[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]




                REVIVING COMPETITION, PART 5: ADDRESSING
     THE EFFECTS OF ECONOMIC CONCENTRATION ON AMERICA'S FOOD SUPPLY

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
                         AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               ----------                              

                      WEDNESDAY, JANUARY 19, 2022

                               ----------                              

                           Serial No. 117-48

                               ----------                              

         Printed for the use of the Committee on the Judiciary
         
         
         
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]       
         


               Available via: http://judiciary.house.gov
               



   REVIVING COMPETITION, PART 5: ADDRESSING THE EFFECTS OF ECONOMIC 
                 CONCENTRATION ON AMERICA'S FOOD SUPPLY
                 
                 



                               
                               
                               
 
                REVIVING COMPETITION, PART 5: ADDRESSING
     THE EFFECTS OF ECONOMIC CONCENTRATION ON AMERICA'S FOOD SUPPLY

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
                         AND ADMINISTRATIVE LAW

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                      WEDNESDAY, JANUARY 19, 2022

                               __________

                           Serial No. 117-48

                               __________

         Printed for the use of the Committee on the Judiciary
         
         
         
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]         
         


               Available via: http://judiciary.house.gov
               
               
               
               
                           ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
48-713              WASHINGTON : 2022 
                
               
               
                       COMMITTEE ON THE JUDICIARY

                    JERROLD NADLER, New York, Chair
                MADELEINE DEAN, Pennsylvania, Vice-Chair

ZOE LOFGREN, California              JIM JORDAN, Ohio, Ranking Member
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
STEVE COHEN, Tennessee               LOUIE GOHMERT, Texas
HENRY C. ``HANK'' JOHNSON, Jr,       DARREL ISSA, California
    Georgia                          KEN BUCK, Colorado
THEODORE E. DEUTCH, Florida          MATT GAETZ, Florida
KAREN BASS, California               MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York         ANDY BIGGS, Arizona
DAVID N. CICILLINE, Rhode Island     TOM McCLINTOCK, California
ERIC SWALWELL, California            W. GREGORY STEUBE, Florida
TED LIEU, California                 TOM TIFFANY, Wisconsin
JAMIE RASKIN, Maryland               THOMAS MASSIE, Kentucky
PRAMILA JAYAPAL, Washington          CHIP ROY, Texas
VAL BUTLER DEMINGS, Florida          DAN BISHOP, North Carolina
J. LUIS CORREA, California           MICHELLE FISCHBACH, Minnesota
MARY GAY SCANLON, Pennsylvania,      VICTORIA SPARTZ, Indiana
SYLVIA R. GARCIA, Texas              SCOTT FITZGERALD, Wisconsin
JOE NEGUSE, Colorado                 CLIFF BENTZ, Oregon
LUCY McBATH, Georgia                 BURGESS OWENS, Utah
GREG STANTON, Arizona
VERONICA ESCOBAR, Texas
MONDAIRE JONES, New York
DEBORAH ROSS, North Carolina
CORI BUSH, Missouri

         AMY RUTKIN, Majority Staff Director and Chief of Staff
               CHRISTOPHER HIXON, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON ANTITRUST, COMMERCIAL,
                         AND ADMINISTRATIVE LAW

                DAVID N. CICILLINE, Rhode Island, Chair
                PRAMILIA JAYAPAL, Washington, Vice-Chair

JOE NEGUSE, Colorado                 KEN BUCK, Colorado, Ranking Member
ERIC SWALWELL, California            DARREL ISSA, California
MONDAIRE JONES, New York             MATT GAETZ, Florida
THEODORE E. DEUTCH, Florida          MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York         W. GREGORY STEUBE, Florida
JAMIE RASKIN, Maryland               MICHELLE FISCHBACH, Minnesota
VAL BUTLER DEMINGS, Florida          VICTORIA SPARTZ, Indiana
MARY GAY SCANLON, Pennsylvania       SCOTT FITZGERALD, Wisconsin
LUCY McBATH, Georgia                 CLIFF BENTZ, Oregon
MADELINE DEAN, Pennsylvania          BURGESS OWENS, Utah
HENRY C. ``HANK'' JOHNSON, Jr., 
    Georgia

                       SLADE BOND, Chief Counsel
                      DOUG GEHO, Minority Counsel
                      
                            C O N T E N T S

                              ----------                              

                      Wednesday, January 19, 2022

                                                                   Page

                           OPENING STATEMENTS

The Honorable David N. Cicilline, Chair of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Rhode Island...................................................     2
The Honorable Jim Jordan, Ranking Member of the Committee on the 
  Judiciary from the State of Ohio...............................     4
The Honorable Jerrold Nadler, Chair of the Committee on the 
  Judiciary from the State of New York...........................     5
The Honorable Ken Buck, Ranking Member of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Colorado.......................................................     7

                               WITNESSES

Allison Johnson, Sustainable Food Policy Advocate, Natural 
  Resources Defense Council
  Oral Testimony.................................................     9
  Prepared Testimony.............................................    11
  Supplemental Materials.........................................    15
Michael S. Needler, Jr., Co-Owner, Generative Growth II
  Oral Testimony.................................................    61
  Prepared Testimony.............................................    63
Trina McClendon, Owner, Trinity Poultry Farm LLC
  Oral Testimony.................................................    73
  Prepared Testimony.............................................    75
Joe Maxwell, President, Board of Directors, Farm Action
  Oral Testimony.................................................    78
  Prepared Testimony.............................................    80
  Supplemental Materials.........................................    89
Peter St. Onge, Research Fellow, Economic Policy, The Heritage 
  Foundation
  Oral Testimony.................................................   151
  Prepared Testimony.............................................   153
Geoffrey A. Manne, President and Founder, International Center 
  for Law and Economics
  Oral Testimony.................................................   161
  Prepared Testimony.............................................   163

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Materials submitted by the Honorable Greg Steube, a Member of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of Florida, for the record
  An article entitled, ``HSUS' Maxwell Says `Less Meat' is 
    Good,'' Brownfield Ag News...................................   226
  An article entitled, ``Campaign to outlaw sow housing in 
    Florida advances,'' The American Veterinary Medical 
    Association..................................................   232
  An article entitled, ``Eating Humanely--Plant-based eating 
    benefits people, animals, and the planet,'' The Humane 
    Society......................................................   234
Materials submitted by the Honorable David N. Cicilline, Chair of 
  the Subcommittee on Antitrust, Commercial and Administrative 
  Law from the State of Rhode Island, for the record
  Statement from Claire Kelloway, Manager, Fair Food and Farming 
    Systems Program, Open Markets Institute......................   258
  Statement from Rob Larew, President, National Farmers Union....   267
  Statement from Bill Bullard, CEO, Ranchers-Cattlemen Action 
    Legal Fund United Stockgrowers of America....................   271
  Statement from Steven Etka, Policy Director, Campaign for 
    Contract Agriculture Reform..................................   276
  Statement from George Slover, Senior Policy Counsel, and 
    Michael Hansen, Senior Scientist, Food, Consumer Reports.....   298
  Statement from Doug Kantor, General Counsel, National 
    Association of Convenience Stores............................   301
  Statement from the National Sustainable Agriculture Coalition..   305
  Statement from a coalition of organic farmers from Maine, 
    Vermont, New Hampshire, and New York.........................   310
  Statement from Margaret Krome Lukens, Policy Director, and 
    Aaron Johnson, Challenging Corporate Power Program Manager, 
    Rural Advancement Foundation International...................   313
  Statement from Anthony Perrone, International President, United 
    Food and Commercial Workers International Union..............   323
  Statement from Ruarri Miller, Owner, Union Burrito.............   331
  Statement from Kayte Barton, an advocate for individuals with 
    disabilities.................................................   333
  Statement from Amanda Hitt, Director, Food Integrity Campaign, 
    Government Accountability Project............................   334

                                APPENDIX

Statement from Julie Anna Potts, President and Chief Executive 
  Officer, North American Meat Institute, submitted by the 
  Honorable Ken Buck, Ranking Member of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Colorado, for the record.......................................   342
An article entitled, ``Analysis: High U.S. meat prices: packer 
  profiteering or capacity crunch?'' Reuters, submitted by the 
  Honorable Scott Fitzgerald, a Member of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  Wisconsin, for the record......................................   354
Statement from Thomas M. Collins, II, President, Luke Family of 
  Brands, submitted by the Honorable David N. Cicilline, Chair of 
  the Subcommittee on Antitrust, Commercial and Administrative 
  Law from the State of Rhode Island, for the record.............   359

                  QUESTIONS AND ANSWERS FOR THE RECORD

Questions to Trina McClendon, Owner, Trinity Poultry Farm LLC, 
  from the Honorable Dan Bishop, a Member of the Subcommittee on 
  Antitrust, Commercial and Administrative Law from the State of 
  North Carolina, for the record.................................   364
Responses to questions from Trina McClendon, Owner, Trinity 
  Poultry Farm LLC, to the Honorable Dan Bishop, a Member of the 
  Subcommittee on Antitrust, Commercial and Administrative Law 
  from the State of North Carolina, for the record...............   365
Questions to Peter St. Onge, Research Fellow, Economic Policy, 
  The Heritage Foundation, from the Honorable Dan Bishop, a 
  Member of the Subcommittee on Antitrust, Commercial and 
  Administrative Law from the State of North Carolina, for the 
  record.........................................................   366
Responses to questions from Peter St. Onge, Research Fellow, 
  Economic Policy, The Heritage Foundation, to the Honorable Dan 
  Bishop, a Member of the Subcommittee on Antitrust, Commercial 
  and Administrative Law from the State of North Carolina, for 
  the record.....................................................   367


