods declined an interview request but pointed me to economists and analysts who refute the idea that meatpackers are price gouging, and testimony from Tyson Foods’ CEO, Donnie King, given to the US House Agriculture Committee in late April on the matter. King reiterated that strong demand and increased labor and input costs were the main reasons for higher meat prices.

“Meat companies do not set prices for consumers,” Sarah Little of the North American Meat Institute told me over email. “Retailers do that.” She cited a Texas A&M economist who says some wholesale beef cuts have gone down in price while their retail price has risen. Tyson’s King also told the House committee that high prices have nothing to do with industry consolidation.

But that’s something experts like Hansen and Kelloway — and President Biden — dispute.

Kelloway says there is heavy market concentration in some parts of the produce aisle too, but it’s usually not as intense as it is for meat: In an article for Vox last year, she reported that the top four corporations in each industry slaughter 73 percent of all beef, 67 percent of all pork, and 54 percent of all chicken in the US. “When there are so few players, it’s not hard to keep track of everyone and what’s called ‘tacitly collude’ and all move in the same direction on price. … So I think that definitely seems to be happening,” she told me. “Even though that’s evidence of excessive market power, it’s not actually an antitrust violation.”

“We basically have four meat processors in the whole country,” President Biden said a few weeks ago. “They process the meat that goes into the hamburgers you buy, so they set the price. When there’s no competition, they can set the price higher and higher.”

Michael Mitchell of the Groundwork Collaborative, a progressive economic policy group, says some ranchers are getting a raw deal as well. Increasingly, US beef comes from ranchers who sign contracts with meatpackers to sell their meat at set rates, and Mitchell says the packers aren’t raising those rates in tandem with their record profits: “It’s really creating an environment in which ranchers get squeezed,” Mitchell said. “Because demand for meat is still relatively strong … the meatpackers can make a very, very healthy profit and the ranchers don’t see that.”

There are Congressional efforts underway to rein in alleged price gouging in the meat market, which long predates this high inflationary period. And last month, the USDA proposed long-awaited rule changes to the Packers and Stockyards Act, a 1921 law meant to prevent anti-competitive behavior in the meat industry, which antitrust advocates say has been weakly enforced. The new rules would create more transparency around farmer contracts in the poultry industry, and more proposed rule changes are expected to come.

But whatever the price, demand for meat remains strong because it tends to be inelastic — economist-speak for the fact that increases in price have little effect on overall sales. While untangling competitive issues in the meat industry could take years, for those looking to save on their grocery bills now, the fastest way is to switch to less expensive plant-based foods.

Eat plants, cheaply

University of Oxford researcher Marco Springmann and his colleagues published a study last year that found that in high-income countries, a flexitarian diet — a diet low in meat and dairy — reduces food costs by 14 percent on average. “In the [US], it’s even a bit more — more like 25 percent [cost savings] because US diets have so much meat and dairy, so there are lots of savings potential,” he told me. Fully vegetarian and vegan diets reduce food costs even further than flexitarianism.

However, there’s one major caveat. The flexitarian, vegetarian, and vegan diets analyzed by the researchers comprise whole plant-based foods, such as fruits, vegetables, grains, and legumes — nearly all of which require cooking and preparation. They don’t include the packaged plant-based meat, milk, and egg alternative products that now line grocery store shelves, and which actually tend to cost more than their animal-based counterparts.

They’re not more expensive because of the basic ingredients, which are usually low-cost components like wheat, soy, peas, and vegetable oils. Rather, the startups churning out plant-based products don’t benefit from the economies of scale that big meat producers enjoy.

Animal-based meat, milk, and eggs are also comparatively cheap in part because of government support. For decades, the corn and soy fed to farmed animals has been heavily subsidized by the US government, and the industry has benefited from extensive government-funded research on how to make factory farming more efficient. The meat industry also benefits from business-friendly regulation.

Despite the high cost of plant-based alternatives, prices are beginning to come down. Plant-based startups often say price parity with conventional meat is a primary goal, and at least one claims to be getting close: Rebellyous Foods in Seattle, which makes plant-based chicken.

Plant-based advocacy groups say more government funding for R&D, like the meat industry has benefited from, would help startups like Rebellyous get there faster. That could give startups an edge, as a recent survey found lower prices in the plant-based aisle could attract more consumers.

Springmann also says his findings should ease policymakers’ financial worries about measures to increase plant-based eating, such as putting more plant-based meals in schools or updating federal dietary guidelines. “People are often concerned with how expensive [flexitarian, vegan, vegetarian] diets are, but our study shows that actually if it’s healthier and more sustainable and more plant-based, you don’t need to worry much about [cost].”

Even as plant-based meat sales have jumped in recent years, US meat consumption has steadily increased with it, hitting a record high of 224.8 pounds per person last year, with forecasts to go even higher in 2022. But sky-high meat consumption isn’t an immutable law of nature — Germany, the land of bratwursts, has seen a steady decline in meat consumption in recent years despite a strong economy, as have some other European countries.

But those of us here in the land of cheeseburgers and chicken wings do have the option of both helping the environment and reducing our grocery bill. Just follow the immortal words of parents everywhere: “Eat your vegetables.” And I’ll add one more: “Don’t forget legumes.”

A version of this story was initially published in the Future Perfect newsletter. Sign up here to subscribe!

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