Farm Progress America, Nov. 12, 2024

Mike Pearson takes a look at a report released by the USDA that looks at the competition in the meat processing industry.

The report looks at the competition and fair practices in meat merchandising industry outlines the large fees and incentive structures that benefits the large suppliers leaving small suppliers struggling in the market.

Small producers report marketing fees and slotting allowances make it difficult to gain shelf space in large retail markets.

A significant concern is accrual arrangements. These are essentially pre-payments that hold down in an account advertising or discount promotions. Often, these benefit large meat producers, smaller retailers can't afford these arrangements which prevents them from accessing some retail markets.

The USDA also highlighted rebates and kickbacks which offers money to retailers for exclusive shelf space or priority purchasing agreements.

For instance, large suppliers may give free products to institutions or restaurants, pushing small suppliers out because they can't match those offers.

Discounts in the meat industry were also discussed in the report. These can include: Primary, secondary and tertiary. In each case, large buyers can use their power to secure better prices-- creating the waterbed effect.

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Ultimately, it raises costs for rural and small independent grocery stores.

The USDA emphasized concerns over labeling claims. The concerns centered around large suppliers using claims like "grass fed" or "antibiotic free" without a third party verification. The USDA hopes that by using verification it can help to clear up real product differences.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, farm broadcaster and host of This Week in Agribusiness .