                 REVIVING COMPETITION, PART 5: ADDRESS-


                  ING THE EFFECTS OF ECONOMIC CONCEN-


                    TRATION ON AMERICA'S FOOD SUPPLY

                              ----------                              


                      Wednesday, January 19, 2022

                        House of Representatives

                 Subcommittee on Antitrust, Commercial,

                         and Administrative Law

                       Committee on the Judiciary

                             Washington, DC

    The Committee met, pursuant to call, at 10:05 a.m., via 
Zoom, Hon. David N. Cicilline [Chair of the Subcommittee] 
presiding.
    Members present: Representatives Nadler, Cicilline, Neguse, 
Jones, Jeffries, Raskin, Jayapal, Demings, Scanlon, Dean, 
Johnson of Georgia, Jordan, Buck, Issa, Gaetz, Johnson of 
Louisiana, Steube, Fischbach, Spartz, Fitzgerald, and Bentz.
    Staff present: John Doty, Senior Advisor and Deputy Staff 
Director; Moh Sharma, Director of Member Services and Outreach 
& Policy Advisor; Cierra Fontenot, Chief Clerk; John Williams, 
Parliamentarian and Senior Counsel; Merrick Nelson, Digital 
Director; Joseph Van Wye, Professional Staff Member/Legislative 
Aide for Antitrust, Commercial, and Administrative Law; Slade 
Bond, Chief Counsel for Antitrust, Commercial, and 
Administrative Law; Phillip Berenbroick, Counsel for Antitrust, 
Commercial, and Administrative Law; Mary Helen Wimberly, 
Detailee for Antitrust, Commercial, and Administrative Law; 
Ella Yates, Minority Member Services Director; Douglas Geho, 
Minority Chief Counsel for Administrative Law; Elliott Walden, 
Minority Counsel; Andrea Woodard, Minority Professional Staff 
Member; and Kiley Bidelman, Minority Clerk.
    Mr. Cicilline. The Subcommittee on Antitrust, Commercial, 
and Administrative Law will come to order. Welcome. It is our 
first fully virtual ACAL hearing so it is great to see everyone 
and thank you again to our Witnesses for joining us today.
    The Subcommittee will come to order and without objection, 
the Chair is authorized to declare recesses of the Committee at 
any time.
    Good morning, and welcome to this hearing on the harmful 
effects of consolidation on America's food supply.
    I would like to remind Members that we have established an 
email address and a distribution list to circulate exhibits, 
motions, or other written materials that Members might want to 
offer as part of our hearing today. If you would like to submit 
materials, please send them to the email address that has been 
previously distributed to your offices and we will circulate 
the materials to Members and staff as quickly as we can.
    I would also ask all Members to please mute your 
microphones when you are not speaking. This will help prevent 
feedback and other technical issues. You may, of course, unmute 
yourself any time you seek recognition.
    I now recognize myself for an opening statement. Across the 
country, food prices are soaring, families are going hungry, 
and small businesses are suffering. In the wake of weather 
disruptions and recent COVID outbreaks caused by the Omicron 
variant, people cannot believe their eyes when they see entire 
barren sections of the grocery stores. Across the country, 
workers are calling out sick due to surging COVID cases, truck 
deliveries and other shipments that are facing delays, and 
people panic buying, all leading to product shortages.
    Small businesses and food banks are struggling and with 
pandemic profiteering driving up costs, our most vulnerable 
neighbors are buying their groceries at dollar stores just to 
make ends meet. While prices are declining, and I expect them 
to continue to fall in the months ahead, we have seen versions 
of this story play out repeatedly in recent years due to deep 
structural problems in our economy.
    Today, nearly every link of America's food supply chain is 
dominated by less than a handful of corporations. We have seen 
consolidation trigger more consolidation which has caused a 
domino effect for our nation's food supply. In the meat 
processing markets, for example, four dominant companies 
control 85 percent of the market. The four largest poultry 
processing companies made up more than half of the market in 
2015, up from 35 percent of the market in 1986.
    In the pork market, the top four firms control more than 
two-thirds of the market and doubled their market share from 
1976. According to Open Markets Institute, waves of mergers 
have resulted in four grocery chains controlling 72 percent of 
local markets.
    In 2019 alone, there were more than 300 food industry 
mergers and acquisitions. A joint investigation by The Guardian 
and Food and Water Watch likewise revealed that four firms or 
fewer controlled more than 40 percent of market share for the 
vast majority of grocers. They note and I quote, ``The size, 
power, and profits of these mega companies have expanded thanks 
to political lobbying and weak regulation which enables a wave 
of unchecked mergers and acquisitions.''
    As a result, hard-working Americans all across this country 
are paying more as food prices skyrocket, particularly for 
meat. Large corporations have also squeezed out independent 
businesses that are lifelines for our local communities and 
critical sources of competition for these dominant firms.
    As Michael Needler will testify today, dominant retail 
companies have become so powerful that they have become 
essential gatekeepers for America's food suppliers in their 
power to extract discriminatory terms, better prices, more 
favorable terms, and unfair allocation of products.
    Beyond the cost of food this unchecked consolidation has 
resulted in the presence of chokepoints throughout America's 
food supply chain, creating much of the fragility Americans are 
experiencing every day. In competitive markets, there are many 
businesses of different sizes that can offer a variety of 
solutions in response to disruptions, such as extreme weather. 
If one supplier has a problem, others can fill the gap.
    The corporate consolidation we are seeing in the food 
industry has destroyed that diversity. In my district, Ruarri 
Miller, the owner Union Burrito, said in a statement for 
today's hearing that while mergers may create some economies of 
scale, ``show me the savings I have enjoyed when rocked by 
bottlenecks and price hikes in centralized supply chains for 
the last 18 months.''
    In many cases, small or more agile independent businesses 
have left the market, leaving fewer and larger corporations 
that are unable to pivot quickly or offer different solutions 
to supply disruptions. When a single facility controls a large 
portion of production, one problem with that one factory's 
production process can have ripple effects throughout the 
country.
    As the American Antitrust Institute has noted, ``These food 
goliaths have exercised their market power to suppress 
competition which alone is problematic, but as the COVID-19 
crisis has demonstrated, such concentration has also 
contributed to unstable supply chains.''
    For example, in 2019, a fire at a Kansas meat production 
facility affected 6 percent of the entire beef market in the 
United States, causing shortages for ground beef and steak 
throughout the country. After the fire, prices for beef soared 
to $153 per cattle to $344 just a week later, while profit 
margins climbed 10 percent in the entire industry.
    In April of 2020, Chair of Tysons took out full-page 
advertisements in The New York Times to warn that, and I quote, 
``The food supply chain is breaking,'' adding that millions of 
pounds of meat will disappear from the supply chain due to 
closures in the wake of the pandemic. Last year, an organized 
cyberattack forced JBS Foods, which controls nearly a quarter 
of beef processing in the United States, to close all those 
facilities in the United States, resulting in steep reduction 
of beef processing and spiked the prices.
    More recently, winter storms and COVID outbreaks have 
caused delivery delays and empty shelves in grocery stores 
across the Eastern Seaboard and jacked up prices for locally 
owned businesses.
    In the backdrop of these trends there is also widespread 
evidence of corporate profiteering. Why? ``They are raising 
prices because they can,'' as Federal Reserve Chair Jay Powell 
recently testified. For example, early this month, Walmart and 
Kroger, the two most dominant grocery chains in the country, 
announced they would jack up the price for rapid COVID tests 
following the expiration of an agreement with President Biden 
to maintain them at affordable levels. This is nothing less 
than pandemic profiteering as we enter the third year of an 
economic and public health crisis.
    As prices are rising, corporations are seeing record 
profits, demonstrating that they are not absorbing the supply 
shock exacerbated by the pandemic; instead, they are taking 
advantage of the American people to line their pockets in the 
midst of this crisis. In some cases, companies are using the 
cover of reduced supply to drive prices even higher while 
consumers and workers suffer. Farmers, ranchers, and other 
producers are also earning less than ever before. According to 
some estimates, only 50 cents of every dollar spent at the 
grocery goes to farmers and producers.
    We have a perfect storm. Markets are monopolized, demand is 
high, Omicron is surging across the country, and front-line 
workers are showing up to their jobs under enormously stressful 
and unsafe conditions, often for wages that are insufficient to 
put food on their own table or to pay the rent.
    Across party lines, people are tired, angry, and fed up 
with the corporate greed and runaway consolidation that are at 
the heart of this crisis. In response, President Biden has 
undertaken a series of actions as part of his economic agenda 
to rebuild the backbone of the country, the middle class. 
Earlier this month, President Biden announced a four-part plan 
to create a fair, more competitive, more resilient meat and 
poultry supply chain. This follows actions last year to address 
supply chain risks for critical inputs and an Executive Order 
directing a whole-of-government approach to promoting 
competition in the United States, including through the 
rigorous enforcement of antitrust laws.
    We can do more, and we must do more, to bring all policy 
tools to bear to address this crisis. We need to create choice 
for consumers, even playing fields for independent businesses, 
safe workplaces for essential workers, and protect the 
livelihoods of farmers by breaking up monopolized sectors in 
the food system.
    We need to pursue criminal charges for corporate executives 
who engage in cartel activity such as price fixing and other 
forms of criminally anticompetitive conduct. In Congress, we 
must build new tools to address these problems as part of the 
Subcommittee's work to address shortcomings in current law. We 
need to strengthen worker protections, prohibit price-gouging, 
and explore price controls as part of industrial policy to 
address the outbreak of inflation for essential business 
services and industries that are plagued by profiteering.
    In short, we need an all-of-the-above approach to bring 
down costs and to rebuild our economy. I very much look forward 
to hearing solutions to these problems at this very hearing and 
I thank our panel of esteemed Witnesses for appearing before us 
today.
    I note the Ranking Member, Mr. Buck, is having some 
technical issues, so we will turn now to the Ranking Member of 
the Full Committee, Mr. Jordan, for his opening statement.
    Mr. Jordan. Thank you, Mr. Chair. I don't have an opening 
statement, but I would want to welcome our Witnesses, and in 
particular, Mr. Needler, from the great State of Ohio. We 
appreciate him being with us today and I look forward to 
hearing from each of our Witnesses and to the discussion that 
will follow. I yield back.
    Mr. Cicilline. Thank you, Mr. Jordan. I will now turn to 
the Chair of the Full Committee on the Judiciary, Mr. Nadler, 
for his opening statement.
    Chair Nadler. Thank you, Mr. Chair, for holding today's 
important hearing on America's food supply. Our attention to 
this topic is timely. As you noted, this weekend's winter 
storms impacted food supply up and down the eastern seaboard. 
The ongoing effects of climate change will cause more and more 
weather disturbances like this from coast to coast and as the 
unprecedented global destructions caused by the COVID-19 
pandemic continue, everyone is feeling the pinch of higher 
costs and higher prices. Everyone except for one group, the 
giant corporations that control huge swaths of our food supply.
    Because of unchecked consolidation, a few large 
corporations own every link in the food supply chain. The beef, 
poultry, and pork processing markets are each dominated by four 
huge corporations. The grocery retail market similarly is 
concentrated in the hands of just a few companies. This major 
concentration of power has had significant negative 
consequences for consumers and the workers in these industries. 
This consolidation occurred over the course of decades and the 
statistics are startling. According to recent reporting, the 
market share of the four leading firms in beef processing rose 
from 25 percent in 1977 to over 80 percent today. In grocery 
retail, the share of the 20 largest food retailers increased 
over 85 percent from 1990-2019. The top four grocery giants now 
control almost 70 percent of the market.
    The real-world impact behind these numbers is stark. Quite 
simply, corporate concentration of food markets is bad for 
Americans. Consumers are paying higher prices and workers in 
these industries have lost their ability to demand a living 
wage. Anyone who has gone to the grocery store recently has 
seen the price of food go up, with the price of meat, poultry, 
and eggs rising at a clip that far surpasses the rest.
    Why? Because those are the product markets with the fewest 
competitors. Those are the ones dominated by just a few 
corporate giants. Decades of consolidation and wage stagnation 
has also given employers in highly concentrated markets the 
economic power to lower or even to fix wages in concert with 
other employers. Consequently, many of our essential workers 
who work in the food supply industry are not making enough to 
cover their necessary expenses like food and housing.
    The results of this monopoly problem are striking. Three 
out of four poultry farmers live below the poverty line. A 
leaked 2018 internal document from the retail grocery chain, 
Kroger, showed that Kroger executives knew that hundreds of 
thousands of their employees lived in poverty because of the 
company's low wages.
    Furthermore, the investigation by the Select Committee on 
the Coronavirus Crisis revealed that in the wake of the 
pandemic, meatpacking companies prioritized profits and 
production over workers' safety, continuing to employ practices 
that led to crowded facilities in which the virus spread 
easily.
    Consolidation also takes an economic toll on independent 
businesses. Often, they are squeezed by powerful corporations 
that dominate the food system and control prices and output. A 
prime example of this is one of our Witnesses today, Trina 
McClendon, who owns an independent poultry farm in Mississippi, 
and I look forward to hearing her testimony.
    As Chair Cicilline already explained, concentration of our 
food system is responsible for much of the supply chain 
fragility that we are currently experiencing. That is not all. 
Not only do giant corporations help cause supply chain 
problems, but they are also benefiting from them. Throughout 
the pandemic, dominant businesses have exercised their power to 
earn record profits while most Americans have seen their 
paychecks buying less and less. This is nothing short of 
pandemic profiteering at the expense of everyone else.
    Accordingly, this hearing is part of a larger effort not 
only to diagnose the problems facing our food system, but also 
to come up with meaningful solutions. To that end, I applaud 
the Biden-Harris Administration for taking critical actions to 
remedy America's consolidation problems. With that in mind, I 
look forward to hearing what our distinguished panel of 
Witnesses have to say on this critically-important topic.
    I thank the Chair for holding today's hearing and I yield 
back the balance of my time.
    Mr. Cicilline. Thank you, Chair Nadler, and I know Ranking 
Member Buck is still having some technical difficulties, so I 
will proceed with introducing our Witnesses and then I will 
recognize Mr. Buck for his opening statement as soon as he 
arrives.
    It is my pleasure to introduce our first Witness, Allison 
Johnson. She is the Sustainable Food Policy Advocate at the 
Natural Resources Defense Council. She is an expert on building 
sustainable food systems and on the impact of food businesses 
and their responsible practices on the environment. Before 
joining the NRDC, Ms. Johnson practiced environmental and land 
use law at Shute, Mihaly & Weinberger. Additionally, she worked 
with the California Certified Organic Farmers as an organic 
certification and policy specialist. Ms. Johnson received her 
bachelor's degree and J.D. from the University of California at 
Berkeley, as well as a master's degree in gastronomic science 
from L'Universita di Scienze Gastronomiche.
    The second Witness is Michael Needler, the President and 
CEO of Fresh Encounter, Inc. A third-generation grocer, Mr. 
Needler's company manages 100 stores under many successful 
banners, including Save A Lot, Community Markets, and Needler's 
Fresh Markets. Before joining Fresh Encounter in 2009, Mr. 
Needler worked in banking and capital markets in Los Angeles 
for five years. He has served on the boards of the National 
Association of Grocers, the Food Industry Association, and the 
Findlay Family YMCA.
    Mr. Needler received his bachelor's degree from Hanover 
College and his master's from the University of Michigan's Ross 
School of business. He also completed the Executive Management 
Development Program at Cornell University.
    Our third Witness is Trina McClendon, co-founder and owner 
of Trinity Poultry Farm, LLC, in southwest Mississippi. In 
2003, Trina and her late husband, Rusty McClendon, built a 
commercial poultry operation and started working full-time in 
the agricultural industry. Over the past 19 years, Trinity 
Poultry Farm has raised 129 million pounds of chickens and 
created jobs for the local community. Trinity consistently 
ranks as one of the top poultry growers in her region of 
Mississippi. Ms. McClendon currently serves on the board of 
directors for Mississippi Women in Agriculture and works to 
promote women-owned farms and help women enter the agricultural 
industry.
    Today's fourth Witness is Joe Maxwell, President of the 
Board of Directors at Farm Action. Mr. Maxwell founded Farm 
Action, formerly the Family Farm Action Alliance, to advocate 
for a food system that works for everyone. As a farmer, Mr. 
Maxwell knows from experience the impact that consolidation has 
had on our food system. He has served in both Missouri's House 
of Representatives and State Senate, and was Lieutenant 
Governor of Missouri from 2000-2005. Mr. Maxwell received his 
bachelor's degree and J.D. from the University of Missouri.
    Our fifth Witness is Peter St. Onge, a Research Fellow of 
Economic Policy at The Heritage Foundation. Prior to joining 
The Heritage Foundation, Mr. St. Onge worked extensively in 
academia as a fellow at the Mises Institute, a senior fellow at 
the Montreal Economic Institute, and Assistant Professor of 
International Trade and Marketing at Taiwan's Feng Chia 
University. Before entering academia, Mr. St. Onge worked in 
strategy and marketing Takara Toys in Japan and Harris 
Corporation in Florida. Mr. St. Onge received his bachelor's 
degree from McGill University and a Ph.D. from George Mason 
University.
    Our last Witness is Geoffrey Manne, President and founder 
of the International Center for Law and Economics. He is also a 
distinguished fellow at the Northwestern University Center on 
Law, Business, and Economics. Prior to founding ICLE, he was a 
law professor at Lewis & Clark Law School. He also taught at 
the University of Chicago School of Law and the University of 
Virginia School of Law. Prior to his time in academia, Mr. 
Manne practiced antitrust law and appellate litigation at 
Latham & Watkins and worked as a research assistant for Judge 
Richard Posner. He additionally recently served for two years 
on the Federal Communications Commission's Consumer Advisory 
Committee. Mr. Manne received both his bachelor's degree and 
his J.D. from the University of Chicago.
    I am now pleased to report that our Ranking Member, I 
thought I just saw him, Mr. Buck, has overcome his technical 
difficulties and has joined us and now I recognize him for his 
opening statement.
    Mr. Buck. Thank you, Mr. Chair, and I am not sure I 
overcame my technical difficulties, but I have staff that did 
that, and I appreciate the staff for doing that.
    Americans across the country are facing once-in-a-
generation economic headwinds thanks to the disastrous policies 
implemented by President Biden. In an economy that should be 
growing and recovering from government-mandated lockdowns is 
instead stagnating over record-setting inflation, labor 
shortages, and a crippled supply chain.
    We can have a philosophical debate over the concentration 
of power in our food supply and I welcome a discussion of 
Amazon's acquisition of Whole Foods and its anti-competitive 
pricing and delivery practices that force small independent 
grocers out of business. Amazon has consistently distorted 
market outcomes to the detriment of small businesses and must 
be held accountable.
    To suggest that changes to antitrust law will heal what 
ails our economy at this moment is disconnected from reality. 
President Biden implemented massive government spending that 
ushered in seven percent inflation. President Biden has refused 
to bring labor unions to the negotiating table to solve the 
grave crisis at our ports. President Biden has paid Americans 
to stay home and out of the work force.
    Americans are paying more for their groceries than they 
have in decades, if they can even find the products that they 
are looking for, and the responsibility for that falls squarely 
on the shoulders of President Biden.
    The food supply industry has not changed overnight, nor 
could it. The only change we've seen in the past year is a 
shift from pro-growth policies under President Trump to the 
tax, spend, and regulate policies of President Biden. The 
results: Extreme prices and back orders for farmers to buy 
needed equipment, labor shortages across the agricultural 
industry, and, ultimately, pain in the pocketbooks of many 
hard-working Americans.
    Unfortunately, this isn't the first time President Biden 
and his allies have attempted to shift the blame for 
skyrocketing prices. In November, President Biden claimed, 
without evidence, that oil companies were driving up prices at 
the pump, instead of recognizing that begging OPEC for 
production increase was terrible policy and unleashing the 
American energy industry, President Biden, with no basis, 
attacked the industry for alleged anti-competitive practices. 
This may focus on a different sector of the economy, but is 
following the same playbook.
    As I said, there are legitimate concerns about anti-
competitive practices by actors in the food supply chain like 
Amazon's grocery business that could lead to productive 
discussions. However, if my colleagues across the aisle insist 
upon using limited concentration in America's food supply as a 
scapegoat for failed liberal policies, Congress will never make 
it to that conversation.
    Mr. Chair, I yield back.
    Mr. Cicilline. The gentleman yields back. We again welcome 
all our distinguished Witnesses, and we thank you for your 
participation.
    I will begin by swearing in our Witnesses who I would ask 
to turn on their audio and make sure that I can see your faces 
and your raised right hand while I administer the oath.
    Do you swear or affirm under penalty of perjury that the 
testimony you are about to give is true and accurate to the 
best of your knowledge, information, and belief, so help you 
God?
    Thank you. Let the record reflect that the Witnesses 
answered in the affirmative. You may be seated to the extent 
you stood for that oath.
    Please note that your written statements will be entered 
into the record in their entirety, and I thank you for them. 
They were really useful to all Members of the Committee.
    Accordingly, I ask you to summarize your testimony in five 
minutes. To help you stay within that time frame, there is a 
timing light on your screen. When the lights changes from green 
to yellow, you have one minute to conclude your testimony. When 
the light turns red, it signals that your five minutes have 
expired.
    I now recognize Ms. Johnson for five minutes.

                  STATEMENT OF ALLISON JOHNSON

    Ms. Johnson. Chair Cicilline, Ranking Member Buck, and 
Members of the Committee, thank you for exploring the harmful 
impacts of consolidation in good and agriculture today.
    Our food system is in crisis and with it are our 
environment and farming communities and especially the 
hardworking and talented people who make sure food moves from 
the fields to our tables.
    They say that bad luck comes in threes, but in 
concentration we often speak in fours. You have heard some of 
this already this morning. Four companies control half of the 
global seed supply. Four companies control over 80 percent of 
the U.S. beef slaughter. Four companies control nearly half of 
the retail grocery market. At almost every key link in our food 
chain, a few huge companies are profiting wildly at everyone 
else's expense.
    Our health, ecosystems, and climate are threatened by 
emissions, runoff, and dangerous chemicals from industrial 
agriculture. Food system workers, farmers and ranchers, and 
consumers are all struggling to make ends meet and stay healthy 
and safe, to be paid a living wage and eat nourishing foods. 
The long, complex supply chains that we rely on daily to eat 
are extremely vulnerable to disruption by health and 
environmental disasters.
    These problems are united by a common theme, power and 
balances related to size. So, if you take one thing away, say 
it be that size matters, and for more than economic reasons. 
Our antitrust laws attempt to keep companies from getting too 
big because when you are big you have more power. More economic 
power, but also more political and social power.
    An outsized power is a problem for democracy. Bigness can 
mean the power to unilaterally set agendas, to drown out other 
voices, and to extract wealth, waiver, and resources with no 
meaningful repercussions.
    Unfortunately, in recent decades narrow antitrust 
enforcement has sidelined political and social protections and 
set the stage for unprecedented consolidation and a precarious 
food system.
    Today, the biggest food companies have disproportionate 
power to influence who eats what, where, and at what price, as 
well as who profits, and who bears the costs. As I mentioned, 
four companies control half of our seed market and three of 
those four are also major pesticide companies. These companies 
and their predecessors that they have gobbled up, have steadily 
decreased seed diversity while also promoting dangerous 
chemicals. Their dominance leaves farmers little choice about 
what to grow and how to grow it and leaves our food system 
highly vulnerable in a changing climate. They also drive 
research, marketing, and lobbying efforts that undermine public 
support for organic and other climate friendly agricultural 
systems that offer significant public benefits. These companies 
do not shoulder the vast societal health costs they create, and 
they are not held responsible for contributing to climate 
change and crops' eco-systems. They profit and everyone else 
pays with the heaviest burdens falling on the most vulnerable 
people and places.
    So, how do we balance the power and shift toward the fair, 
healthy, and climate friendly food system we desperately need? 
It is going to take a cohesive and multi-prong approach. 
Antitrust enforcement is key. We have strong, flexible laws, 
but we are not using them to address modern problems and to 
succeed, the enforcement agencies need budgets to match the 
size of the problem.
    For perspective, if DOJ's Antitrust Division dedicated its 
entire budget to challenging a single major retailer and that 
retailer dedicated a year of its profits to defense, the 
company could outspend DOJ for 70 years. That is not a fair 
fight.
    Congress should also step-up direct oversight of the 
dominant companies in every food sector and examine the impacts 
and public costs of consolidation on the environment workers, 
farming communities, small businesses, and consumers.
    Parallel tax reforms are essential to reining in corporate 
power, and finally, we need agricultural policies and 
investments that account for distributional impacts so that 
they help smaller scaled diversified farms and ranches, they 
remedy injustices that have stripped Black, indigenous, and 
other communities of color of land and wealth, and make healthy 
foods more affordable and accessible for everyone.
    Concerns about consolidation cross party lines because 
there are so many people, places, and resources who benefit 
from fairness and so few who benefit from outsized wealth and 
power. So, as we proceed today remember, size matters. Thank 
you.
    [Statement of Ms. Johnson follows:]
    
    
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    Mr. Cicilline. Thank you, Ms. Johnson. I now recognize, Mr. 
Needler for five minutes.

               STATEMENT OF MICHAEL NEEDLER, JR.

