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CCTV Script 09/09/21

— This is the script of CNBC's news report for China's CCTV on September 9, 2021, Thursday.

As the Biden administration expressed intention to tighten regulations over the meat processing industry, shares of major-related companies went down during the overnight trading session. Industry giants – Tyson Foods and JBS of Brazil – closed down 1.45% and 2.59% respectively.

An article published on the official website of the White House on September 8 clearly states the reason behind the Biden administration's intention, that is because American households are facing rising food prices, half of which coming from increases in meat prices. 

Since December of 2020, beef prices at grocery stores have risen 14%, while prices of pork and poultry are 12.1% and 6.6% higher.

This article also pointed out that, in addition to demand, a lack of competition in the meat processing sector is an important factor that drives up meat prices. In the past few decades, the U.S. meat processing industry has been consolidating. Smaller players got acquired; and the four largest beef processors control 82% of the market now, according to statistics from the United States Department of Agriculture. That number was only 25% in 1977. In poultry, the top four processing firms accounted for 35% of the market in 1986, compared to 54% today. And in pork, the top four biggest firms controlled 33% of the market in 1976. Today it is 66%. 

 

The market condition means these middlemen can squeeze the consumers as well as the farmers and ranchers, the article argues. The meat processors are generating record profits during the pandemic, pushing stock prices higher, but that's at the expense of consumers, farmers, and ranchers.  In light of Covid-19, there is insufficient processing and transportation capacity in the meat industry. As a result, many chickens, cattle, and pig farmers in the United States have a large backlog of livestock that could not be transported to processing plants in time, increasing feeding costs.

Multiple agencies in the United States are taking action to address the issue, including investigating pricing activities, providing subsidies and assistance to small business owners in the industry, and making the market fairer and more transparent by legislation. So far, we have yet to see any public comment from major processors.

 

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