Cutthroat Business

Abstract

The production of meat is almost entirely controlled by a small group of multinational agribusinesses. These corporations own everything from animal genetics to feed to wholesaling to slaughtering to butchering—leaving only the raising of the animals to nominally independent farmers, who are, in turn, controlled through one-sided contracts. Packing companies use this power not just to push down costs and make raising and slaughtering animals more specialized and efficient (though they have done that), nor just to bargain for more favorable deals from farmers, workers, retailers, and consumers (they have done that, too). They use it to extract subsidies and regulatory favors (such as remaining open during COVID), to avoid accountability for pollution and for their power over many rural communities, and to shape the information and narrative the public hears about their industry.

Taking on the power of meatpackers and its impacts on working conditions, prices, animals, rural communities, and the environment would require a comprehensive set of reforms. But a surprisingly large amount would be possible by revitalizing enforcement of a century-old statute that has largely lain dormant during the transformation of meat production. Congress passed the Packers and Stockyards Act of 1921 (PSA) in (belated) response to the first wave of integration and consolidation in meatpacking. By the 1950s, the PSA had become part of a quasi-sectoral regulatory regime that also included a decades-long antitrust consent order with structural separations and NLRB-enforced pattern-bargaining agreements. After providing a novel interpretation of why the midcentury regime collapsed, this Article explores how that collapse led to today’s regime and synthesizes the criticisms of concentrated agribusiness that has resulted. It then explains several means by which the PSA—and its prohibition on “unfair” and “unjustly discriminatory” practices can be used to redistribute power in the short term and begin to build toward a more comprehensive re-regulation.

It lays out four mutually compatible avenues for reform via conduct regulation. The first would involve a general effort to deconcentrate the packing industry and increase competition between packers: targeting collusion, exclusionary conduct, and concentrated market power in each market in which they participate. The second would target vertical restraints to rebalance power between packers and farmers, creating a floor on pay and treatment, empowering farmers by facilitating both exit and voice, and perhaps dampening the role of incentive payments to promote equality of treatment between farmers. Some progress on each of these avenues has already been made, though only some. A third avenue would go beyond existing progress and seek to raise the standard for treatment of packhouse workers by supplementing work law to channel competition away from cutting costs on labor and toward attracting workers with better pay and conditions. And a fourth would begin to promote a more decentralized and redundant ecosystem of farms and packers in the name of dispersing power and promoting resilience.

Keywords: antitrust, meatpacking, agriculture, administrative law, regulated industries, work law, franchising