    Mr. Needler. Good morning, Mr. Chair, Ranking Member Buck, 
and Members of the Antitrust Subcommittee. Thank you for 
inviting me to testify at this critical hearing regarding 
concentration of the food supply chain.
    My name is Michael Needler, Jr. and I am the President and 
CEO of Fresh Encounter, an independent, retail grocer based in 
northwest Ohio. I am testifying on behalf of National Grocers 
Association and the independent retailers and wholesalers that 
they represent.
    I am going to start by noting that my professional career 
started on Capitol Hill when I interned for Congress Michael G. 
Oxley, and then again for the House Financial Services 
Committee. Those summers taught me how demanding your jobs are. 
I thank you very much for all your service.
    We operate a hundred grocery stores in Ohio, Indiana, 
Kentucky, and Florida. I am a third-generation grocer. My 
grandfather started the business in 1964 and I recently 
acquired the business from my father. Our mission is to delight 
our customers, nourish our community, and inspire pride in our 
team. We serve a broad spectrum of markets from inner city to 
rural and in many cases, we can be the only full-service 
grocery store in the community.
    When I was named President about 12 years ago, our stores 
faced a very difficult decision. We were confronted with 
incredible margin compression, failed, shrinking, and many 
cases the retail prices of our competitors were well below our 
acquisition costs. I determined the only way for us to survive 
was to scale up and took big risks to do so. Over the course of 
several years, I was able to acquire struggling companies, put 
together a portfolio of stores that hopefully would become 
sustainable and with each transaction, our size and 
sophistication grew. That brings us where we are today. We have 
100 stores over four states, and have about 3,500 team mates. 
In spite of our growth and scale, we still see that the road to 
sustainable competition is steep and potentially 
insurmountable.
    Our view is this, America's food supply chain problems are 
a result of increasing concentration and unchecked buyer power 
by a few dominant retail firms. They force suppliers to 
discriminate against independent and grocery channels. The 
result is a system that benefits a few at the expense of 
everyone else including consumers, workers, independent 
retailers, and producers. Consumers have a narrowing range of 
choice to shop for the goods and services they need. 
Entrepreneurs and independent businesses struggle to start up 
and sustain businesses and producers such as farmers and 
ranchers are forced to accept unfavorable, economic terms, 
conditions and prices imposed by the largest members of the 
consolidated supply chain.
    Although these problems are not new, the grocery power 
buyers have taken advantage of the pandemic and supply chain 
disruptions to further entrench their dominance at the expense 
of smaller competitors like myself and producers.
    Independent grocers like me struggle throughout the 
pandemic to stock most of the need-to-have products like paper 
products, cleaning supplies, critically packaged goods like 
canned soups. Meanwhile, large national chains have exercised 
buyer power to demand on time complete orders and in some cases 
secure excess supplies. As a result, everyday Americans who 
rely on main-street grocers, especially rural and urban areas, 
cannot access products that they need for their families and 
are forced to travel sometimes at long distances to visit our 
chain competitors.
    These same Americans foot the bill for inflation pressures 
that dominant players have the power to refuse inflationary 
pressures and inflationary price increases from suppliers. Like 
squeezing one end of a waterbed, suppliers have no choice but 
to increase prices on smaller customers like myself. Due to 
concentration and relentless economic discrimination imposed by 
dominant grocery chains with fire power, the number of 
independent grocers in America is declining. When independent 
grocers leave, small towns begin to fall apart. I think we have 
all seen this happen in our communities. Our government 
oftentimes will react by sending billions of dollars to reverse 
the food deserts that are created, and to be clear, we do 
support legislation like that introduced by Ranking Member Buck 
to provide tax credits to grocers who invest in food deserts, 
but this approach treats the symptom rather than the cause.
    Unfortunately, oftentimes it is too late for the 
independent--once an independent grocer has left. Prevention is 
the only way to stop the erosion. So, over 80 years ago 
Congress led by this very Committee wrote laws like the 
Robinson-Patman Act to prohibit any competitor economic 
discrimination against independent businesses. Those laws are 
still on the books, but the FTC and the DOJ have brought--have 
not brought a Robinson-Patman case in over 20 years. It is time 
to dust off the tools, go to work to protect the free and fair 
market to preserve the food supply chain and American 
consumers.
    Thank you very much for taking the time to hear me today. 
There are so many pressing issues that we face, and I think 
that the health of our food supply chain is one of those very 
issues. I welcome any questions.
    [Statement of Mr. Needler follows:]
    
    
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    Mr. Cicilline. Thank you so much, Mr. Needler. Perfectly on 
time, so thank you.
    I now recognize Ms. McClendon for five minutes.

                  STATEMENT OF TRINA McCLENDON

    Ms. McClendon. Thank you, Mr. Chair, Ranking Member, and 
the Committee Members today. I appreciate you calling me to 
testify.
    I'm going to reintroduce myself. My name is Trina 
McClendon, and I am a contract poultry grower in southwest 
Mississippi. From a young age, I just always dreamed of being a 
farmer, and in 1985 I married my husband Rusty, and I moved to 
his family's farm in Mississippi from Louisiana.
    Rusty and I raised cattle all while working 9-5 jobs. We 
always dreamed about farming full-time. In 2003, Sanderson 
Farms, a poultry production company in Laurel, Mississippi, 
offered us a 15-year contract to grow chickens, which seemed to 
be an answer to our prayers.
    We soon realized that while we thought we were in a 
partnership with Sanderson, the truth is that our contract was 
very one-sided. We had no say over quality of chicks, quality 
of feed, and many other issues related to growing a good bird.
    The fact that five farm deficiencies could bankrupt us, 
causing to lose the family farm and our home, created untold 
stress. After 16 years of bearing the stresses of raising 
chickens, my husband passed away, of 34 years, from a massive 
heart attack.
    I was left a widow and sole owner of an eight-house poultry 
farm, and I had to do what all farmers do in times of trouble. 
I had to put away my grief and get on with the job at hand, 
raising the best chickens that I could.
    This leads me to why I am testifying today. Sanderson Farms 
is a vertically integrated company, meaning that they own all 
aspects of the chicken supply chain, which include, again, the 
quality of chicks, feed, and medication, among many other 
things.
    As a contract poultry grower, I'm responsible for the cost 
of building the houses, all the maintenance, the utilities, all 
equipment costs, and all costs to maintain and run the houses, 
along with a $1.4 million debt burden.
    Another aspect of contract growing is the tournament 
system. This is the way that growers paid. This system favors 
the integrator over the farmer.
    It allows the company to maximize efficiency and cost, but 
it penalizes the growers by keeping our pay low and demanding 
that we continually make upgrades to the houses that keep us in 
debt for many years. Growers just never seem to get ahead.
    Because we are kept in debt for many years, it is a known 
statistic that over 71 percent of all poultry growers who 
solely rely on poultry for their income are below the poverty 
level.
    This leads me to why I'm testifying today. In August of 
2021, I learned at the same time as everyone else that 
Sanderson Farms had concluded a deal with Cargill and 
Continental Grain to sell their company for $4.5 billion. Just 
two days after this announcement, I was handed a pay cut.
    In this take-it-or-leave-it relationship with Sanderson, 
they told me that they were going to reduce my income by one-
third. Whether I signed this pay contract, that all Sanderson 
growers, only within the State of Mississippi, would receive 
this pay cut.
    After this, I decided to speak out as a whistleblower to 
shed light on the abuses by Sanderson and other integrators in 
the contract grower model. I reached out through RAFI and the 
Government Accountability Project, and they put me in touch 
with Senator Grassley's staff so that I could make a 
whistleblower disclosure about the problems that I and other 
growers faced with the Sanderson buyout.
    So, today, I am here to make a request. I am asking for 
three things.
    First, I am asking you to stop this buyout and send a clear 
and concise message to Sanderson Farms, Cargill, and 
Continental Grain that the consolidation of our feed industry 
is detrimental to the continued practice of a free and fair 
market economy.
    Second, I am asking that you simply enforce the rules that 
were written to protect our country's food supply, and that you 
place a temporary moratorium on all large feed and agribusiness 
mergers.
    Last, I urge you to protect all Americans across this 
country. You can do this by protecting our most important 
asset, our food and the farmers who grow it.
    In conclusion today, I believe that I speak for all rural 
Americans and all family farmers across this country when I say 
that we love our jobs, and we love growing food for this 
country.
    So, I am asking that all of you show bipartisan support for 
the women like myself and men who feed this great nation by 
creating a fair and transparent market for all American-grown 
food. Thank you.
    [Statement of Ms. McClendon follows:]
    
    
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    Mr. Cicilline. Thank you so much, Ms. McClendon.
    I now recognize Mr. Maxwell for five minutes.

                    STATEMENT OF JOE MAXWELL

    Mr. Maxwell. Chair Cicilline, Ranking Member Buck, Chair 
Nadler, Ranking Member Jordan, and Members of the Subcommittee, 
thank you for this opportunity to testify. I will be 
highlighting the on-the-ground implication of the heavily 
concentrated food system.
    I am the President of Farm Action. We look at the broader 
impact of market concentration in the food system, developing 
policy recommendations to bring about economic vitality in 
rural America. I have degrees in agriculture, economics, and 
law, and 30 years' experience in policy development. My brother 
and I farm in Missouri.
    Economists State market abuses are likely to occur when the 
concentration ratio of the top four firms exceeds 40 percent. 
Today, the ratios in nearly every sector are far beyond this 
point. Beef is at 85 percent.
    At these levels, the understanding and application of 
supply and demand modeling fails to explain the market dynamics 
of concentrated corporate power. What we see are dominant firms 
exerting their power to extract excessive wealth up and down 
the supply chain.
    Today's grain farmers are trapped in an economic system 
dependent upon government subsidies for survival. When 
commodity prices are high, dominant firms simply raise prices 
of input.
    Today, commodity grain prices are up, but fertilizer prices 
have doubled. While the cost of manufacturing fertilizer has 
increased, these increases do not justify a 680 percent 
increase in gross margins for fertilizer companies. This spike 
in fertilizer would cost the farmers in the communities in 
Stearns County, Minnesota, over $8.5 million, requiring farmers 
to continue to rely on government subsidies. When commodity 
prices drop below production cost, farmers only survive if they 
do what it takes to receive government subsidies.
    The real beneficiary of this taxpayer-supported agriculture 
system are big meatpackers, who benefit from cheap feed. We 
call this model of government-supported production the feed-
meat complex.
    Meatpackers either own or control the majority of the 
livestock needed to meet their plant demand, putting livestock 
producers in direct competition with the corporations they 
depend on to buy their livestock. This gives the beef-packer 
the market power to slow their demand for cattle purchased in 
the marketplace, cutting the price they pay to producers.
    The majority of poultry farmers don't even sell chickens. 
They borrow money, millions of dollars, to build poultry barns 
to raise the poultry processing company's birds, hoping the 
company will keep sending them flocks so they can make enough 
to pay their mortgages.
    SBA determined the contract poultry grower has no 
independence and is under the mandates of the processor. One 
wrong move, one wrong statement, and they lose their homes and 
farms.
    As concentrated corporate power drives farmers off the 
land, the vertical integration of the food supply chain means 
the company provides everything it needs. No buying from local 
businesses. As farmers and businesses are pushed out, rural 
America is hollowed out.
    Farmers of color in their communities have felt the pain of 
power since the beginning of this country. Concentrated market 
power has continued the cycle of abuse.
    The experience of Nicodemus, Kansas, the oldest remaining 
African American farming settlement west of the Mississippi 
River, and the stories of farmers on tribal land should be a 
part of your understanding of the impact of concentration on 
America's farmers.
    Food chain workers are in the most unsafe and unhealthy 
conditions at the workplace for some of the lowest wages. As 
reported, the oppression is so great that some front-line food 
chain workers have to wear diapers because their employer will 
not show them the dignity of a bathroom break.
    Dominant firms in the food sector have so much power they 
profit from the supply chains disruptions. Shortage of natural 
gas, the fertilizer companies gouge the farmer. A fire at a 
beef plant, they gouge the consumer while cutting the price to 
producers.
    Today, consumers are experiencing a 6.9 percent inflation 
rate. A Nasdaq headline sums up the power of concentration in 
the food supply during the pandemic: Who's Hungry? Food 
Companies Are Gobbling Up Profits.
    Failing to include concentrated corporate power in any 
analysis of the current rise in inflation misses the mark. 
Blaming increased wages and increased government support during 
an unprecedented pandemic says to American workers, you can 
never make a livable wage. Doing so will cause too much 
inflation.
    The U.S. capitalist economic system will not work without 
government safeguards to ensure competition. The administration 
has a plan. It states they will invest a billion dollars from 
funding from this congress in local and regional meat and 
poultry processes.
    They will strengthen and provide greater enforcement of 
antitrust laws, including the Packers and Stockyards Act. They 
must do everything they have said. Congress needs to take 
action as well.
    Our policy recommendations are included in our submitted 
documents. I thank you all so much for the opportunity to 
testify here today.
    [Statement of Mr. Maxwell follows:]
    
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    Mr. Cicilline. Thank you very much, Mr. Maxwell.
    I now recognize Mr. St. Onge for five minutes.

                  STATEMENT OF PETER ST. ONGE

    Mr. St. Onge. Mr. Chair, Ranking Member, Members of the 
Committee, thank you for this opportunity to testify today. My 
name is Peter St. Onge. I'm a research fellow in economics at 
Heritage Foundation. I'm also a former professor teaching 
corporate strategy, and I have worked at both small companies 
and large manufacturers. The views I express in this testimony 
are my own and should not be construed as representing any 
official position of The Heritage Foundation.
    In my comments today I'll make two key points.
    First, the data strongly suggest that food production, and 
in particular meatpacking as well as grocery stores, is among 
the most competitive and efficient industries in America, 
indeed in the world.
    Second, the inflation Americans are currently suffering 
across the economy is due to a series of administration 
blunders that unfortunately continue. This administration is 
scapegoating food producers for this own mistakes.
    So, first, the question at hand. Does food industry 
concentration, especially in the meatpacking industry, explain 
food inflation? There are several key data points that argue 
strongly against this claim.
    First, the food industry has been highly concentrated for 
decades, and meatpacking has been at today's level of 
concentration since 1994. Yet, during those decades American 
food has been exceptionally cheap.
    One study found as a percent of income; Canadians pay 50 
percent more for food than Americans. Many European countries 
pay twice as much. Europeans are often amazed when they come 
here and see how cheap our food is.
    Indeed, American food is so cheap that we are among the 
biggest food exporters on Earth. We export 25 percent of what 
we produce, specifically because our industry is so competitive 
and so efficient.
    The other key data point is profit margins. Across the food 
industry, and specifically in meatpacking, profit rates are 
among the lowest in our entire economy. Consumer companies 
often register 20-30 percent profits margins--this is revenue 
going to shareholders--yet the top four meatpackers have 
margins between 5-8 percent. For grocery stores, also 
scapegoated by the administration's allies, profit margins 
hover around one percent. For comparison, on the same method, 
Citibank is at 30 percent, Apple 26 percent, and Berkshire 
Hathaway, Warren Buffet's collection of folksy businesses like 
See's Candies, comes in at 25 percent.
    In sum, the numbers suggest strongly that our food 
industry, including meatpackers, are among the most competitive 
and most efficient on earth. We shouldn't be attacking them; we 
should be holding them up as a model.
    So, what is driving today's inflation in food? The same 
things that are driving inflation across the board: Misguided 
policies from this administration that have led to too much 
money chasing too few goods.
    These include, first, flooding the economy with trillions 
in deficit spending, which drives a wall of money up against an 
already struggling supply chain.
    Second, paying millions of people not to work or to drop 
out of the workforce altogether. Now threatening to drain 
millions more via vaccine mandates, or the separation of work 
and benefits in Biden's Build Back Better proposal.
    Third, soaring regulations, including environmental and 
labor mandates, which can raise costs, reduce supply in the 
store of markets, all of which drive inflation, while 
incidentally tilting the playing field in favor of larger 
companies that are better able to negotiate these regulations 
at the cost of smaller or local businesses.
    Fourth, protecting union monopoly chokeholds over critical 
infrastructure, such as the Ports of Los Angeles and Long 
Beach, which are essential to the flow of goods and inputs to 
American factories and to American families.
    Finally, this administration has conducted what I would 
characterize as a war on production, particularly on energy 
production, in the form of regulation, mandates, distortions 
that can both hike prices and that can soak up an ever-greater 
share of the consumer dollar, leaving less and less for the 
people who actually make the things we need.
    I thank you for your time.
    [Statement of Mr. St. Onge follows:]
    
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    Mr. Cicilline. Thank you, Mr. St. Onge.
    I now recognize Mr. Manne for five minutes.

                  STATEMENT OF GEOFFREY MANNE

    Mr. Manne. Thank you, Chair Cicilline, and thank Ranking 
Member Buck, Chair Nadler, Ranking Member Jordan, Members of 
the Subcommittee. Thanks for having me here today.
    As Mr. St. Onge suggested, there are a number of possible 
explanations for the rise in consumer food prices over the last 
year: Increased demand driven by fiscal stimulus, disruptions 
arising from an unprecedented set of simultaneous supply and 
demand shocks, the incentive effects of government responses to 
the COVID pandemic, and an increase in money supply, among 
others.
    They're all interrelated and surely all have contributed in 
some degree to current headline inflation woes. What's not a 
plausible explanation is increased concentration in the 
exercise of market power in the food supply chain.
    It's hardly surprising that shifting consumption patterns 
and the post-vaccine reopening of the economy have led to 
short-term frictions like backlogs and shortages and disruption 
throughout the supply chain, all which are clearly associated 
with important relative price movements.
    They aren't strictly inflation in the sense that all prices 
and wages aren't increasing together. These shocks are mostly 
likely transitory, and higher prices will recede when the 
supply chain returns to normal. That is, as long as sensible 
economic fiscal policies predominate.
    In the face of the harsh political realities of the current 
State of affairs, there's no guarantee that they will. Rather 
than accepting these extremely likely causes of the recent 
increase in prices, some, including the White House, have 
seized the opportunity to blame inflation on a widespread 
pandemic of greed and collusion, but business, especially that 
of meatpackers, grocery stores, and oil companies.
    Corporate concentration is bad for Americans is a nice 
slogan, but it's not economic analysis. Correlation isn't 
causation.
    It's no coincidence either that food and energy prices are 
excluded from core inflation because they are particularly 
sensitive to demand and supply disruptions and can be 
misleading. Yet, those are exactly the industries we're looking 
at today as if they're bellwethers.
    Critics of American business blame years if not decades of 
so-called rising concentration. It's claimed that the increase 
in concentration stems from mergers and acquisitions over the 
years that were blessed by lax antitrust regulators or merely 
overlooked by agencies.
    These critics give the impression that in virtually all 
corners of the American economy lurk sleeper cells of colluding 
cartels that activated their plans just as the country went 
into lockdown.
    Under this thinking, vigorous antitrust enforcement will 
punish the colluders and stop the scourge of rising prices, but 
it won't. The purpose of antitrust law in the U.S. is to 
protect competition, not to guarantee low prices in and of 
themselves. When demand suddenly spikes and the labor pool 
suddenly dries up, higher prices are a good thing as a result 
of competition, not monopolization.
    It's entirely misguided to look at extremely long-term 
causes for short-term problems. Consumer prices have been 
sharply increasing for less than a year. Market concentration 
numbers in every relevant market at issue have been in place 
for far longer, decades even. I don't really understand how a 
market structure that hasn't changed since 1990 can be blamed 
for a sharp, radical rise in prices in 2021.
    The closest anyone has come to a legitimate answer to that 
question is to say that the ability to exercise market power 
enabled by those market structures is dramatically increased 
when demand and supply shocks occur because they can facilitate 
the pass-through of higher costs.
    This explanation, still the best one there is, contains the 
seeds of its own demise. Its very premise is that there exists 
an exogenous demand and supply shock that's being exacerbated 
by existing market structures. By definition, the exacerbating 
force isn't the cause of the underlying shock.
    At the same time, even within the industries that have seen 
particularly newsworthy price increases, the subject of today's 
hearing, the complex competitive dynamics of those industries 
responding to disruption offer far more plausible explanations 
of current prices.
    In the first place, I should say it's not entirely clear 
where claims of dramatically increased food prices actually 
come from. It's not that food prices aren't up, they are. It's 
that food prices aren't up by appreciably more than overall 
consumer prices.
    That's important because it suggests that explanations for 
food price increases that rely on industry-specific exercise of 
market power aren't supported by the data. Indeed, virtually 
every economist and scholar who studies the industry pegs last 
year's food price increases to shifts in consumption patterns 
and supply chain disruptions related to the pandemic.
    Plenty of those commentators recognize the concentrated 
nature of elements of the food supply chain, particularly in 
meatpacking. Yet, copious studies explained that concentration, 
and none find the causal connection between it and higher 
prices.
    In fact, quite the opposite. Several studies find that 
there is market power among meatpackers that correlates with 
increased concentration, but also that scale and scope 
efficiencies more than outweigh, sometimes by orders of 
magnitude.
    When you move past the tendentious headlines of political 
scapegoating, it turns out that the specific characteristics of 
the responses to disruptions from COVID are consistent with 
competitive markets. Thank you very much.
    [Statement of Mr. Manne follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
  
