Band Andrea Shalal
WASHINGTON, December 10 (Reuters) – Four of the largest meat processors, using their market power in the heavily consolidated U.S. market to drive up meat prices and underpay farmers, have tripled their own net profit margins since the start of the pandemicWhite House economic advisers said.
The financial statements of meat processors – which control 55-85% of the beef, poultry and pork market – contradict claims that rising meat prices were caused by labor costs. work or higher transport costs, advisers led by National Economic Council Director Brian Deese wrote in an analysis published Friday on the White House website.
Officials studied Tyson Foods Inc’s tax returns TSN.N, the chicken producer and the largest U.S. meat company by sales; JBS SA based in Brazil JBSS3.SA, the world’s largest meat packer; Brazilian beef producer Marfrig Global Foods SA MRFG3.SA which owns most of National Beef Packing Company NBEEF.UL; and Seaboard Corp RIC SEB.A.
Those returns showed a collective 120% jump in their gross profits since the pandemic and a 500% increase in their net income, according to the analysis. These companiesrecently announced $1 billion in new dividends and share buybacks, on top of the more than $3 billion they’ve paid out to shareholders since the pandemic began.
The North American Meat Institute trade group accused the White House of “cherry picking” data.
“It’s no coincidence that this blog post appears on the same day as the Consumer Price Index release, showing that gas and energy prices are up nearly 60% over of the last 12 months, which is nearly 10 times the rate of food inflation,” said President Julie. Anna Potts said in a statement.
Profit margins – the spreads companies make in excess of their costs – have also risen dramatically, belying the argument that companies are merely passing on higher labor and supply costs, according to analysis, with gross margins up 50% and net margins up more than 300%.
“If rising input costs lead to higher meat prices, these profit margins would be roughly flat, as higher prices would be offset by higher costs,” the analysis says.
Meat price increases accounted for 25% of the rise in consumer prices for food eaten at home in November, an important factor in the surge in inflation seen in recent months.
Tyson raised the price of beef so much – by more than 35% – that they made record profits while selling less beef than before,” the advisers wrote.
The companies did not immediately respond to requests for comment.
The White House, hammered by Republicans in the face of rising inflation, is working to combat rising prices by eliminating supply chain blockages and tackling what it sees as uncompetitive practices of large corporations, which reap big profit gains even as consumers suffer.
Friday’s blog post – published after November consumer prices posted the biggest annual gain since 1982 – reflects White House officials’ growing frustration with the continued rise in meat prices, an issue he reported in September.
(Reporting by Andrea Shalal; Editing by Caroline Stauffer, Heather Timmons and Mark Porter)
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