Consumers have been shocked and dismayed over the last year with the dizzying and destructive rise of food prices. Meat prices in particular have gone sky-high. In November, beef prices were up over 20%, bacon was up 21%, and pork ribs were up 23% for the year.
Some of that increase is due to inflation, which puts upward pressure on all prices and is caused by unwise monetary policy at Federal Reserve (the Fed). But most of the increase in meat prices is due to unwise fiscal policy by Congress and the executive branch.
The supply chain problems and labor shortages plaguing the meat industry have been exacerbated by a combination of government handouts, vaccine mandates, forced business closures, and other unwise policies. This has raised the costs of transportation, animal feed, packaging materials, and employee compensation. When these input prices rise, so does the price of the final product.
The White House also supports devastating the meat market with price controls, which have never worked as desired—ever. Price controls make consumers worse off by creating shortages or lowering the quality of goods and services.
The increase in meat prices clearly has its origin in the unwise monetary and fiscal policy of Washington, D.C. but the White House won’t admit any fault on the part of the government. It is much easier to scapegoat business instead.
The White House has called large meat processors “monopolists,” and plans to give $1 billion to smaller meat processing plants, allegedly to promote competition. But that completely ignores the root cause of the problem, and it will not bring down the cost of meat on grocers’ shelves.
Meat processors, both small and large, have to bid for the same livestock. Allowing smaller producers to get more of the meat processing market does not increase the total supply of meat delivered to consumers. All that does is transfer product from more efficient, larger producers to less efficient, smaller ones.
Because of the higher cost to produce, this errant solution is a recipe for higher consumer prices, not lower ones.
Giving taxpayer dollars to expand independent meat processing neglects the reality that meat processors are not currently operating at capacity, in part because they are short on workers. Expanding capacity now is like putting more sand in the top of the hourglass thinking it will make the bottom fill up faster.
If the large meat packaging plants really were gouging consumers, as the White House alleges, then the smaller meat producers could easily undersell the rapacious “monopolists” and take their market share away. But the price increases have been industry-wide.
Furthermore, if the large meat processors have so much market power, why are they only exercising it now? Did they suddenly become greedy, as Senator Elizabeth Warren suggests? Why were they not greedy yesterday or three years ago?
This is just like when the White House blamed oil and gas companies for high energy prices after cancelling pipelines, drilling leases, and engaging in other acts that hamstrung energy production. It’s the arsonist blaming the fireman.
Obviously, every business can only charge prices that the market will bear. Because the Federal Reserve (Fed) has flooded the country with newly printed cash for nearly two years, the market is bearing much higher prices.
But that doesn’t equate to more profit for businesses—those higher consumer prices are being eaten up by higher input prices. Inflation is a tax on everyone, including businesses.
Instead of exerting pressure to rein in the Fed, the White House is casting blame and doubling down on imprudent policies, adding insult to the inflation injury. Household appliances are a perfect example. Consumers are paying artificially high prices because of high tariffs on steel and aluminum imports that the administration do not consider “environmentally friendly.”
The answer to all these problems is simply to end the bad policies that created them. The free market will take care of the rest—if we let it.