       
    Mr. Cicilline. Thank you, Mr. Manne. Thank you to all the 
Witnesses for your opening statements. We'll now proceed under 
the five-minute rule with questions, and I'll begin by 
recognizing myself.
    Mr. Maxwell, I'm going to start with you. One question many 
of us have about rising prices is really why now? Some of my 
colleagues just made an argument that it was really government 
regulation, which of course has existed forever, and spending 
under the Biden Administration that are really the culprits.
    Which of course ignores the fact that after the COVID-19 
outbreak, former President Trump signed bills providing $3.4 
trillion in relief funds, and gave a $1.9 trillion tax cut to 
the wealthiest Americans at biggest corporations. So, that 
money was pumped into the economy.
    By comparison, the American Rescue Plan, signed by 
President Biden rendered $1.9 trillion of aid to everyday 
working people in this country struggling to make ends meet. 
So, it's kind of hard to figure out why that would be the 
cause.
    So, that's my question, is it fair to blame current price 
increases on the Biden Administration, or does the problem lie 
in the way that our markets are structured? If so, what can we 
do about it? That's for you, Mr. Maxwell.
    Mr. Maxwell. Thank you, Mr. Chair for the question. First, 
what we need to do about it is to look at putting a moratorium 
on acquisitions and mergers and increasing further 
concentration.
    The Sanderson Farms deal with Continental-Cargill will take 
the poultry CR4 from 54-60 percent. That's the wrong direction. 
Or, as Trina outlined, those farmers will continue to be in 
harm's way.
    We need to have a lookback provision. I agree with Mr. 
Manne, if everything is going right then there shouldn't be a 
problem with providing a lookback provision like Senator 
Klobuchar's legislation is.
    I think that what we have to do is we have to take a strong 
review of what has happened in the marketplace, look at the 
profits within certain sectors like the fertilizer sector, and 
make the determination if that market power has extracted 
excessive wealth from those communities.
    Mr. Cicilline. Thank you. Mr. Needler, you're a third-
generation Ohio grocer who's witnessing every day what is 
happening to America's Main Street in the face of rampant 
consolidation by corporate giants. What can we do to make sure 
that individual grocers like you have a fair shot competing 
with the big box companies?
    What is your response to those who say that independent 
businesses are looking for a handout or some special rules to 
just thwart larger, more successful competitors?
    Mr. Needler. That's a great question, thank you very much. 
Look, I think that we're equipped to compete if the rules are 
fairly enforced. I think we're asking you all to look at an 
enforcement strategy on the rules that are already there.
    If we can buy truckloads of the same lumber and the same 
quantities that the large few can, then it's not really an 
efficiency, it's really a market power issue, right. So, we can 
deliver products, we can serve our communities just as 
efficiently as they can.
    If I'm buying a truck, really the incremental value of one 
truck versus three trucks versus 100 trucks really becomes 
marginal and you can't see much efficiency gain. If we could 
just get the fair shake to have a level playing field, we will 
compete. We'll deliver product in efficient manners to rural 
communities, inner cities, and the like.
    Mr. Cicilline. Thank you, Mr. Needler. Ms. McClendon, thank 
you very much for your testimony today and the work that you've 
done to bring a light to how extreme market competition has 
harmed poultry farmers like yourself.
    You noted that the poultry industry is dominated by a few 
vertically integrated companies like Sanderson who maximize 
efficiency at the expense of contract growers struggling to get 
by.
    You explained how, within days of Sanderson announcing that 
it was being bought for four and a half billion dollars, 
Sanderson offered you a take-it-or-leave-it contract cutting 
your income by a third.
    What can we do to help ensure that independent poultry 
growers are in a position to negotiate fair terms and keep 
their businesses open and successful?
    Ms. McClendon. Thank you, Mr. Chair, for that question. In 
the poultry industry, one of our biggest burdens, of course is 
our debt. This is the burden that keeps us from speaking out. 
The contract is very one-sided.
    So, I would ask this Committee to--I'm not a fan of 
regulations, but I would ask this Committee to protect the 
farmer.
    A business partnership, you negotiate a contract fairly and 
equally for both parties. In the vertically integrated poultry 
industry, the farmer is not given a fair contract. It really is 
a take-it-or-leave-it. So, I would ask you to look at that 
issue that we have as growers and see what could be done to 
help give the farmer a fair shake.
    Mr. Cicilline. Thank you so much. My time has expired, and 
I now recognize the gentleman from California, Mr. Issa, for 
five minutes.
    Mr. Issa. Thank you, Mr. Chair. Boy, I'll tell you this--
I'll never forget when President Obama said elections have 
consequences, and I've never felt it more than today.
    I am perplexed. What is it at the docks that makes 100-plus 
ships sit out there, and what is it that makes those containers 
cost $17,000 a piece, if you can find them, instead of $3,500, 
which was the rate on the last day that President Trump was in 
office?
    Is it some sort of mystical hand or Archer Daniel or some 
large wholesale buyer, or is it Albertsons or Kroger? 
Apparently, it's one of them, isn't it? Perhaps Mr. Onge, St. 
Onge.
    Mr. St. Onge. St. Onge. Yes, the ports themselves are a 
huge part of it. The unions, the longshoreman unions who run 
those two Southern California ports, they have for years fought 
automation.
    The World Bank came out with a study late last year where 
they found that U.S. ports are among the absolute least 
efficient on earth, those two ports specifically, Los Angeles 
and Long Beach. They actually rank below Mombasa, Kenya or Dar 
es Salaam, Tanzania.
    We have atrocious port productivity, far lower than our 
major competitors. The reason for that very specifically is 
that those unions have fought any form of automation to 
safeguard their jobs, which incidentally pay roughly $200,000.
    Mr. Issa. Well, Mr. St. Onge, let me just maybe narrow it. 
In your opening remarks, and certainly we know that there's 
been no major mergers in this industry over the last one year 
or two years.
    Are we having an antitrust hearing because we have a 
disrupted supply chain, some gaming, certainly, by large 
companies to try to get their supplies?
    I'll give you just a quick example for you to opine on. I 
don't happen to have one in food, but I can tell you that when 
I visited on a bipartisan basis with the Port of Long Beach, 
what I discovered were containers stacked up that were not 
going back to Asia. So, ships were going back empty.
    I also discovered a number of the--and this included the 
longshoremen, explaining to me that large companies were buying 
whole ships to get their goods. That includes Amazon and so on.
    So, the question is, is the supply chain disruption, is the 
failure to deal with that on a national basis, creating an 
advantage for large companies by definition and fixing the 
supply chain, normalizing the workforce?
    Wouldn't that be the best way to give the small 
entrepreneur a fighting chance? In a time of shortage, aren't 
you going to always favor the people like Warren Buffet that 
can buy a whole ship if that's what it takes to get his 
deliveries?
    Mr. St. Onge. That's a great point, and absolutely. In 
fact, that's a theme throughout any sort of government 
intervention or regulation is that it tends to help the big 
guys and then the smaller operators have a much harder time of 
it. So, without a doubt, right.
    Larger companies are able to navigate this crisis better 
than smaller companies, that's a general pattern. So, 
normalizing supply chains would help those smaller firms.
    Mr. Issa. Question to follow up. Isn't that essentially big 
always a tradeoff? This is an antitrust Subcommittee, so we'll 
move off the pandemic for a moment.
    Isn't big, including our Witness from northwest Ohio who 
struggled to go from a few stores to over 100 stores, isn't big 
always the tradeoff of economy of scale, versus, quite frankly, 
coming up against the antitrust laws?
    Isn't that always been a tradeoff where you struggle to get 
as much economy of scale, as much market advantage, until or 
unless you come up against these laws which are designed not to 
give you an unfair advantage?
    Mr. St. Onge. Absolutely, and it's important in this 
discussion to remember that what's driving bigness is 
consumers. Consumers want lower prices; they want affordable 
goods that are of high quality. This is not some nefarious 
conspiracy. Consumers want lower prices.
    Now, large firms still compete very vigorously: Coke vs. 
Pepsi, Burger King vs. McDonald's. Indeed, the margins in 
grocery stores at sub one percent suggest that they can compete 
extremely fiercely.
    Fundamentally, we don't want to lose sight of the fact that 
the consumer's welfare is served by in many industries 
economies of scale.
    Mr. Issa. Last question--
    Mr. Cicilline. No, the time of the gentleman has expired. I 
let the Witness answer the question well beyond your time.
    So, I now recognize the Chair of the Full Committee, Mr. 
Nadler.
    Chair Nadler. Ms. Johnson, I'd like to ask you about how 
concentration in the food system impacts workers, in your 
opinion.
    The United Food and Commercial Workers Union, which 
represents 1.3 million workers in the United States and Canada, 
submitted a statement for the record that described the impact 
of COVID-19 on workers in meatpacking plants as devastating. It 
explained that meatpacking workers reported too crowded and 
closed facilities where they got sick and died in numbers 
disproportionately higher, relative to other industries.
    At the same time, these workers are paid wages that did not 
allow them to cover their medical expenses. How does 
concentration impact workers' wages and their safety in markets 
such as meatpacking, and how can our antitrust laws and other 
laws ensure that workers have safe work conditions and are paid 
livable wages?
    Ms. Johnson. Thank you for the question, Chair, and the 
discussion actually relates directly to the point that was just 
made around price and efficiency. When you set prices so 
artificially low that it allows only companies with access to 
large resources to survive, they have pretty much free rein to 
set wages, to establish working conditions with little 
repercussion.
    So, as we see sectors that have only a few companies in 
control, there's no meaningful check on the circumstances that 
they create for their workforce.
    So, there's a limit and a balance to how low you can drive 
prices and then a need to ensure that the costs of doing 
business are encompassed within that pricing model.
    In addition, there's not a linear relationship between 
prices and business practices at large. So, what you see in 
these large meatpacking companies as well as other dominant 
elements of the food system is a decision by these companies to 
profit and to cut costs in ways that harm workers, that harm 
the environment, and that are really completely disconnected 
from the price issues that we're seeing.
    Chair Nadler. Thank you very much. Mr. Maxwell, as Chair 
Cicilline noted, many of us are asking why prices are rising 
now. Is it fair to blame current prices on the Biden 
Administration or does the problem lie in the way our markets 
are structured?
    Mr. Maxwell. Thank you, Mr. Chair. I think that it is ill-
placed to blame this administration or the previous 
administration's response to an unprecedented pandemic, to 
blame the response of this Congress on the spike in inflation 
costs that we're seeing today.
    I think it's ill placed to blame inflation on the backs of 
the working men and women in this country. It is to tell them 
that they cannot ever have a livable wage because it will 
increase inflation to too high of a point.
    What I think we should look at is companies like fertilizer 
companies. We have submitted to this Committee a paper that we 
published yesterday that describes price gouging within the 
market.
    Yes, costs went up. The cost of goods went up from one 
company 51 percent. They have chosen to increase their 
manufactured gross margin by 680 percent. Fertilizer prices 
doubled. Farmers had expected to make a profit. Commodity 
prices are up. That would be good news for the Congress because 
that means farmers would need less subsidies. Fertilizer prices 
skyrocketed.
    Chair Nadler. Thank you.
    Ms. McClendon, thank you for your testimony. I appreciate 
independent farmers like you who continue to work hard to 
provide this country with the food we all need to survive.
    I'd like to know what we can do make sure you and other 
independent farmers are able to stay in business, and what are 
the consequences for independent farmers and for consumers if 
the poultry market remains concentrated to just a handful of 
large companies controlling the industry?
    Ms. McClendon. Well, I feel that the lack of competition is 
not always a good thing. When you have competition in the 
marketplace it allows for better contracts, better prices, a 
more open and free fair market, as I talked about.
    I'm not really sure exactly what you all can do. Part of 
the issues that we have as contract growers is that we were 
asked to take on a tremendous amount of debt burden in the 
hopes that we were promised that we're going to make big money 
and, yes, we do. My income is significant.
    However, none of that money sticks and because of the cost 
of rising prices right now; the cost of propane is my number-
one expense today and just propane for the winter months will 
cost me anywhere from $20,000-40,000, and that's a tremendous 
amount of income pouring out of my farm.
    Mr. Cicilline. The time of the gentleman has expired. I 
thank you for your testimony.
    I now recognize Mr. Fitzgerald of Wisconsin for five 
minutes. I'm sorry.
    Mr. Fitzgerald. Thank you, Mr. Chair. Mr. Manne, recently 
the Biden Administration has looked to antitrust as a way to 
fight inflation. For example, in relation to oil and gas, and 
also concerning, as we were just speaking about, agriculture 
and meat prices.
    Senator Warren said firms are too big, that Congress should 
expand antitrust laws and we should break up the big grocers. 
Another proposal is amending section 7 of the Clayton Act. 
Others have said antitrust is too focused on consumers and 
prices and instead should focus on a number of conflicting 
goals. Even some economists, including Larry Summers and Jason 
Furman, have characterized this as a distinction from Biden 
Administration's worsening supply chain crisis.
    Is it accurate that expanding antitrust laws as proposed by 
some of my colleagues on the other side of the aisle would 
simply reduce supply while stimulating demand, which, 
obviously, would be a recipe for more inflation?
    Mr. Manne. That's a good point. I think there's a couple 
things to mention here. Number one, I think it's notable that 
Senator Warren's call to break up big grocers was aimed 
particular at Kroger, which has about a 10 percent market 
share, and it operates in a very competitive market. It really 
strains credulity to think that presents an antitrust problem 
that we should be addressing and the cure will be worse than 
the disease.
    To your point, all the suggested interventions that we have 
been talking about today aimed or responding in the first place 
to increased prices, everything I hear today suggests solutions 
that would further increase prices.
    Now, there may be very good policy reasons to do that. It 
may be an important idea to protect farmers in certain 
circumstances, to protect the environment, to adopt regulations 
that have the effect of increasing prices. They will have that 
effect and I think that's the most important thing to keep in 
mind.
    That doesn't mean that the policies are inherently bad. It 
does mean, though, that those policies are raising prices.
    Now, if you're looking for things that raise prices, 
antitrust intervention into competitive markets is, certainly, 
one of them.
    So, I think it's incumbent on us to acknowledge those 
consequences of some of the regulations we have seen. That 
doesn't mean they're inherently bad, but let's acknowledge what 
the consequences are.
    Mr. Fitzgerald. Very good. Thank you. If I can turn to Dr. 
St. Onge. Doctor, you have significant experience and expertise 
in inflation-related issues and supply chains. So, I'm so glad 
that you're here today.
    It seems that this hearing would be better of examining how 
the President's favoritism towards unions is backing up the 
ports right now. I mean, that's real. That's a real thing 
that's happening out there and how in more of an ancillary way 
or a more comprehensive way environmental regulations have had 
an impact on the rising prices of food and overall effect on 
the supply chain.
    Could you give some examples of how those policies rather 
than industry concentration better explain the inflation that 
we see today?
    Mr. St. Onge. Absolutely. Thank you. That's a great 
question.
    California really kind of makes the case on regulation--how 
they contribute to the supply chain crisis. There are really 
two areas there--labor and emissions--and those two together 
they directly attack the supply chain at just about every 
stage.
    Truckers, railroads, warehouse workers, retail workers, all 
these groups are affected by labor mandates that can drive up 
the cost to employers, therefore, making it harder for them to 
employ more people.
    They can also, in California, for example, under the CARB 
standards on truck emissions those hit at the wrong time. They, 
effectively, took actually the majority of trucks in the 
country out of commission when it comes to the State of 
California.
    They actually wait at the border of California. They have 
to wait for a truck that's allowed in California to come to the 
border, which is about four hours. They transship and then that 
compliant truck goes back.
    This is insane during the worst supply chain crisis in a 
generation and, of course, the concern is that those California 
regulations there are Democrats in Congress who are interested 
in taking those nationwide.
    On the labor side with the PRO Act, which does not look 
like passing at the moment, and on emissions the EPA has 
expressed interest in bringing California emission standards 
over the rest of the country.
    If that occurs, that could spread the supply chain crisis 
far beyond California, which is key, because it's not the whole 
country--that could spread it across the country.
    Mr. Cicilline. The time of the gentleman has expired.
    I will say this as I recognize the next Witness--I will 
say, Mr. Manne, I don't think the Antitrust Subcommittee has 
ever heard testimony that claims antitrust interventions raise 
prices. That's the first time we have ever heard that. It's an 
interesting perspective for this Committee.
    With that, I recognize the gentleman from New York for five 
minutes, Mr. Jones.
    Mr. Jones. Thank you, Mr. Chair, and good morning everyone. 
I'm very grateful to our Witnesses for joining us today. I also 
want to recognize, of course, the distinguished Chair of the 
Full Committee for participating and holding this vital 
hearing, along with the Chair of the Subcommittee.
    Thanks to President Biden's American Rescue Plan our 
economy is experiencing the fastest recovery in United States 
history. Obviously, we still have work to do.
    Today, the American people are facing higher prices, 
especially for food. The biggest corporations have sold us a 
self-serving story about why prices are high. They want us to 
believe that, due to the pandemic, they've had no choice but to 
increase prices on the rest of us.
    That's simply not true. Sure, costs are up for many 
businesses. No one disputes that. Last year, United States 
corporations made their highest profit margins since 1950.
    Consider the biggest driver of rising food prices, meat. 
According to the National Economic Council, since the start of 
this pandemic, four of the largest meat processing firms have 
increased their collective profits over 120 percent, or more 
than double.
    Tyson increased beef prices so much that although they sold 
less beef than before, they made more money. These firms have 
even given $3 billion to shareholders in stock buybacks and in 
dividends.
    The truth is massive corporations do not have to impose 
record price increases on ordinary Americans amid this 
pandemic. Instead of paying their fair share of rising costs, 
they're making us pay the price, literally.
    Of course, if they actually faced competition from other 
companies, they couldn't get away with this. As we have heard 
today, they rarely face competition at all. President Biden put 
it best. Capitalism without competition is exploitation.
    Now, Ms. Johnson, you testified that key links in the food 
chain are controlled by just four massive corporations. For 
instance, in 1977 the four largest beef-processing firms 
controlled just a quarter of the market.
    Today, they control over 80 percent, and as an 
investigation by the Guardian and the nonprofit Food and Water 
Watch documented, four firms or fewer dominate the markets for 
nearly 80 percent of groceries.
    You opened your testimony by saying that although bad luck 
comes in threes, market concentration comes in fours. Would you 
care to elaborate on that for us, specifically, how does the 
domination of a market by just four corporations enable those 
firms to raise prices beyond competitive levels?
    Ms. Johnson. Thank you for the question, Congressman. I'd 
like to talk about the rule of fours, and then also raise some 
questions about it.
    So, as a general concept, when you have very few companies 
who have outsized resources and power relative to any other 
competitors in the marketplace, their power and wealth becomes 
sort of self-reinforcing.
    They can undercut competitors with artificially low prices 
until they drive them out of business and then hike up prices 
once they're gone. They can enter into new markets, kind of 
self-subsidizing until they have their foothold established, 
and then use their resources to change rules, to lobby, to 
market and do whatever it takes to succeed there at the expense 
of everyone else.
    At the same time, I do caution against an over-focus on 
these numbers, because the other fundamental elements of our 
antitrust laws are qualitative, they're just political, they're 
social, and they're about influence.
    Part of the problem with recent decades' trends in 
antitrust enforcement is an outsized focus on the numbers alone 
and an outsized focus on driving down prices with no political 
and social checks.
    So, what we're ultimately seeking with antitrust laws is to 
balance influence with price fairness and to ensure that 
companies bear their own costs of doing business, not the 
public.
    Mr. Cicilline. The time of the gentleman has expired. I 
presume the gentleman yields back. I now recognize the 
gentleman from Florida, Mr. Gaetz, for five minutes.
    Mr. Gaetz. Thank you, Mr. Chair. The American people are 
fatigued and frustrated by rising prices, by not being able to 
get the goods that they want or need. We've had a Biden 
Administration that has printed money like it's going out of 
style. It's declared a war on work with vaccine mandates, by 
paying people to stay home. In some circumstances encouraging 
school closures or allowing them so that people are forced to 
stay home. They've backed lockdown strategies that have killed 
restaurants, causing more people to increase demands at grocery 
stores.
    What you're being told by some in this hearing is that the 
reason that we are fatigued and frustrated at the grocery story 
is because Big Food, not because of big government. That's an 
assumption that I certainly think deserves challenging.
    I guess my first question is for Mr. St. Onge. Have the 
lockdown policy choices increased grocery demand in a way that 
might have spurred some of these challenges that consumers are 
facing?
    Mr. St. Onge. Thank you for that question. I do want to 
take a moment to agree with the other Witness, Mr. Manne, that 
antitrust often does raise prices. So, I would second that 
opinion.
    Thank you for that question. Without a doubt, it did. Part 
of the impact was just the mix of products. People tend to buy 
higher priced cuts when they're cooking at home. A school 
cafeteria or restaurant might optimize lower prices. Then part 
of it was also simply supply disruptions.
    So, there was a long period during the pandemic where there 
were too many cows, not enough beef. We also saw similar 
dynamics in lumber. So, there have been disruptions really 
across the economy.
    Final point is that inflation itself tends to create a sort 
of illusion of profit. Many firms will book the goods they sell 
at the purchase price, right. Now, you could argue they should 
look at the replacement price, but at any rate, a certain 
amount of apparent profit during in an inflation is an 
illusion, so right.
    There are a number of factors, either related to the 
lockdowns during the pandemic or to this inflation itself.
    Mr. Gaetz. In your research, have you looked at the extent 
to which the policy choices that have disincentivized work have 
impacted the supply chain and the amount of folks that are able 
to move product and onboard product and shelve product for our 
fellow Americans?
    Mr. St. Onge. Absolutely. That's precisely what's been 
happening with the benefits, delinking benefits from work. That 
does not take dentists out of the business, it takes warehouse 
workers, retail workers, transportation workers out.
    Mr. Gaetz. So, the worst things that the Biden 
Administration has done to the workforce are felt most in some 
of these areas that impact our food, isn't that right?
    Mr. St. Onge. That's exactly right.
    Mr. Gaetz. Now, one of the policy recommendations that 
we've heard some of our colleagues reference in this hearing 
support moratoriums on mergers and acquisitions. Of course, 
we're the United States Congress, we only have jurisdiction 
over what happens in our country.
    If we were to do that, what impact would it have, if any, 
on global consolidation? Because I seem to see that 
particularly Chinese investors are consolidating globally. If 
we were to deconstruct American companies, would that make us 
less competitive with the Chinese problem?
    Mr. St. Onge. Yes, that's a great point, and that would be 
the tendency.
    Mr. Gaetz. I have to say there's a specific circumstance, 
Mr. Chair, that deeply concerns me. So, while we may not get 
bipartisan agreement for a total moratorium on mergers and 
acquisitions, the Smithfield Foods case study is one where I 
think we could get agreement.
    In that case, Smithfield Foods, Inc., sold to China. They 
sold to the WH Group of China. Now, they're a wholly owned 
