USDA puts beef at center of Biden’s anti-trust and climate campaigns

Despite some negative publicity associated with beef’s GHG emissions, the sector received a $500m USDA package to increase processing capacity while Rabobank’s Justin Sherrard says, ‘beef is where the answer lies.’

Beef has long been a focus for those aiming to raise agriculture’s profile within the global climate change discussion. A recent campaign by FAIRR, for example, highlighted that protein-related emissions have largely been excluded from the Paris Agreement’s Nationally Determined Contributions.

FAIRR’s campaign reflects the type of public pressure investors might instinctively seek to avoid, but a recent Rabobank report and the USDA’s plans to invest $500 million to expand meat- and poultry-processing capacity demonstrate beef’s complicated position at the intersection of several trends.

Rabobank global protein strategist Justin Sherrard co-authored the bank’s June report, which examined approaches to lowering beef-related GHG emissions. It noted that progress has been limited by structural misalignment of costs and benefits in a particularly complex supply chain.

“If we’re going to get to net zero, you need all of that land that is managed for beef to change the way it is managed. You need to change the way those animals are managed,” Sherrard told Agri Investor. “You need to ensure we continue to get the nutritional output and pleasure associated with eating beef and we can do all of that with a much lower sustainability footprint.”

The report called for market-based mechanisms to encourage sustainability and highlighted the need for “change in the way beef producers are recognized and rewarded” to facilitate this. “Those who are close to agri know that beef is where the answer lies, it’s not where the problem lies,” Sherrard added.

FAIRR executive director Maria Lettini has been engaging with policymakers for five years and told Agri Investor she has recently observed increased willingness to consider new approaches to influencing how food is produced.

“There is a desire to be really collaborative and work across stakeholders to understand how we can change this system,” Lettini said, highlighting subsidy reform and blended finance as approaches governments appear increasingly willing to consider.

The US will be especially important in this effort, Lettini added, in part because the goals of the Biden administration’s Build Back Better initiative are likely to involve engaging the private sector in new ways.

“We want to be producing animals for food in a way that is indicative of the true cost of that production,” she said. “This is going to come into play when we start thinking about public-private partnerships and how money is going to be deployed.”

The USDA’s $500 million investment package intends to increase meat- and poultry-processing capacity to boost competition, mitigate climate change and stimulate private and local government spending.

The Biden administration’s efforts to increase competition across the economy amid an intense focus on the climate naturally begins with a meat-processing sector where environmental stress helped create the concentration risks highlighted recently by covid-19.

As agriculture secretary Tom Vilsack put it in his statement announcing the USDA’s package, covid-19 “exposed a [US] food system that was rigid, consolidated and fragile…that rewards size over all else.”

As a result, the USDA has identified meat processing as an early focus of the effort called for by Rabobank to change how producers are “recognized and rewarded.” Though massive government spending plans will not be greeted warmly by all in the market, they do present relevant managers with a chance to influence the new forms of government partnership that could shape opportunities available to them in ag and elsewhere over the long term.