- The U.S. Department of Justice's antitrust division said in a letter sent Friday it "will not challenge" the proposed efforts of the National Pork Producers Council to work with the USDA to euthanize hogs because of "overwhelming oversupply" caused by the coronavirus pandemic.
- The letter responded to NPPC's request for the division to look over its plan and ensure it was in compliance with antitrust regulation. As a result of capacity restrictions at pork packing plants, euthanizing potentially 700,000 hogs per week "will be unavoidable" and a coordinated industry response is necessary to ethically euthanize as few as possible, NPPC said in its plan.
- Producers are now permitted to "work at the direction of the USDA and state agriculture agencies to achieve humane and efficient euthanization of hogs that have grown too large to be processed and are thus unmarketable," the DOJ said. The trade group can also share information about best practices for depopulating unmarketable hogs.
After facing struggles with trade disputes and labor shortages, U.S. pork farmers were hoping to have a profitable year. Then the coronavirus outbreak drastically changed that expectation. As plants have temporarily shuttered to quell the spread of coronavirus among workers, the supply chain has backed up and hog farmers are hurting with no where to send their animals.
With this new plan, the NPPC is hoping to help farmers and state governments identify sources for equipment to cull hog herds and set up centralized euthanasia and disposal areas, the trade group said. That process includes disseminating projections for the number of hogs those facilities can handle each day, as well as collaborating with the industry to discuss the most efficient euthanization process.
NPPC said in April that hog farmers are facing a "financial crisis," with a predicted $5 billion industry loss in 2020. Workers in pork processing plants stand close together on packing lines, which allows coronavirus to spread quickly among them. The pandemic has infected thousands and forced at least 30 meat plants to temporarily close down or reduce production.
President Donald Trump issued an executive order in April declaring meat plants "critical infrastructure," using the Defense Production Act to keep facilities open and prevent shortages. Although labor unions have heavily criticized the order saying it puts workers at risk, industry has praised the move for helping get the supply chain moving. But it does take time. Companies such as JBS USA, which produces about a fifth of the country's pork, have said it will take months to get production back to full capacity.
With reduced production in plants, farmers don’t have anywhere to bring their market-weight animals. Millions of chickens have been killed as closures diminish demand and many pork producers are deciding whether to euthanize their pigs.
There have been some efforts to help farmers get rid of their animals without letting them go to waste. The USDA said it would spend $3 billion to buy fresh produce, dairy and meat that will be sent to food banks. And some producers are turning to alternative methods, like feeding their hogs a leaner diet to keep them smaller longer. Others are sending their animals to prisons to be processed by inmates, according to the Duluth News Tribune.
But even with plants open, many farmers are still finding themselves with oversupply.
It was a smart move for the trade group to check in with the DOJ about its collaborative euthanization plan to avoid facing any potential charges. Typically, an industry working together to limit supply would be a violation of criminal antitrust laws, which could result in up to 10 years in prison or $100 million in fines, Politico reported. The department said in its letter that competition is "critically important to consumers and market participants in the pork and other meat industries," and addressing anti-competitive behavior in these industries is "a top priority."
The wider meat industry is dealing with other antitrust concerns as a result of the coronavirus. Cattle associations across the U.S. sent a letter urging the attorney general and the DOJ to launch an investigation into possible anti-competitive actions in the industry. The USDA is already looking into why the rise in beef prices because of pandemic hoarding didn't convert into higher profits for farmers.