subsidiary. So, the largest in the world, based in Virginia, 
that runs a lot of the pork brands that American consumers are 
familiar with, is Chinese.
    I don't think that's good for our fellow Americans, and I 
don't think that makes us more resilient. So, maybe if we don't 
stop Americans from buying American companies, we can at least 
stop the Chinese from consolidating and improving their 
advantage over us.
    Mr. St. Onge, the regulatory environment has persistently 
put pressures on food prices. If the USDA allowed more direct 
to consumer for smaller, most sustainable, more environmentally 
friendly farms, would that help people access more locally 
grown food at a lower price?
    Mr. St. Onge. Yes, it absolutely would. That's one of the 
areas that the industry could really benefit from congressional 
action is making it easier to enter the industry, particular 
for smaller businesses. We've got a couple Witnesses here 
represent that group.
    So, without a doubt, whether it's making inspection regimes 
more logical with more input, whether it's waters--there are a 
number of environmental rules that cause a lot of risks for--
costs for growers. So, absolutely, being proactive in that area 
would help.
    Mr. Cicilline. The time of the gentleman has expired.
    Mr. Gaetz. I yield back.
    Mr. Cicilline. The gentleman yields back. I now recognize 
the distinguished gentleman from New York, Mr. Jeffries, for 
five minutes.
    Mr. Jeffries. Thank you, Mr. Chair, for your continued 
leadership on this important issue.
    I also thank Ranking Member Buck for his continued work and 
partnership to try to work through these issues, not as 
Democratic issues or Republican issues, but as American issues, 
to try to resolve on behalf of everyday Americans and the 
American consumer.
    Let me ask first Michael Needler, you testified I believe 
that grocery store conglomerates have used the pandemic to 
entrench their market power. That process has hurt small and 
independent grocers. Could you elaborate on this testimony?
    Mr. Needler. Sure thing. So, when we go to market, there's 
a couple of ways you can go to become more competitive in the 
marketplace. The first way is to be an EDLP, and I think we all 
know that the largest players get basically the lowest price on 
a regular basis.
    Smaller retailers like myself will pay a little bit higher 
on the regular basis, but then we'll have promotion prices that 
will be passed through, what are called allowances. There's 
also shopper marketing dollars, slotting dollars, so on and so 
forth, that are--that the consumer-packaged goods try to 
deliver to us.
    During the pandemic, because of the demand, they didn't 
want to promote anything. As a result, our costs went up, 
meaning if four out of every five weeks we pay X, but then that 
fifth week we can pay less, we can buy in, we can be more 
efficient, then we can try to flex and compete.
    Well, during the pandemic, we definitely had no ability to 
get those deals. Consequently our costs went up considerably 
higher than our competition on an EDLP basis.
    In addition to that, we gained market share. Why did we 
gain market share? Because I think consumers wanted a smaller, 
more convenient shopping experience, a cleaner shopping 
experience, places they could trust a little bit better.
    That's all well and good, but in spite of the fact that we 
gained market share, the CPGs acted almost irrationally. They 
continued to allocate additional products to our competition, 
who had lost that market share.
    Why did they do that? Why would that act irrationally, you 
might ask, and I think it's because of supplier power--or 
excuse me, buyer power. So, they exerted some of that quasi-
monopolistic power.
    You can look at the chicken farmer on this panel who poses 
a very good example, but then you can think about a major CPG 
like Proctor & Gamble or Clorox, right? They are almost in the 
same boat as Ms. McClendon is when you're competing or when 
you're trying to sell to a huge organization like--I'll name 
Walmart for example. Their power is so great that they can 
influence access to the products, they can influence the 
pricing of the products. In the short run, it might feel like a 
positive impact for the consumer, but in the long run, I can 
give very real examples where Mr. Manne said that, you know, 
that it ultimately will impact the pricing, but there in a 
negative way.
    I could tell you that--
    Mr. Jeffries. Well, let me stop you right there and ask 
that question.
    Mr. Needler. No problem.
    Mr. Jeffries. So, if in the short term these major 
conglomerates are able to extract lower prices based on their 
concentration of power, but if that ultimately results in small 
businesses, small grocers going out of business, how does that 
ultimately impact the consumer?
    Isn't it logical, I believe, as Ms. Johnson testified, that 
ultimately that will have an adverse impact on the consumer? 
Because once the competition is wiped out, the market will 
allow for them to dramatically increase prices.
    Mr. Needler. Look, bigger isn't necessarily bad. We just 
are looking for a fair playing field, right. So, if they can 
use undue power to influence their supply, undue power then to 
take that margin, keep it, and apply it to smaller markets, 
they can wipe the small independents out of business.
    At that point, and I've seen it happen, they will 
underserve the community with higher prices and lower--and 
higher out-of-stock conditions.
    Mr. Jeffries. Isn't it also fair to say that sort of small, 
more independent grocer who's got a familiarity with the 
communities that they serve can actually be more responsive, 
given the great diversity that we have in America across many 
different measures, as compared to if we just were served by 
the larger big box entities?
    Mr. Needler. Mr. Chair, I see almost ten seconds to answer, 
so I'll be quick. The answer is yes. We feel that we're very 
resilient and we can be very agile because we are smaller. We 
contract with hundreds of independent and locally owned farms 
to try to supplement our supply chain. We have multiple 
wholesalers do our upwards of $30 billion.
    So, we've got efficiency, and we've got resiliency. I think 
that that ultimately could benefit us, and has benefitted us 
through the pandemic.
    Mr. Jeffries. Thank you so much. I yield back.
    Mr. Cicilline. The gentleman yields back. I now recognize 
the gentleman from Louisiana, Mr. Johnson, for five minutes.
    Mr. Johnson of Louisiana. Thank you, Mr. Chair. Apologize, 
I'm multitasking this morning, like all of us, and I've heard 
parts, bits and pieces of the answers and questions.
    I don't want to retread a lot of ground here, but I just do 
need some clarity in think for, not only for myself, but for a 
lot of my constituents who may be watching this hearing now or 
seeing the tapes later. So, let's boil it down to the essence 
of this thing.
    Everybody agrees that we've got a crisis on our hands in 
regard to empty store shelves and inflation and all the rest. 
The food chain supply is big problem. I have constituents in 
Louisiana who are spending half of their paychecks on groceries 
right now. It's not a sustainable trajectory that we're on.
    So, we all agree on the problem, the question is what are 
the actual drivers of this crisis? My Democrat colleagues tend 
to blame corporate greed. I'm not sure that that is the best 
analysis of what we're facing here.
    So, I know we have differing viewpoints on this, but let me 
just ask Dr. St. Onge to summarize as best you can. Is it 
corporate greed, or what would say if you had to identify in 
layman's terms what the biggest drivers for all this inflation 
truly are?
    Mr. St. Onge. Thank you for that. Some of it is simply 
rebounding from COVID. There are shortages, there are price 
hikes all over the world. Now, the U.S. is far worse than 
Europe or Japan, so something bad is happening here. In my 
opinion, that is being driven by poor policy choices.
    So, spending, paying people not to work, regulations, 
particularly on labor and emissions, and union chokeholds on 
critical infrastructure.
    Mr. Johnson of Louisiana. When we talk about policy 
choices, is it specifically Federal over-regulation that you 
think, of the food chain supply that is partially responsible 
for the inflation problem?
    Mr. St. Onge. Yes, I think regulations, in general, are 
partially responsible. As Mr. Manne alluded earlier, any sort 
of scrutiny, rules, micromanaging impositions, these tend to 
distort markets. They also tend to drive prices up and supply 
down.
    Mr. Johnson of Louisiana. Yeah, and I appreciate Mr. 
Manne's opinion on that as well. What about vaccine mandates, 
this idea that we've given out billions of dollars in free 
money under the American Rescue Plan. I mean, are those also 
contributing factors to this?
    Mr. St. Onge. In my opinion both are. Vaccine mandates take 
ever more workers out of the supply chain and, of course, 
benefits unlinked to work also induce people to stay home.
    Mr. Johnson of Louisiana. See, our view as differs the 
Republican response to this is different than the Democrat. Not 
to make this a partisan issue, but the approach to the crisis 
is different. So, our Democrat colleagues want to--their 
reflexive response is to further grow the Federal government, 
to give more power to the FTC and the DOJ and other agencies. 
We look at the response and say no, that is putting fuel on a 
fire. That makes it worse. We need to get back to the free 
market.
    So, Dr. St. Onge, how would you characterize the effect of 
the Biden Administration's attempt specifically on the vaccine 
mandate? I mean, we instinctively sort of intuitively know 
that's part of the problem, but these private employers are 
telling us that this is imposing a real hardship.
    It's fair to say farmers, meatpackers, truck drivers, and 
other workers in the food chain are adversely affected by this. 
Isn't that, right? Is that intuition that we have, is that 
correct?
    Mr. St. Onge. That's absolutely right. The National 
Truckers Association has been really sounding the alarm. A lot 
of truckers do not want to get vaccinated and we need them 
right now.
    Mr. Johnson of Louisiana. How specifically--I'm running out 
of time here, but how specifically do you think Congress could 
rein in inflation and improve economic circumstance for the 
American people? What are specific policy choices, if we were 
going to the opposite, what do you think we should do in a 
minute?
    Mr. St. Onge. Probably the single biggest changes are 
bringing competition to the port monopolies. That would likely 
have a very quick impact. Then regulation really across the 
board against producers standing down on some of this scrutiny 
and sort of going after them. Rather actually removing 
regulations.
    President Trump did do that early in the pandemic, right. 
Supply chains were creaking, there was a lot of concern. He sat 
down with various industries and said how can we, the Federal 
government, proactively get out of the way. That's what could 
be done.
    Mr. Johnson of Louisiana. What a concept, right? Get the 
Federal government out of the way. Reagan said, ``Government is 
not the solution to our problem, government is the problem.'' 
We subscribe that. I'm out of time, I yield back.
    Mr. Cicilline. Thank you, Mr. Johnson. You're not actually 
out of time, so if you wanted to yield that last 16 minutes and 
just say one sentence.
    Bringing competition to monopolies and more regulation is 
what Mr. St. Onge just recommended. That's exactly what this 
Committee is committed to doing, more competition. So, that's a 
good market-based answer.
    I now recognize Mr. Neguse from Colorado for five minutes.
    Mr. Neguse. Thank you, Mr. Chair, for holding this hearing 
today. Over the course of the pandemic, we have seen, and as 
we've heard today during the course of this hearing, that when 
major suppliers of consumer products are faced with limited 
supply and high demand, they prioritize their biggest retail 
customers like Walmart and Amazon over small and independent 
retailers.
    Those choices impact not only the businesses, but 
ultimately the communities that they serve. Independent grocers 
are more likely to be located in lower income or rural areas, 
including parts of my district, rather than chain stores. These 
communities are more likely to experience hardship when trying 
to access essential goods.
    There are businesses, many of which, that drive our Main 
Street economies and are at the heart of our communities. 
Without them, we can expect to see the number of food deserts 
increase and employee wages decrease. So, it's essential that 
this Committee steps in once again to promote competition 
before it's too late.
    Mr. Needler, and I know this has been discussed already 
during the course of this hearing, but independent grocers, 
which as you know are family- or employee-owned grocery 
retailers, often act as an economic anchor in their 
communities, attracting consumers, generating foot traffic that 
creates opportunities for other area businesses.
    Food and Water Watch recently reported that 70 percent of 
all grocery sales come from the four largest grocery chains in 
the country, up from 23 percent in 1993. I wonder if you could 
expound a bit on what that kind of high level of concentration 
in the grocery market means for the ability for small 
independent grocers to be able to keep their shelves stocked.
    Mr. Needler. Thank you for your question, and I think your 
comment started out with the impact of independent grocers. I 
think a lot of us have either started our first careers in a 
grocery store bagging groceries or we know somebody in our 
family who has.
    We teach ethics, a work ethic, we teach accountability, and 
it's a great starting point for a lot of the communities from 
an entry point in the workforce. We also are a great career for 
many people, with good paying jobs with a good trade and a good 
skill. Cutting meat is not something that you can just come off 
the street and know how to do.
    We produce a lot of products in our store, and we nourish 
our community with healthy, wholesome products, which 
apparently really is noticed when we leave. When you create 
food deserts, all of a sudden someone realizes what they were 
taking for granted.
    So, as you see the growth and consolidation of these power 
buyers, they are able to influence an undue influence over the 
supply chain and the suppliers. If we could just--all we're 
asking for is an enforcement of existing legislation. Maybe we 
need to tweak it and look at something that was written 70 or 
80 years ago.
    The fact is what we're trying to do is increase competition 
by just having a fair set of rules. If I'm going to buy as much 
as my competition, then hopefully that will allow me to have 
the same price. That price is a very, very important 
determination in where people choose to support for their 
grocery choices.
    So, yes, fair competition, fair competition is great. I'm 
not saying big is bad, I'm just saying we want to have rules 
that ensure that folks like me can come to the table and get 
specific types of products. They hide under class of trade.
    So, they'll give dollar stores a smaller item, and they'll 
be charging more per ounce, but it looks like a cheaper price 
than something that's on my shelves. Well, I'm not even able 
by, the CPGs, won't even sell that to me. That's not fair. I 
want a fair table set for me to compete.
    Mr. Neguse. Well, I certainly agree. It touches on 
something you mentioned in your written testimony with respect 
to suppliers no longer allowing or eliminating the promotional 
allowances that they had typically, conventionally done for 
independent grocery stores on many products.
    So, in any event, I think the request that you and 
independent grocers are making across the country is a 
reasonable one for an even playing field. I think that 
statistic that I mentioned, the fact that we've gone from 23 
percent of grocery sales in 1993, coming from the four largest 
grocery chains, to 70 percent, literally almost three-fourths 
of the entire market should--it's a sobering statistic, and it 
should alarm every American.
    I think this Committee has a role to play in terms of doing 
its part to promote competition, which in turn benefits our 
constituents and consumers writ large.
    So, with that, Mr. Chair, I would yield back the balance of 
my time.
    Mr. Cicilline. I thank the gentleman. The gentleman yields 
back. I now recognize the Ranking Member of the Full Committee, 
Mr. Jordan, for five minutes.
    Mr. Jordan. Thank you, Mr. Chair.
    Mr. Manne, in opening statements from my Democratic 
colleagues, they said that the concerns in our food supply and 
concerns with pricing are due to--if I got this right, they 
said that it's due to the virus, it's due to weather, and it's 
due to some large companies.
    I didn't hear, and I had to step out for a different event, 
and I just got back, but I didn't hear anything about that 
attack on American energy we've seen from Democrats.
    I sat in a hearing a couple months ago where a colleague 
for mine from the Democrat side of the aisle with oil and gas 
companies that said, will you pledge today to decrease 
production? I'm like, what do they want, eight-dollar gas?
    Everyone knows when you drive up the price of fuel, you 
drive up the price of every other good and service that the 
American people get. Because it costs more to transport in this 
situation that we're talking about today, to transport food 
products to the American people.
    I didn't hear any mention about the pipeline that they've 
stopped, which further exacerbates the problem. When you tell 
American companies don't produce more, pledge to produce less, 
and, oh, by the way, we're going to get rid of a pipeline. I 
didn't hear anything of that.
    Frankly, I didn't hear anything, maybe it's come up since--
while I was gone maybe it came up. I didn't hear anything about 
the record level of spending from Democrats, which has given us 
a 40-year high in inflation.
    Then my friend from Ohio, Mr. Needler, raised a potential 
remedy. I don't know if it's the right remedy or not, but it's 
a law that's on the books, the Robinson-Patman Act. Last time I 
checked, to bring that kind of action, it has to come from the 
FTC or the DOJ. They're both controlled by Democrats, and I 
don't know of any initiative from the FTC or the DOJ regarding 
that.
    So, I guess what's next, and we've already heard Democrat 
Senators talk about this, are they're going to look at price 
controls? Which anyone with any common sense in economics will 
tell you is only going to exacerbate the problem that we have.
    So, am I missing something, Professor, or is that a fair 
summation of what we heard?
    Mr. Manne. That's pretty darn good. I don't know that I 
have too much to add to it. As I said before, regulatory 
interventions for particular social or political purposes 
typically raise prices. Now, they may be justified, or they may 
be thought to be justified. Pretending like they don't have 
that consequence is silly.
    So, if you're looking for a culprit, that's doubtless one 
of them, part of it. I don't know how much, but it's certainly 
part of it.
    You're absolutely right about oil and gas in particular. As 
you said, there's no question that if you curtail the 
production of oil and gas, you're ultimately going to end up 
raising transportation costs, and then prices for consumers. 
Whether that's a good idea or not, I don't know, but again, 
let's not pretend like that isn't the consequence. It 
absolutely is.
    With respect to the Robinson-Patman Act, think there aren't 
a lot of areas in economics that everyone agrees on, virtually 
everyone agrees on. The consequences of Robinson-Patman Act 
enforcement is one of those.
    It shouldn't be surprising. The intention behind that law 
was to raise prices. So, that Robinson-Patman Act enforcement 
would raise prices is--shouldn't be very surprising, but it 
absolutely does.
    Now, again, whether there may be some countervailing 
benefits to that, I don't know. Let's not pretend like that 
doesn't happen.
    Mr. Jordan. When you spend like crazy and create a 40-year 
high in inflation, when you make the cost of fuel higher, and 
when you add regulation, you will drive up costs. So, those are 
the three things that we know have been done, and it seems to 
me the Democrats are suggesting we keep doing all three and 
somehow, oh, it'll work this time.
    So, I just don't see that. I think that's probably going to 
exacerbate a problem. If there are some real solutions that we 
can focus on, I'm all for them. I don't think my good friends 
on the other side of the aisle are offering up those solutions.
    With that, Mr. Chair, I would yield back.
    Mr. Cicilline. The gentleman yields back. I now recognize 
the gentlelady from Pennsylvania, who is graciously managing 
our floor on the bill in a moment. A little out of order, Ms. 
Dean for five minutes.
    Ms. Dean. Thank you, Mr. Chair. Thank you for bringing us 
this important hearing. Thanks for recognizing me now.
    I also want to thank our testifiers, particularly the 
growers and independent retailers, who take such pride in their 
work feeding our country. Of course, providing terrific jobs 
and choice along the way.
    We all know that we're in the midst of a global pandemic 
and an economic recovery. The last thing that Americans need to 
worry about is putting food on their table. I represent 
suburban Philadelphia, Montgomery, and Berks Counties in 
Pennsylvania. In my district, the average price of food went up 
about 1.6 percent between 2020 and 2021.
    Mr. Needler, I was reminded when you said, ``that one of my 
very first jobs was as a cashier and bagger at an independent 
grocery store when I was in college.'' Americans are paying 
higher prices for groceries. With higher prices, everyday 
Americans face difficulty.
    Grocery stores such as yours are also having trouble 
keeping their shelves stocked. In my district, we enjoy some 
terrific smaller, midsize, independent retail grocery stores 
like O'Neill's and Delilah & Dean--it's no relation to me--
George's Market, and others. They provide jobs, they provide 
choice. They stimulate our economy. What challenges do 
independent grocers like these have in stocking their shelves 
and continuing to grow our economy and feed America?
    Mr. Needler. Thank you very much for your question. The 
crux of my position today is that, if we could try to--Mr. 
Manne talks about the short-term impact on Robinson-Patman, but 
I think that you need to look at it almost like a zero-sum 
game. If you push down on one side of a waterbed and the other 
side goes up, it doesn't necessarily mean that there is--
because it was rising on one side doesn't mean there is more 
water in the bed. It is just shifting. So, if you have market 
power in a few that pushes the cost to the rest, it is a zero 
sum, but it makes it an unfair advantage for the long run.
    So, the goal I think that we are trying to have is a very 
stable supply chain in terms of pricing and a fair supply 
chain. So, what challenge we would be facing is, as costs go up 
throughout the entire chain from producers to transportation, 
we can point to a lot of things, and the gentlemen have already 
done a great job of articulating that--labor, freight, all very 
real, very real costs that we are experiencing. The biggest 
players are able to resist that. That is good in the short 
term. The suppliers have to pass that on. They have to pass 
that on, and the only people that they will be able to 
negotiate--and really, we don't have a choice--is the small 
guy, like myself, and we have to take the higher prices.
    So, actually, I was in a supplier meeting the other day 
that they were going to pass this on, and we will keep an eye 
on whether the competition moves their retail or not, and if 
they don't, we will come back to you. I don't even know what I 
am supposed to do with that. How do I explain that to my 
customer? So, that is a very real example, and I can tell you 
lots of real-time examples of where I think we have got 
economists looking at big data, metadata perhaps.
    I can tell you very real examples where I just need people 
to go to work and come to work. We have experienced an 
unprecedented turnover, over 100 percent turnover, during this 
last year. Never heard of anything like that. Folks are not 
interested in going to work, and if we could get people back to 
work faster, that would certainly start helping.
    Ms. Dean. Okay. Thank you. Mr. Maxwell, you discuss the 
concentration of America's food supply and agricultural market. 
Can you explain how this makes supply chains brittle and unable 
to withstand the shock of the COVID-19 pandemic?
    Mr. Maxwell. Yes. Thank you for the question. With growth 
and expansion, and add vertical integration, our supply chains 
now are stretched not only nationally, but globally, with one 
dominant firm or three dominant firms controlling that supply 
chain. When there is a disruption in the middle, one of the 
links breaks, then it affects or impacts a larger community; 
whereas, if we would focus on local and regional food systems, 
which have shorter chains and links, then a disruption or a 
break in a link would have less impact on great numbers of 
people. It would have impact on fewer numbers of people.
    So, building resiliency into the food system should be a 
priority of the Congress, and looking at local/regional systems 
to do that. Mr. Needler's stores are very important in that 
system. He has a Yellowbird Foodshed, I believe, in Ohio that 
is a tremendous service during the pandemic. It is not time to 
talk about it here, but someone ought to talk to Mr. Needler or 
the friends we have out in Ohio about how important that is.
    Ms. Dean. How all these workers are front-line workers and 
how they served us during this pandemic.
    Thank you. My time has expired. I yield back.
    Mr. Cicilline. The gentlelady yields back. I now recognize 
Mr. Steube, the gentleman from Florida, for five minutes.
    Mr. Steube. Thank you, Mr. Chair. Mr. Maxwell, is it true 
that you are the Vice President of outreach and engagement for 
the Humane Society of the United States?
    Mr. Maxwell. I am not currently the Vice President of the 
Humane Society of the United States. I was in the past a Vice 
President of their outreach and engagement and rural 
development.
    Mr. Steube. Is it also true that you advocated for 
Americans to eat less meat, saying that it is, quote, ``good 
for the planet, for the environment, and for the animals.'' Is 
that correct?
    Mr. Maxwell. I don't know that quote, but what I would say 
is this: What is extremely important for us in this country is 
to have a local/regional food system that feeds our neighbors 
healthy, safe foods; that respects the land, the animals, and 
the community for which the production and processing occurs. 
That is my view.
    Mr. Steube. I would ask unanimous consent, Mr. Chair, to 
put into the record Brownfield Ag News, January 21, 2015, 
titled, ``HSUS' Maxwell Says `Less Meat' Is Good.''
    Mr. Cicilline. Without objection.
    Mr. Steube. Thank you.
    [The information follows:]



