Supply Chain Shortages In The Meat And Poultry Industries

• Published date: 22 November 2022
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Law Firm: Foley & Lardner
• Author: Mr Nathan Beaver and Nicholas R. Johnson

Supply Chain Disruption: Article 12

With Thanksgiving fast approaching, you have probably heard that there is a turkey shortage¹ - brought about by a combination of rising costs for feed and fuel, continued labor shortages, and - if that were not enough -a virulent strain of avian flu decimating turkey flocks across the U.S.

Although industries across the board have felt the effects of supply chain disruptions brought on by the COVID-19 pandemic, the meat and poultry industry has been particularly hard-hit. So much so that the Biden Administration, in concert with the United States Department of Agriculture (USDA), has moved forward with regulatory actions aimed at easing the supply bottleneck. Whether they will have the intended effect remains to be seen.

In July 2021, President Biden signed an Executive Order on Promoting Competition in the American Economy (the Executive Order).² The Executive Order directs 72 different actions across the federal government, including several rulemaking directives to the USDA aimed at increasing competition within the meat and poultry industry. Among other things, the Executive Order directs the USDA to issue new rules defining when meat can bear "Product of USA" labels, to address perceived loopholes in the current rules, and to issue new rules under the Packers and Stockyards Act. Following the Executive Order, the USDA has made progress on these new rules, and recently announced new initiatives to ramp up antitrust enforcement in the meat industry.

(For more on this Executive Order and its implications across industries, see a prior article from our Foley colleagues, President Biden's Executive Order on Competition Could Mean Broad Changes Across a Range of Industries.)

Modernizing the Packers and Stockyards Act

The Packers and Stockyards Act (PSA), enacted in 1921, is a federal law designed to combat labor abuses by meatpackers and processors. Specifically, the PSA makes it illegal for livestock and poultry producers to engage in any unfair, unjustly discriminatory, or deceptive practice,³ or to give any undue or unreasonable preference or advantage to any person or locality.⁴ Congress explicitly intended the protections in the PSA to be broader than those found in other federal statutes, such as the Sherman Antitrust Act.⁵ However, the USDA believes the force of the PSA has been reduced by a combination of regulatory narrowing, budget and administrative cuts, and under-enforcement in previous decades. For that...