After a cyberattack crippled the world’s largest meat producer last week, JBS SA meat plants have begun to reopen across the globe. But the meat industry shouldn't be returning to business as usual — and for the security of our food supply, the Biden administration needs to make sure that it doesn’t.
The JBS subversion, which has been attributed to a Russia-linked cybercriminal group, was the latest in a series of Black Swan events that have crippled large-scale meat producers in recent years. The March 2019 fire in Holcomb, Kansas, destroyed a Tyson Foods plant that processed about 5% of US beef. In April 2020, major hog and chicken processing plants nationwide became Covid-19 hotspots, causing cascading shutdowns that included a Smithfield Foods plant processing more than 15% of all pork in the US. Last week’s JBS attack sabotaged more than a fifth of all US beef processing in a matter of minutes.
It reminded us of a glaring truth we already knew: Consolidation has made the US meat industry — and the global protein supply — profoundly and unacceptably vulnerable. It will become more susceptible in the years ahead as public health threats and potential cyberattacks continue to loom large, and as climate change increases the risk of natural disasters. Drought, heat, flooding, wildfires, insects, superstorms and weather volatility are raising pressure on our farms and ranches. In short, the cost-saving benefits of agricultural consolidation are increasingly outweighed by the risks of disruption.
Food-industry experts have long been clamoring for systemic “resilience.” Last April, as the pandemic bore down on meat producers and before he began his second tour as US Department of Agriculture Secretary, Tom Vilsack told me that we’re “better off having multiple plants in multiple locations — smaller facilities to produce enough product. And that may mean a little less profit, but it means that if you have an incident like this that threatens your workforce, you'll always have sufficient operation capacity.” Vilsack reiterated this sentiment Tuesday in a call with reporters: “Efficiency comes at a price, and that price is a lack of resilience when you have a major disruption."
Activists have made the case in stronger terms: The time has come “for deindustrializing and decentralizing the American food system [and] breaking up the meat oligopoly,” wrote environmental author Michael Pollan last May. Philanthropist Chef Jose Andres told me: “The food system centralized in big factories is putting us in danger. Decentralization makes you nimble.”
Yet little has been done to decentralize US meat production. The Biden administration, along with state and federal lawmakers, have an urgent obligation not just to incentivize and support smaller and more diversified meat processors and producers, but also to begin dismantling and diversifying American meat monopolies, which have gone unchallenged and unchecked for too long.
Sweeping reforms will take years, but the USDA can begin to mobilize a plan immediately with the $4 billion allocated for food supply chain resiliency under the American Rescue Plan Act. Tuesday, Vilsack outlined how he intends to spend these funds, and while I applaud his plan to subsidize farmers practicing regenerative agriculture — inherently more resilient than industrial production — he should clarify his goals and timeline, and at least triple the $60 million in grant money that has been earmarked to help expand smaller-scale meat and poultry processors across the country.
The USDA is conducting a large-scale study on resilient meat and poultry processing that is expected to be published this summer. Vilsack should listen carefully to the small and mid-sized processors and producers to find out what they need to expand their operations while meeting federal food safety standards.
Beyond grant money, smaller producers and processors need other forms of USDA support. Vilsack should continue reforming and refocusing the Food Safety and Inspection Service to better assist small and mid-sized players. He should create dedicated roles at the department to help local processors build regional markets while meeting the standards necessary to sell their products across state lines and become competitive with large meatpackers. Vilsack should also re-empower the Grain Inspection, Packers and Stockyards Administration, hollowed out under President Donald Trump, to investigate large meat processors and hold them accountable. Vilsack’s USDA should also be coordinating with the Department of Justice for more active enforcement of antitrust laws — and DOJ must assiduously review proposed mergers in the food and agricultural sector.
Industrial Goliaths have accumulated a powerful grip on global agriculture: In the US alone, four processing companies slaughter more than 80% of the beef; four meatpacking companies process roughly two thirds of the nation's hogs; and five companies control about 60% of the broiler chicken market. The vertical integration of livestock and poultry supply chains, with the same companies producing animals and slaughtering, has stifled competition and led to widespread price-fixing and corruption.
The Biden administration and Congress must clarify and strengthen antitrust laws so that they more clearly apply to largescale food production. And the president should continue to appoint people within the USDA and the DOJ who are willing to challenge the interests of industrial operators — a stance that's long been politically unfavorable for politicians in both parties.
Not since Upton Sinclair’s eye-opening novel "The Jungle" has the American meat industry faced a more significant paradigm shift, and Biden and Congress must get out in front of it. If they don’t, the US — and the world — won't be able to maintain a reliable protein supply in an era defined by disruption.
Bloomberg
