Meat packers’ profit margins jump 300% during pandemic – White House Economics

A worker stacks packages of ground beef in the meat section of a Costco warehouse club during the coronavirus disease (COVID-19) pandemic in Webster, Texas, United States, May 5, 2020. REUTERS / Adrees Latif

WASHINGTON, Dec.10 (Reuters) – Four of the largest meat processors, using their market power in the highly consolidated U.S. market to drive up meat prices and underpay farmers, have tripled their own profit margins sharp since the start of the pandemic, White House economic advisers have said.

Financial statements of meat processors – which control 55% to 85% of the beef, poultry and pork market – contradict claims that the rise in meat prices was caused by labor costs – work or higher transport, according to advisers led by the director of the National Economic Council, Brian Deese. wrote in a To analyse published Friday on the White House website.

Officials studied tax returns from Tyson Foods Inc (TSN.N), the chicken producer and the largest US meat company by sales; JBS SA (JBSS3.SA), based in Brazil, the world’s largest meat packer; Brazilian beef producer Marfrig Global Foods SA (MRFG3.SA) which owns most of the National Beef Packing Company (NBEEF.UL); and Seaboard Corp RIC (SEB.A).

Those statements showed a collective 120% increase in their gross profits since the pandemic and a 500% increase in their net income, according to the analysis. These companies recently announced $ 1 billion in new dividends and share buybacks, in addition to the more than $ 3 billion they have paid to shareholders since the start of the pandemic.

The North American Meat Institute business group accused the White House of “picking” data.

“It is no coincidence that this blog post appears on the same day as the publication of the Consumer Price Index, showing that gas and energy prices have increased by almost 60% over the course of the past 12 months, which is almost 10 times the rate of food inflation, ”said President Julie. Anna Potts said in a statement.

Profit margins – the spreads that companies realize beyond their costs – have also increased significantly, believing the argument that companies only pass on higher labor and supply costs. , according to the analysis, with gross margins up 50% and net margins up over 300%.

“If rising input costs led to higher meat prices, those profit margins would be roughly stable, 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 consumed at home in November, a major contributor to the surge in inflation seen in recent months.

Tyson raised the price of beef “so much – by over 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 over rising inflation, is working to tackle rising prices by clearing bottlenecks in the supply chain and tackling what it sees as uncompetitive practices on the part of large companies, which signal large profit gains even if consumers suffer.

Friday’s blog – published after November consumer prices posted the largest annual increase since 1982 – reflects growing frustration among White House officials with the continued rise in meat prices, a problem that ‘he reported in September. Read more

Reporting by Andrea Shalal; Editing by Caroline Stauffer, Heather Timmons and Mark Porter

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