      

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    Mr. Steube. Also, are you aware, Mr. Maxwell, that the 
Humane Society of the United States fought for the campaign in 
Florida against gestation crates for pigs and swine producers?
    Mr. Maxwell. I am. I believe they also did so in California 
and in maybe Massachusetts.
    Mr. Steube. Are gestation crates allowed in Missouri?
    Mr. Maxwell. Gestation crates are allowed in Missouri. On 
my farm, we do not have gestation crates. Caging an animal, a 
sentient being, for their entire life in a two-foot by seven-
foot cage, in the name of industrial agriculture, is just 
wrong. We are the custodians, the farmers are the custodians of 
that which we have.
    Mr. Steube. So, the organization that you just--right.
    Mr. Maxwell. We should take care of those animals that are 
within our care, whether our sheep, cattle, or hogs.
    Mr. Steube. Okay, it is my time. I am the one asking the 
questions.
    Mr. Maxwell. Oh, I am sorry. Pardon me. Pardon me.
    Mr. Steube. So, you have admitted that you were the Vice 
President of outreach for the Humane Society. You also just 
stated the Human Society of the United States was responsible 
for backing the gestation crate amendment in the State of 
Florida, which systematically put out of business every swine 
producer in the State of Florida.
    So, today, in your testimony, you stated that four firms' 
control, and I quote, ``four firms control 67 percent of the 
hog market.'' I was one of 670,000 hog farmers in the U.S. 
Today, I am one of the remaining 64,000 hog farmers. It is a 
direct result of the policies that you supported as Vice 
President of the Human Society that put your competitors in 
Florida completely out of business.
    So, you are complaining today that there are only four 
manufacturers of the hog market, four firms that control 67 
percent of the hog market in the United States, which is a 
direct result of the policy positions that you have taken in 
your organization that you were Vice President of, which has 
led us to where we are.
    Interestingly enough, the State that you hail from--
    Mr. Maxwell. That is not--
    Mr. Steube. --does allow for gestation crates--
    Mr. Maxwell. That is not an accurate representation of--
    Mr. Steube. Whether you do or not is relevant. The State 
that you hail from allows for gestation crates, but it is 
disallowed in States like Florida, which has directly resulted 
in small swine producers in the State of Florida completely 
going out of business and not being able to compete with 
farmers, say, in your State of Missouri that are allowed to use 
gestation crates for the production of swine.
    Therefore, I find it very difficult to take your testimony 
when you have opened advocated against the growth in the 
livestock market. Yet, today, you purport to opine on what is 
best for it.
    I represent a district with over 500,000 head of cattle. We 
don't have swine anymore, thanks to the Human Society of the 
United States pushing for that amendment in the State of 
Florida. Yet, here you are, telling us what is best for the 
livestock in the United States.
    Mr. Manne, there has been a push by Democrats for sweeping 
antitrust reforms. They are making sure not to let a crisis go 
to waste and are using inflation as a justification for those 
reforms. The Biden Administration is looking to blame problems 
like inflation and supply chain issues on anything, but their 
own policies. Big companies are an easy scapegoat.
    I disagree with the Democrats' premise and approach, but if 
lack of competition really is the issue, then wouldn't lowering 
regulatory barriers to entry and, in turn, promoting more 
competition be a solution?
    Mr. Manne. Yes, no question that is right. I also agree 
that there is some scapegoating going on. There is a much 
longer standing policy agenda, and this is an opportunity to be 
opportunistic and take advantage of the situation to try to 
promote it.
    I will also note that very antitrust agenda that we heard 
some mention of earlier, that focuses on worker welfare and 
supplier welfare, and small firms versus big firms, the neo-
Brandeisian approach, again--and I know I sound like a broken 
record--it will raise prices. We can debate whether it is worth 
that or not, but we cannot debate that that will be a 
consequence of it. We should judge the value of those kinds of 
policies in their full context, and part of that context is 
higher prices for consumers.
    Mr. Steube. Mr. Chair, I have a unanimous consent request.
    Mr. Cicilline. Please state your request.
    Mr. Steube. An excerpt from the American Veterinary Medical 
Association article by Bridget Kuehn, September 15, 2002, where 
the pig crate issue was backed by the Humane Society of the 
United States. I ask unanimous consent that this is added to 
the record.
    Mr. Cicilline. Without objection.
    Mr. Steube. I, also, ask that the Humane Society of the 
United States' Eating Humanely website is also entered into the 
record.
    Mr. Cicilline. Without objection.
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    Mr. Cicilline. The gentleman's time has expired.
    I now recognize the gentlelady from Washington, Ms. 
Jayapal, for five minutes.
    Ms. Jayapal. Thank you, Mr. Chair, for this very important 
hearing. My colleagues, we do have an agenda. It is to fight 
for Americans to be able to have choice; for consumers to be 
able to shop at local grocery stores; to stop the consolidation 
of industries where that consolidation results in higher 
prices. That is the agenda that I think we are very focused on, 
and in many situations, it is actually a bipartisan agenda as 
well. I appreciate that.
    Amidst the new pandemic wave, the American food supply 
chain is hemorrhaging. Products are disappearing from shelves 
or listed for far higher prices. Essential workers are subject 
to massive COVID outbreaks and unhygienic conditions. In 
contrast, dominant food suppliers like Tyson Foods have record 
profits and CEO pay.
    In fact, just a few months ago, my home State, Washington, 
our State's Attorney General sued Tyson Foods, Inc., Pilgrim's 
Pride Corp., and a number of other big chicken producers for 
conspiring to inflate and manipulate prices, rig contract bids, 
and coordinate supply reductions to boost profits. As AG 
Ferguson said, ``If you've eaten chicken in the last decade, 
this conspiracy touched your wallet and cost middle-class and 
low-income Washington families more money to put food on their 
table.''
    The unprecedented consolidation of these companies in the 
food supply chain has driven out competitors and has ignored 
poor working conditions and increased consumer prices. As 
dominant food suppliers consolidate, profits normally funneled 
into local communities get siphoned out to Wall Street. For 
example, in the last two decades, Tyson and many others have 
acquired dozens of smaller firms.
    Mr. Maxwell, as an economist and cofounder of Farm Action, 
how has market consolidation in the supply chain impacted the 
profits of local farmers?
    Mr. Maxwell. Concentration has stripped the farmer of the 
market. The fact is the market is dead. We are not here today 
to talk about government intervention into competitive markets. 
Farm Action is here today to talk about government safeguards 
in markets that have no competition.
    That is the reality that the farmer faces--one or two 
buyers for their cattle. They are competing directly head-on 
with their buyer. The majority of the cattle are either owned 
by the packer or controlled by the packer, and that is the same 
person that the farmer, the cattle producer, has to sell their 
livestock to. The packer just simply slows down its purchasing 
in the marketplace, lowering the price the farmer gets, and 
puts the money in their pocket. It is that way in every sector.
    America's farmers farm dependent upon government subsidies, 
and they are being driven out of business by the concentration 
of power.
    Ms. Jayapal. Thank you.
    Mr. Maxwell. They are losing their businesses and they are 
losing their rural communities. It is a hollowing-out of 
America.
    Ms. Jayapal. Thank you very much.
    Access to essential items has been particularly difficult 
during the COVID-19 pandemic, and there have been extensive 
outbreaks at places like Tyson Foods in my home State of 
Washington that resulted in plant shutdowns and even deaths.
    Ms. Johnson, as a food sustainability expert, can you 
discuss how the pandemic worsened the working conditions in the 
consolidated food industry?
    Ms. Johnson. Thank you for the question, Congresswoman.
    Yes, COVID has created a set of risks in the workplace that 
we are all trying to understand how to deal with. It is 
dangerous to go to work in a way that it hasn't been before, 
and the dangers fall most heavily on those who are also poorly 
paid and already endure dangerous workplaces.
    Meatpacking, in particular, is an extremely dangerous 
profession with very high turnover and a vulnerable workforce. 
So, we are layering on top of existing risks another challenge.
    I have heard this idea that people don't want to go to work 
coming up, as if it is a preference. People are afraid to go to 
work, and they are trying to protect themselves and their 
families, while also trying to afford food and meet their basic 
needs.
    The pandemic has shed light on dynamics that were already 
there, that have really been there since the beginning of the 
United States and our food system. It is premise is relying on 
exploitative labor practices. So, what we have now is an 
opportunity. It is not opportunistic in an exploitative sense, 
but it is opportunistic in that we can see what is before us, 
and this is an opportunity to make change and remedy the unsafe 
working conditions that so many people endure.
    Ms. Jayapal. Thank you so much.
    My time is expired, but I am really excited that we are 
having this hearing, Mr. Chair, and I think it is important for 
the American consumer that we fight for consumers and small 
businesses across the country.
    Thank you so much. I yield back.
    Mr. Cicilline. Thank you. The gentlelady yields back.
    I now recognize the gentlelady from Minnesota, Ms. 
Fischbach, for five minutes.
    Ms. Fischbach. Thank you very much, Mr. Chair.
    Mr. St. Onge, in your testimony, you mention the challenges 
for entrance into the processing market, I believe, such as 
achieving the economies of scale necessary to compete. An 
additional factor as well that we have been seeing in the Ag 
Committee is the incredible capital cost that it takes to even 
start a modestly sized meat processor. These are expensive 
pieces of equipment that go into the facilities.
    Can you expand further on those challenges for a new 
entrant into the processing industry?
    Mr. St. Onge. Mr. Manne may know the processing industry 
better.
    In general, the compliance costs, setup costs, all these 
are far harder for smaller entrants. This is true not only in 
food production, but this is also really true--it is true in 
retailing; it is true across the economy.
    Of course, what we are discussing today has the potential 
to raise not only the compliance and the regulatory risks--or 
sorry--costs, but also risks on top of that, right? If a firm 
is sort of afraid of coloring outside the lines and getting 
into a lot of trouble for that, then they can often end up 
taking choices that are not only bad for the business, but 
could actually be bad for the consumer. So, an example of that 
is that a company might be actually afraid to offer customer 
discounts because they are afraid of running afoul of some 
requirement.
    Ms. Fischbach. Since you mentioned Mr. Manne, Mr. Manne, do 
you have anything to add or respond to that question regarding 
the process?
    Mr. Manne. Yes, I think a couple of things. First, I would 
point out that there have been copious studies on the 
meatpacking industry, on its history and economic consequences. 
It is pretty remarkable how consistently they find that there 
has been increased concentration. I don't think anyone can deny 
that. That increased concentration correlates with some 
increase in market power. Yet, there has been such an increase 
in efficiencies that it dwarfs the potential harm from exercise 
of market power.
    There is lots of speculation about exactly what the source 
of those efficiencies is. Everyone agrees that larger meat 
processing plants is more efficient; no question about that. 
That doesn't inherently mean that many plants have to be owned 
by one company. So, there is a lot of speculation about 
economies of scope, and there is a lot of research to suggest 
that there are some.
    I will give you one example. If you are able to process and 
sell meat products from multiple different species, and you are 
selling to a wholesaler that is interested in buying meat 
products from many different species, you may have a much 
easier time negotiating with them the marketing margin that the 
wholesaler is making smaller--all because you have access to a 
wider range of types of supply. That is just one of many, many 
examples.
    Ms. Fischbach. Maybe it is a yes-or-no question, but are 
any of those challenges that are faced by the meat processors, 
and getting into the business, are any of those related to 
matters of antitrust policy?
    Mr. Manne. Let's see, difficulties getting into the 
business are not related to antitrust policies. They can be 
related to regulation, though.
    Ms. Fischbach. Okay. Maybe you could expand a little bit on 
the regulation. That was going to be one of the other questions 
that I asked about--kind of the challenges of regulation and 
how that deals with the supply chain.
    Mr. Manne. Yes. So, again, there may be perfectly good 
justifications for this. Obviously, safety of the food supply 
is very important. One consequence of that is absolutely 
extraordinarily high compliance costs.
    I would point out, for example, that the recent Biden USDA 
announcement of a billion dollars or so to support small 
businesses in the meatpacking industry, a chunk of that 
specifically goes to defraying the cost of compliance with USDA 
inspections and other regulations. Now, it is a very real cost, 
and certainly, that makes a lot of sense, actually. It is the 
one element of that proposal that makes some sense. Actually, 
what doesn't make sense is why you don't do that for all 
providers, because, of course, those costs apply at an even 
greater level to a larger processor.
    Yes, it is very real, and it certainly impedes entry at the 
margin. I don't know exactly how much, but certainly at the 
margin it would impede it.
    Ms. Fischbach. Thank you very much. Mr. Chair, I yield 
back.
    Mr. Cicilline. The gentlelady yields back.
    I now recognize the gentleman from Maryland, distinguished 
Professor Raskin.
    Mr. Raskin. Mr. Chair, thanks so much for this excellent 
hearing.
    Mr. Maxwell, the administration itself recently observed 
that high levels of market concentration in the meat processing 
industry is a textbook example of how diminished competition 
hurts consumers who pay more, farmers and workers who are paid 
less, and the economy more broadly. Can you explain the role 
that meat processors play in the supply chain today? Do you 
agree with the White House analysis that the high level of 
concentration in meat processing is a problem for Americans 
generally?
    Mr. Maxwell. Meatpackers are, for the producer and for 
access choice to the consumer, are the bottleneck within the 
supply chain. The number of processors, meatpackers, or poultry 
processors is extremely limited today to four dominant firms. 
Therefore, they control the market at their processing plant.
    We agree with the assessment, as we stated in our opening 
statement, that market power, the concentration of the dominant 
firms, has to be part of the analysis as it relates to 
inflation and the increased spike in cost that we are facing 
today during this pandemic. We believe that there are other 
factors, which are some supply chain disruptions that have 
increased cost, but many of those supply chain disruptions are 
within that vertically integrated supply chain that is within 
the control of that packer, as it relates specifically to meat.
    Mr. Raskin. Well, some people seem to want to be blaming 
antitrust laws for inflation. In 2021, Pilgrim's Pride, which 
is one of the big producers of broiler chicken, pleaded guilty 
to charges that it criminally conspired to fix prices and rig 
bids for broiler chicken products. In 2019, the DOJ intervened 
in a civil lawsuit alleging that Tyson Foods and Pilgrim's 
Pride conspired together to fix chicken prices.
    Do you agree that aggressive enforcement of antitrust laws, 
or what we are proposing, which is strengthening of antitrust 
laws, leads to inflation? Or do you think it will help us to 
restrain inflation?
    Mr. Maxwell. I believe that it will help restrain price 
gouging by dominant firms within a marketplace. You have 
mentioned the litigation that has gone on. Oddly enough, 
Kroger, which has been mentioned here during this testimony, 
was one of the plaintiffs that brought a collusion case against 
the big poultry processors. So, even the big is admitting there 
are problems within the system. Congress needs to act.
    Mr. Raskin. Thank you.
    Ms. McClendon, the poultry industry is a highly 
concentrated and dominated industry by just a handful of large 
companies. Your firm was directly injured by Cargill's 2021 
acquisition of Sanderson Farms. Can you explain to us what the 
impact of that acquisition and merger was on your business?
    Ms. McClendon. Well, there is a couple of impacts. Of 
course, the pay decrease that we are getting is going to reduce 
my pay by one-third, which is a tremendous amount on all 
poultry farmers. Our prices, too, continue to rise--the price 
of gas, the price of electricity, the price of supplies like 
fan motors and feed motors, and all those costs are rising for 
us. So, to introduce a pay cut is extremely detrimental to us, 
as farmers.
    Again, I just believe that, as we continue to consolidate 
into big three, that we run into the issues that have been 
discussed here today, which is the price-fixing issues. These 
large corporations have a lot of power. I am for capitalism, 
and in capitalism, you need competition, and we just don't have 
that in the poultry industry today.
    Mr. Raskin. Well, can I ask you, but why are people paying 
more for chicken when they go buy it at the store, but you, as 
a farmer, are getting paid less?
    Ms. McClendon. Because the model is set up so that 
Sanderson Farms and Cargill/Continental Grain can all achieve 
the highest profit that they can get. So, they are maximizing 
their profits, while we, as farmers, are basically tenant 
farmers. At times, that is what I feel like. It is like the big 
man is in charge and a little guy is getting shoved out and 
will never make what they need to make to even survive.
    Mr. Raskin. Well, thank you for your excellent testimony.
    Mr. Chair, Ms. McClendon's story is the story of countless 
farmers and workers across the country, and we need to get back 
to being in the business, as government, of aggressive 
antitrust enforcement, so we can achieve what Ms. McClendon is 
talking about, which is real market competition which benefits 
everybody, as opposed to monopoly.
    I yield back.
    Mr. Cicilline. The gentleman yields back. Thank you, 
Professor Raskin.
    I now recognize the gentlelady from Indiana, Ms. Spartz, 
for five minutes.
    Ms. Spartz. Thank you, Mr. Chair. I appreciate your 
hearing. I wanted to share with you a little bit of my personal 
perspective, as someone, actually, not as a legal scholar, but 
as a farmer, who actually used to get on the combine, someone 
who used to pull the wagons. I will tell you one thing, as 
somebody who actually used to be in Fortune 500 America an 
auditor who worked at a largest company. Actually, that is what 
led me to run for Congress.
    If we continue on this path on destroying small business 
with government regulations, we will have oligopolists control 
all of the sides of the market, which they control most. I will 
tell you that government-controlled monopolies is very 
dangerous, a very dangerous structure because they can hire 
very expensive CPAs like me and attorneys, and also have 
lobbies to create a lot of loopholes and don't follow the 
rules.
    Actually, our environmental regulations, which a lot of 
them are unreasonable, we want to have reasonable. They created 
a lot of land restriction and views, and that destroyed a lot 
of farming. We are talking about fertilizers. We were trying to 
put a fertilizer facility in Indiana, and actually, I aligned 
with some liberal Democrat because they were trying to push 
carbon onto the Madrid Fault in Indiana, and he was very 
nervous about that. So, now, we will rely on Japan and on 
foreign countries to buy fertilizer, and our prices are going 
to increase.
    The same when we are talking about propane. I think Ms. 
McClendon brought an issue. In the fossil fuels, we will see it 
will double the price of propane, and it is destruction for the 
little guy.
    I just recently met with some farmers. My husband and the 
Farm Bureau, and I met with some farmers, hog farmers. I told 
them, okay, we do have significant oligopoly problems. I told 
them, why couldn't--I know it requires capital, and access to 
capital, as a small business owner, is very limited. I have 
struggled with that myself. I said, ``Why couldn't we just 
create a profitable business? Why cannot we create a new 
facility to slaughter and butcher hogs?'' I actually was told 
that we cannot use this word anymore; we have to use ``harvest 
hogs.'' Well, I will still use ``slaughter,'' since English is 
not my first language. So, I go to the dictionary because it is 
ridiculous to say that we are ``harvesting hogs.''
    Anyway, I said, ``Why couldn't we just start a facility? 
You have some people. You have some businesspeople.'' He said, 
``Oh, yes, we had some colleagues who tried to start a hog 
facility in Indiana,'' and they told me, ``Well, wait for USDA 
inspectors, it will take you a year to get them, and then, they 
constantly have to check these facilities.'' If you are not a 
big company connected to the government, they are not going to 
show up. So, all big companies have political power and capital 
to control.
    So, my suggestion would be, to my fellow colleagues, if we 
want to put all this FDA and USDA and the jurisdiction of DOJ 
and the FTC--how much restriction to competition they are 
creating--I would be all for it because the government is 
destroying small enterprise. We are destroying manufacturing. 
We are destroying mining. Now, we are coming after the farm. If 
we continue on this path, now we are crying, that we are going 
to be dependent on China and Russia. Well, we will be begging 
for pork from China and grains from Russia, if we continue on 
this path.
    I don't know, Mr. Manne, do you have any suggestions what 
you think that is really reasonable and common sense? Because 
it is a very serious issue. Unfortunately, in many cases it is 
not protecting competition, but competitors, and puts us in the 
middle of global oligopolists.
    Mr. Manne. You want to know what suggestions I might have 
for--
    Ms. Spartz. For increased competition. We really need to 
protect competition because all we are doing: Setting prices 
benefits government-controlled monopolies and is destroying the 
little guy.
    Mr. Manne. Well, in the industry that I am most familiar 
with, in the beef industry, I would say that I don't see any 
reason--there is no intervention we need to do to increase 
competition. There is lots of competition, despite there being 
