Dive Brief:
- The U.S. Department of Agriculture is partnering with attorneys general in over two dozen states to crack down on anti-competitive practices in the food industry as part of the Biden administration’s effort to address consumer inflation, the agency announced Wednesday.
- The Agricultural Competition Partnership will offer states funding and research support, enabling them to take on more complex antitrust cases. The bipartisan effort involves attorneys general in 31 states and Washington, D.C.
- The USDA will also work to increase competition for seed growers and plant breeders through a new Farmer Seed Liaison initiative, which gives farmers more transparency into the patent process.
Dive Insight:
As grocery prices significantly influence consumers’ perception of inflation overall, the Biden administration has prioritized food in its efforts to bring down sky-high prices across industries.
Over the past few years, the USDA has made a flurry of investments to help independent food producers compete more effectively. In addition to allocating $1 billion to expand local meat and poultry processing capacity, the agency also earmarked $500 million to promote U.S. fertilizer manufacturing.
The ties between industry consolidation and rising food prices, however, have remained hotly contested. Farm consolidation overall has actually slowed since 2007, according to a USDA report, with only dairy showing continued rapid concentration within the livestock sector.
More than three-quarters of economists surveyed by the University of Chicago Booth School of Business last year disagreed with the idea that market power is a significant cause of recent inflation.
But even if there isn’t a direct link between market power and inflation, economists say consolidation may still have exacerbated recent price increases. The COVID-19 pandemic exposed how dependence on a handful of companies can lead to supply shocks, which in turn cause higher prices.
The USDA partnership is part of a larger, whole-of-government effort to tackle market consolidation in areas including food, housing and healthcare.
The Biden administration also announced Wednesday it is strengthening enforcement of laws prohibiting anti-competitive mergers through guidelines that encourage regulators to consider a company’s market power and acquisition history.
“The Biden-Harris Administration is committed to addressing corporate consolidation and its negative effects on the U.S. economy, such as unfair competition and increased prices,” Agriculture Secretary Tom Vilsack said in a statement Wednesday, adding that the agency’s latest efforts will help “ensure a more robust and competitive agricultural sector.