Aug.31

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Dem 52

Ties 1

GOP 47

Trump's Other Plan to Reduce Cost: Eliminate USDA Meat Inspection

On the same beat, somebody apparently told Donald Trump that the peasants are coming with their pitchforks and he'd better get on the stick on affordability. The price of gas is one area he is "working" on (see above). The price of meat is another target.

Trump has done two things in the meat space. First, he has waived the 26.4% tariff on 300,000 metric tons of beef. Cattle ranchers in Texas and other states did not wave back. They are furious with him because: (1) they have to compete with the cheaper imported beef and (2) more beef on the market drives beef prices down. Ranchers and farmers skew heavily Republican and are an important element of Trump's coalition.

Senators from beef-producing states are not happy. Senate Majority Whip John Barrasso (R-WY) said: "Americans want U.S. beef on the table—not foreign imports." You didn't know that Wyoming has cows? Surely you knew that the Cowboy State has cowboys, and where there are cowboys, there are cows. Trump's problem here is that he needs both consumers and cattle ranchers and it is hard to get both on this issue. Also, the 26.4% reduction will not cut beef prices 26.4% in stores because the cost of ground beef in the supermarket is made up of many factors besides the beef (e.g., transportation, packaging, retailers' margins, etc.). Also, most imported beef goes to fast-food restaurants, not supermarket shelves. So with one move, Trump has enraged ranchers without actually helping consumers much.

Second, Trump has another plan to get prices down. He wants to allow ranchers to process their own meat. Again, this may sound good, but it is not. Here are some caveats:

• Congress: The food industry is heavily regulated for health and safety reasons. Trump can't just overturn the many laws and regulations with a stroke of his pen. If he tries, the big four meat processors—Tyson, Cargill, JSB, and National Beef—will sue and possibly win, since both the law and public health are on their side. But the courts move slowly. Nevertheless, the Big Four do not want competition from unregulated mom-and-pop slaughterhouses, and will use all of their considerable clout to keep their oligopoly intact.
  
  
• USDA Inspections: Commercial meat-packing plants are heavily regulated and inspected by the USDA. Making the plant clean and disease-free costs money and so does killing the animals in a humanely (bovinely?) way. That USDA label on meat does not come for free. The potential savings here is to let ranchers skip all the health and safety regulations here and kill the cows the simplest way, health and safety be damned. Kristi Noem is currently unemployed and could be hired as a consultant on killing four-footed animals, since she has some experience with that. She also has experience with killing two-footed animals, but that is not germane here.
  
  
• Slaughterhouses: Ranches don't have on-site slaughterhouses. A rancher could probably kill one cow using the Noem method, but processing 100 cows or 1,000 cows really requires a facility no ranch has. Investing in building a slaughterhouse on the ranch might not be a good business move, since the resulting beef would not have the USDA label. Consumers might refuse to buy meat that wasn't inspected and USDA approved.
  
  
• Logistics: A modern meat-packing plant is more than a slaughterhouse. It also handles cutting, deboning, curing, smoking, grinding, packaging and shipping of the packages. Meat-packing plants have long-term contracts with supermarket and restaurant chains to provide meat at volume. Few, if any ranchers, are set up to to sell meat at scale. A rancher could probably slaughter a few cows, cut the meat into large chunks, and sell them at a local farmer's market, but that won't affect national meat prices very much.

So once again, a big presidential pronouncement about meat prices probably won't overcome market forces. Meat prices have gone up because all of the inputs have gone up. But for Trump, what matters is the photo-op for the announcement, not the reality that comes after it. If this comes to pass eventually, and meat that is not USDA approved gets on the market, there is a fair chance that someone will get seriously sick from uninspected meat. That will likely get a lot of publicity and make consumers very leery of uninspected meat for health reasons. Then the whole project will collapse when people decide they prefer healthy (but more expensive) meat to unhealthy (but cheaper) meat. (V)