a small number of firms. It is well understood that number of 
firms does not correlate to the amount of competition, even 
though we hear that repeatedly.
    Everyone says, ``Four firms.'' Four firms. Actually, it 
turns out that there are some studies, by the way, in the 
telecom industry that suggest four firms is the optimal number 
of firms for maximizing efficiency in a market.
    Regardless, there seems to be a lot of competition. I am 
not sure what we should do to increase competition, but, as I 
said before--
    Ms. Spartz. Well, I have an example. My farmers said that 
USDA precludes competition.
    Mr. Manne. Yes, exactly, I was just going to say--
    Ms. Spartz. You know what I mean? We cannot say, as a 
little guy--and I don't know if you have been business or not, 
but I have started a lot of businesses. It is very difficult to 
go against big oligopolies that government controls and they 
are very close to the government. That is the biggest problem 
we have. It is not just because--I mean, we cannot just neglect 
and say, ``Oh, markets are going to work. They do not exist in 
a lot of areas.''
    I think my time has expired, but I would love to continue a 
conversation and maybe see who can answer issues of 
anticompeti-tiveness created by our agencies.
    I yield back.
    Mr. Cicilline. Thank you. The gentlelady yields back.
    I now recognize the gentlelady from Florida, Ms. Demings, 
for five minutes.
    Ms. Demings. Thank you so much, Mr. Chair. Let me be clear 
on this: I don't want a government-controlled monopoly. I just 
want every Florida family to be able to afford a decent meal.
    Mr. Chair, as all of you know, I grew up in a rural part of 
Jacksonville, Florida in a family that did not have a lot. So, 
you can imagine food that was affordable was critical to our 
family. My parents grew vegetables, they raised chickens, they 
traded with neighbors, and relied on our local independent 
grocery stores. Coming together as a community, although it was 
tough many days, we were able to make it work.
    Now, I think every business wants to make a profit, but 
greed is a different thing, and that's what we are here to talk 
about today.
    We have seen consolidation of the people who buy crops and 
meats from our farmers and ranchers giving them the power to 
squeeze both for greater profits for themselves and reduce 
profits for those they buy from. This is just wrong. The 
National Grocers Association affirmed that with limited 
supplies independent grocery stores have not received their 
fair share, seeing whole pallets of the products missing from 
independent shelves in the big box retailers across the street. 
The evidence is clear: Big corporations have squeezed and 
continued to do so independent stores and food producers out of 
the marketplace leaving us with a fragile food system.
    Mr. Maxwell, Florida has a significant agriculture economy 
providing the State with a wide variety of safe and dependable 
food products and large and stable economic base. According to 
the USDA in 2019 Florida ranked first in the U.S., in the value 
or production of bell peppers, for fresh market grapefruits, 
oranges, sugarcane, fresh market tomatoes, and watermelons, 
second in the value of production for bell peppers, fresh 
market sweet corn, and strawberries, and third in fresh market 
cabbage, peanuts, and squash.
    Mr. Maxwell, how does the consolidation of our food system 
from middleman to food companies to grocers affect the 
availability of fresh, healthy, and affordable food for 
Floridians and the livelihoods; we all should care about it, of 
Florida ranchers and farmers and the economy in Florida?
    Mr. Maxwell. Thank you for the question. The issues that 
you present within your question clearly need to be framed 
within the domination that the firms--dominant firms have, the 
CR4, and the power that they then have. As your farmers raise 
their produce there are limitations in who will stand ready to 
buy that produce and then to process that produce.
    For the cattle producer there's a limitation on the number 
of firms that will buy those fat cattle. You have great cattle 
production, beef production in the State of Florida, and it is 
getting more and more heavily concentrated. Farmers are facing 
harder and harder times to find a fair price.
    What it does to the consumer is that there's a bottleneck, 
a bottleneck in the processing. These chains, these supply 
chains are so extended globally and nationally that it limits 
the amount of choices that a consumer has in a grocery store. 
Mr. Needler already testified on how he's not given the same 
fair deal for his opportunities to present to his customers as 
are the large box stores. So, those bottlenecks in the supply 
chain create barriers for producers, access markets, and 
consumers to access choices at the grocery store.
    Ms. Demings. Mr. Maxwell, thank you so much.
    Mr. Needler, over the past several years Florida has seen a 
reduction of grocers in many communities leaving many 
Floridians in food deserts. How are small and independent 
grocers helping address the problem of food deserts 
particularly in underserved communities including rural areas 
like the one I grew up in?
    Mr. Needler. Well, I think you should start by looking at 
once the--one of the biggest issues of food deserts is, once 
somebody's gone, the barrier to entry really is the capital 
intensity that's required to open the store.
    So, independent retailers have been nimble enough to take 
on different formats and different types of stores. Like, my 
example would be that we've grown over the years because I've 
been able to take on a different type of store, a smaller 
format, a bigger format, and we've been able to be nimble and 
try to serve the community with what we've got. We don't have 
to build a brand-new store; we just try to step in and keep it 
going as long as we can to serve that community, nourish that 
community.
    So, I think independent retailers have been more willing to 
try and take risks versus playing large-scale capital 
allocations across markets.
    Ms. Demings. Again, thank you all.
    Mr. Chair, I yield back.
    Mr. Cicilline. The gentlelady yields back. I now recognize 
the gentleman from Oregon, Mr. Bentz, for five minutes.
    Mr. Bentz. Thank you, Mr. Chair.
    Thanks to the Witnesses for this excellent hearing, 
although I think the focus should be a little more on the 
opportunities that exist for folks on the smaller end of 
things.
    The reason I say that is because I am a member of a five-
generation ranch family from Oregon and involved in the cow/
calf producing space for many, many, many years. I have watched 
as a family operation, of which I am no longer a part, has 
grown from 600 mother cows to something in the 4,000-5,000 
mother cow range, which of course one would suggest listening 
to today's hearing is some horrible example of consolidation, 
but in point of fact it is a reflection of what has been 
happening in the agricultural arena for a very long time.
    I would take us back to the 1930s when some 25 percent of 
all Americans were engaged in one way or another in farming, or 
seven million family farms then and down to two million now, 
and I would just say that this is consolidation. In addition, 
the price of food over that period of time has declined from 
17.5 percent of a family's budget in 1960 to around 9.9 percent 
today. So, when we are here talking about how awful it is that 
people are paying more for groceries, I would simply say, gosh, 
look back to 1960. I don't want to go back there. That is my 
point.
    Now, this is not to say that the packers or the feed lot 
operators or the retailers are above reproach; they are not, 
but there are ways of I think approaching what we are talking 
about today that will advance the interests of the producers 
and the interests of the American people without bringing more 
government into it.
    With that as kind of a background, I would like to turn 
to--I will take Dr. Manne for a moment and ask him about the 
addition of some additional packing capacity; as I understand 
it plants were already being built somewhere across the United 
States, some actually in Idaho, new packing plants that would 
add to the capacity of the nation when it comes to packing and 
also alternative places to take your cattle, and ask if that is 
kind of a natural process of our economy.
    Dr. Manne?
    Mr. Manne. Yeah, no, I think that's exactly right. When 
prices go up, of course you see companies expanding to try to 
capitalize on that, and ultimately that drives prices down.
    So, actually, in the meatpacking industry, it's sort of 
interesting: There's evidence to suggest that--or, sorry, 
there's been claims that, following COVID and the price 
increases during COVID, the meatpackers have sort of 
artificially constrained supply in an effort to capitalize on 
increased prices by increasing the prices even more. The best 
studies on this point out that only did that not happen, but 
the level of market power that existed before the pandemic 
would have suggested vastly larger increases in price than 
actually happened.
    So, what it tells me is it seems like--and who knows 
exactly what is motivating this--the beef packing industry is, 
again, no one is above reproach and there certainly have been 
problems there and elsewhere, but generally speaking, with 
respect to the pandemic response, they've been increasing 
capacity as much as possible. They have not been trying to 
constrain capacity. They're literally building new capacity and 
really responding in a very commendable sort of fashion to an 
emergency situation that was certainly not of their making.
    Mr. Bentz. I might say this is not limited--just because of 
the nature of today's hearing it might mislead folks to think 
that it is. This is not--this higher price situation we find 
ourselves in, I would just simply talk about computer chips for 
a moment. How about the automobile industry and what has 
happened to the cost of a used car? Why don't we haul all the 
used car dealers in here and accuse them of gouging? Because I 
just noticed the other day when I went out to look for a used 
car that the price was up 37 percent. So, where is the hearing 
and the--I mean why aren't we running around there?
    The reason of course is I think we all understand that 
because of COVID there was a movement away from contracting for 
computer chips and now we are reaping the harvest of not having 
those computer chips made here in the United States, among 
other things.
    Mr. Chair, I just want to say as a member of a community 
that relies upon cow/calf producers, I want to emphasize the 
packing space is not above reproach, but I think adding more 
capacity in the form of these smaller plants is a really good 
step in the right direction. They were already coming along 
before COVID and I wish them the very best because I think 
broader markers are good for all of us, but breaking things 
up--I don't want to go back to the 1930s. With that, Mr. Chair, 
I yield back.
    Mr. Cicilline. I thank the gentleman for yielding back. 
It's nice to hear a Republican Member of this Committee 
praising one of the Biden Administration's initiatives on 
helping develop capital formation to bring more meatpacking 
operations into our country. So, that was duly noted.
    With that I would recognize the gentlelady from 
Pennsylvania, Ms. Scanlon, for five minutes.
    Ms. Scanlon. Thank you, Chair Cicilline. Concentration and 
consolidation in our food supply chain has been shown now to 
pose a serious threat to our food markets, the food industry 
workforce, and financial stability for the American consumer. 
Our ability to provide adequate and nutritious food to 
consumers is a matter of national security, so we need to act 
to ensure that the continuity of the industry is assured.
    The pandemic, as with so many other things, has highlighted 
the fragility of the U.S. food supply chain as meat processing 
plants, grocery stores, seed and green markets, all which have 
become steadily more concentrated in recent decades, were 
unable to meet demand and Americans were left at various times 
with empty shelves and increasing costs.
    In a resilient and healthy food supply system redundancy 
and diversity of suppliers would have helped to insulate 
consumers from the harmful costs or supply impacts of the 
pandemic and other similar events. More sources, processors, 
and distributors of food means that if something goes wrong in 
one part of the market, there are plenty of competing 
businesses to pick up the slack.
    In speaking with supermarket owners and operators and 
others in our food supply chain we have seen the direct impact 
of industry concentration when something goes wrong such as a 
COVID surge leading to workers getting sick or having to take 
time off to take care of family members, which then reduces 
supply, which then increases prices.
    Additionally, in studying the concentration of the food 
supply chain it is so important that we look at the impact on 
labor markets. Workers in meat processing and grocery 
industries have seen elevated levels of risk during the COVID-
19 pandemic, but because just a few companies control such 
large shares of the grocery and meat processing markers, they 
are able to depress wages and subject their workers to poor 
working conditions.
    What we end up getting are companies in the national 
grocery chains that rely on a really perverse form of corporate 
welfare. They have a business model that relies on paying 
employees so little that they are forced to rely on food stamps 
and other government benefits. Studies show that the families 
of employees of some of these corporate giants often go hungry 
while the employees are literally surrounded by food. This 
isn't just a perverse way to run a grocery business in the 
wealthiest nation in the world; it's immoral.
    We must have a food system in the U.S. that respects the 
dignity of workers, is resilient even in the face of 
unprecedented supply chain shocks, and that provides affordable 
quality food for all Americans. Addressing concentration within 
these markets is an important way to ensure a more secure food 
supply chain, and so I look forward to discussing with you some 
solutions to these problems.
    Ms. Johnson, I have spoken to independent and small grocers 
in my district about their challenges in getting supplies and 
they have spoken at length about the impact of market 
concentration on the meat industry. They were overwhelmingly of 
the opinion that the price increases we have seen lately have 
had a large part to do with that concentration because it has 
drastically reduced the number of meatpacking plants and 
suppliers. Then when the pandemic hits those places, they don't 
have enough people to produce the pounds of protein that they 
are used and the need for social distancing further reduced 
their ability to produce the pounds of protein that they were 
used to. So, the law of supply and demand then causes prices to 
rise.
    Both you and Mr. Needler have mentioned enforcement of 
existing antitrust laws as a tool to address shortages. Can you 
explain how that helps and what Congress might do or need to do 
to improve enforcement or get additional enforcement tools?
    Ms. Johnson. Thank you for the question, congresswoman, and 
I couldn't agree more with your comments.
    I think what's helpful here is to think in terms of fair 
and affordable prices and get out of this high/low dynamic 
because one point that we often miss is that the consumers who 
are struggling to afford food are also the workers who are 
having their wages suppressed. So, we need to align our 
enforcement strategies and complementary policies to ensure 
fair outcomes.
    It's not necessarily the case that we always want to seek 
the lowest possible price if that comes at the expense of 
health, of environmental protection, and foists other costs 
onto the public. That diverts public resources away from other 
social problems that urgently need attention and it allows 
corporate profits to skyrocket.
    So, we need to ensure that our enforcement approach 
addresses the tendency to externalize costs and to put those 
onto the public and then at the same time invest in public 
policies that will support our workers and our consumers and 
ensuring that everyone can afford the food they need.
    Ms. Scanlon. Thank you. I see my time is expired. I yield 
back.
    Mr. Cicilline. The gentlelady yields back.
    I now recognize the Ranking Member of the Antitrust 
Subcommittee, the very distinguished gentleman from Colorado, 
Mr. Buck, for five minutes.
    Mr. Buck. I thank the Chair. I will pass, Mr. Chair, and I 
don't think I will have questions at any point. I thank the 
Chair for recognizing me.
    Mr. Cicilline. All right. The gentleman yields back. I now 
recognize Johnson of Georgia.
    Mr. Johnson of Georgia. Thank you, Mr. Chair, for holding 
this hearing and I will note for the record that hardworking 
people across this country, including those who own family 
farms, are stressed out, working so hard that they are 
literally working themselves to death.
    So, Ms. McClendon, I want to offer my condolences on the 
loss of your dear husband.
    As President Biden recently said, ``Capitalism without 
competition isn't capitalism; it's exploitation.'' Ms. 
McClendon, the story you shared today about you and your 
husband's experience with Sanderson Farms is a classic case of 
exploitation. Would you agree?
    Ms. McClendon. Yes, sir, I would.
    Mr. Johnson of Georgia. In response to a question, you were 
asked earlier you said that although you are not a fan of 
government regulations, you feel that our government should do 
something to protect family farmers like you from exploitation 
by greedy corporations like Sanderson Farms, correct?
    Ms. McClendon. That is correct.
    Mr. Johnson of Georgia. So, Ms. McClendon, you would agree 
that it has not been too much government regulation that has 
hurt your business, but it has been a lack of adequate 
regulation that has hurt your business. Is that correct?
    Ms. McClendon. I would say that it is a lack of the 
enforcement of the laws that are already on the books.
    Mr. Johnson of Georgia. All right. Fair enough.
    I think it is quite telling that the two Republican 
Witnesses testifying today are against regulations that promote 
competition. They are against enforcement of competition laws. 
One of them testified point blank that the rise in consumer 
food prices is not caused by increased market concentration in 
the food industry. The other Republican Witness said that food 
production, particularly meat-
packing, is among the most competitive industries in America.
    Ms. McClendon, as the owner of a poultry farm do you agree 
that market concentration in the poultry industry is killing 
your ability to make a fair profit?
    Ms. McClendon. Congressman, I am not qualified actually to 
answer that question. I am not overly familiar with all the 
rules and regulations that are currently before Congress, and 
so I would decline to give an opinion on that.
    Mr. Johnson of Georgia. Okay. Well, thank you, ma'am.
    Mr. Maxwell, what would you say in response to that 
question?
    Mr. Maxwell. Well, thank you for the question, 
representative. I believe that what we face in the poultry 
industry is extreme concentration and probably the best example 
of the abuse of power within agriculture. Either the power they 
have to deny workers bathroom breaks, the power they have to 
walk in and throw a contract down in front of a contract 
poultry grower and say this is how much we're now going to pay 
you in spite of having millions borrowed.
    Mr. Johnson of Georgia. That is what happened to Ms. 
Sanderson, right?
    Mr. Maxwell. Say again?
    Mr. Johnson of Georgia. That is what happened Ms. 
Sanderson, right? I mean Ms. McClendon. Correct?
    Mr. Maxwell. Yes. That's exactly what happened to her. 
She's lived that experience. What we tried to present today is 
the--you know, we can talk about economic theory, but these are 
the lived experiences and the outcomes of this very economic 
theory that some are defending today. These are real. Real 
people, real impact on rural communities. Look at the hollowing 
out of rural America, the depopulation, the loss of tax base. 
It's because there are dominant firms that are controlling 
almost every aspect of rural life today.
    Mr. Johnson of Georgia. Mr. Maxwell, would it be fair to 
say that the two Republican Witnesses are not paying close 
attention to the reality on the ground of what is happening to 
family farmers like Ms. McClendon due to the anticompetitive 
concentration the market concentration in the meatpacking 
industry that is the most significant driver of higher food 
prices for consumers and lower prices for farmers?
    Mr. Maxwell. Well, I think that the Witnesses that you've 
referenced are bringing their perspective as they know it 
through their academic education and their experiences within 
the segments of the industries that they have represented. What 
they don't bring here today is the lived experiences on the 
ground of the outcomes of the economic theories that rely upon 
certain assumptions.
    What I would ask those Witnesses to do is go back and 
question the assumptions. Question the assumptions. Why are 
these the outcomes? Why did fertilizer costs go up 51 percent, 
but the cost of the gross margin, manufacturing margin went up 
680 percent and farmers saw a doubling in prices? Go back and 
scratch your head and rethink the assumptions based upon your 
economic theory, because it's not playing out on the ground.
    Mr. Johnson of Georgia. Well, the problem is money--
    Mr. Cicilline. The time of the gentleman has expired.
    Mr. Johnson of Georgia. Thank you, Mr. Chair.
    Mr. Cicilline. I didn't mean to cut you off mid-sentence.
    Mr. Johnson of Georgia. I would just point out that the 
problems are money and politics. The big agribusinesses are 
paying for the regulations that are not being enforced to not 
be enforced. It is what they are doing. Then we have got two 
Witnesses who are testifying on their behalf and they happen to 
be Republican Witnesses. With that, I yield back.
    Mr. Cicilline. All right. Thank you. The gentleman yields 
back. I now ask unanimous consent to add a number of statements 
and letters regarding the harmful effects of consolidation on 
our nation's food supply to the hearing record.
    The first is a statement from Claire Kelloway, Manager of 
the Fair Food and Farming Systems Program at the Open Markets 
Institute; testimony from Rob Larew, President of the National 
Farmers Union; a statement from Bill Bullard, CEO of the 
Ranchers-Cattlemen Action Legal Fund, the United Stockgrowers 
of America; testimony from Steve Etka, Policy Director of the 
Campaign for Contract Agriculture Reform; a letter from George 
Slover, Senior Policy Counsel, and Michael Hansen, Senior 
Scientist, Food, both of Consumer Reports; a statement from the 
National Association of Convenience Stores; a statement from 
the National Sustainable Agriculture Coalition; a statement 
from a coalition of organic farmers in New England; testimony 
from Margaret Krome-Lukens, Policy Director, and Aaron Johnson, 
Challenging Corporate Power Program Manager, of the Rural 
Advancement Foundation International; a statement from Anthony 
Perrone, International President of the United Food and 
Commercial Workers International Union; a statement from Rhode 
Island resident Ruarri Miller, owner of Union Burrito; a 
statement from Kayte Barton, an advocate for persons with 
disabilities; and, finally, testimony from Amanda Hitt, a 
director of the Food Integrity Campaign of the Government 
Accountability Project, without objection.
    [The information follows:]



