Key Points:
- President Donald Trump has ordered a federal investigation into U.S. food-related industries and foreign-controlled companies for potential price fixing in response to rising grocery costs.
- The Department of Justice and the Federal Trade Commission have been directed to establish task forces to investigate anticompetitive behavior within food supply chains, particularly among companies owned by foreign entities.
- The executive order empowers the DOJ and the FTC to take enforcement actions against companies engaging in anticompetitive practices and propose new regulatory approaches.
Insights:
The Trump administration is facing pressure to address the increasing costs of food, with consumers now paying 32% more per month on average for groceries compared to 2019, according to the Urban Institute.
In the executive order, Trump highlighted meat processing, seed, fertilizer, and equipment companies as having vulnerabilities to price fixing and other anti-competitive practices. He specifically pointed out concerns regarding anticompetitive behavior from foreign-controlled corporations affecting the stability and affordability of America’s food supply.
Two major meatpackers with ties to foreign countries, JBS from Brazil and Smithfield Foods owned by China’s WH Group, have come under scrutiny. WH Group recently spun off Smithfield’s North American operations amid concerns over China’s influence on the U.S. agricultural industry.
The administration is focusing on meat processors as beef prices reach record highs, with recent efforts to reduce food tariffs on items like beef and coffee to lower costs. However, meat processors claim they are not responsible for the high prices and are facing losses due to a cattle shortage. Tyson Foods, for example, announced plans to lay off thousands of workers and close a beef processing plant due to supply constraints.
Julie Anna Potts, president and CEO of the Meat Institute, which represents processors, stated that despite high consumer beef prices, beef packers have been operating at a loss due to tight cattle supply and strong demand for over a year.