      

                      MR. CICILLINE FOR THE RECORD

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    Mr. Cicilline. I want to thank the Witnesses for their 
testimony today and my colleagues on both sides of the aisle 
for participating in this hearing.
    Today we had the opportunity to hear firsthand from 
farmers, experts, and business owners on the effects of 
economic concentration on America's food supply. This hearing 
has made clear that our food system is in crisis, harming 
consumers and small businesses throughout the supply chain. 
Excess concentration has caused not only a rise in prices, but 
also harm to the environment, our health, worker safety, and 
the stability of the entire food system.
    Unprecedented concentration and vertical integration at 
every link of the supply chain threatens our economic system by 
eliminating competitive markets. It threatens the livelihood of 
farmers by squeezing them at both ends, buyers and sellers, and 
particularly impacting farmers of color.
    Independent grocers and small retail outlets are struggling 
to stock their shelves and keep their doors open in part 
because dominant big box chains and large suppliers abuse their 
power to force small retailers to pay higher prices for 
products or withhold products from them entirely.
    Small poultry farmers are living in poverty and struggling 
to survive because a handful of vertically integrated firms 
control every stage of the supply chain.
    This outsized control of America's supply by a handful of 
immensely powerful companies has also made clear that we need 
real solutions to these problems by strengthening our antitrust 
laws to outlawing abusive practices in the marketplace. We need 
to make sure our nation's competition system and economy works 
for everyone.
    They also underscored the dire need for reforms across the 
board, implementing President Biden's four-point plan to lower 
food prices and creating choice for hardworking Americans to 
tackle price-gouging and other symptoms of corporate 
profiteering.
    Again, thank you to our Witnesses for extraordinary 
testimony.
    This concludes today's hearing. Without objection, all 
Members will have five legislative days to submit additional 
written questions for the record or additional materials for 
the record. Without objection, this hearing is adjourned.
    [Whereupon, at 12:49 p.m., the Subcommittee was adjourned.]



      

                                APPENDIX

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                  QUESTIONS AND ANSWERS FOR THE RECORD

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