As the U.S. Department of Agriculture continues proposing more regulations on meat-processing businesses, some local processors and farmers are hoping to see deconsolidation in the industry.

JBS Foods, Tyson Foods, Cargill and Marfrig control 85% of U.S. beef processing, according to USDA data, with Tyson and JBS also controlling large portions of poultry and pork processing. Numerous lawsuits over the past several years have accused these companies of price fixing.

“It’s a real concern when you have that few processors,” said Joe Heinrich, a Maquoketa, Iowa-area livestock and crop farmer who previously served as Iowa Farm Bureau vice president. “This has been a problem for years.”

Public concerns spurred the USDA, under Ag Secretary Tom Vilsack, to restore and strengthen regulations first established in 1921 under the antitrust Packers and Stockyards Act, which had been weakened by various court rulings. This includes a 2009 5th U.S. Circuit Court of Appeals ruling which established a high burden of proof on those suing processors for unfair market practices, requiring the plaintiff to demonstrate an adverse impact not just on themselves but to competition across the industry.

Among the new rules is one, effective as of May 6, 2024, that prohibits discrimination and retaliation against producers and growers who participate in cooperatives or explore business relationships with competitors. The rule also prohibits the omission of relevant information in contracts between processors and producers.

A proposed rule, on which the public comment period ended in September, seeks to clarify and broaden the unfair practices prohibited by the Packers and Stockyards Act, defining them as not just conduct that harms the market, but conduct that harms market participants.

This proposal defines a practice as unfair if it “causes or is likely to cause substantial injury to one or more market participant, which … the participant or participants cannot reasonably avoid, and which (cannot be justified) by establishing countervailing benefits to the market,” per a USDA entry into the Federal Register.

As the department finetunes these rules it says are intended to deconsolidate the market, it is also supporting the growth of smaller processors, such as Edgewood Locker. The Edgewood, Iowa, processor recently received a $1.4 million USDA grant to increase its processing and storage capacity.

“It’s helping with our expansion project (and) upgrading machinery,” said co-owner Luke Kerns.

Kerns said the approximately 35,000-square-foot facility wouldn’t grow in size, but will use the money to make its operations more efficient.

Heinrich said he was eager to see how USDA’s rule changes unfold. He said local processors, such as Edgewood Locker, are “great” alternatives to larger corporations.

Emerging local processors are hoping to capitalize on their local status in their marketing efforts.

“(Customers) want to know where the meat’s coming from,” said Randy Vaske, owner of The Butcher Block, which opened in 2023 in Cascade. “Everything we process is from local farmers and goes to local consumers.”

Kerns and Vaske both said they are not expecting to be impacted by the federal regulations on packers and processors.

Heinrich said that customers can contribute to deconsolidating the market by buying local meat.

“We can decrease their (share of the) market by buying locally,” Heinrich said. “It’s going to take (local) processors sticking their necks out and consumers supporting them.”

However, Heinrich conceded that large processing companies provide convenience that could be hard for customers to abandon.

“There are efficiencies to (conglomeration),” he said. “Consumers want uniform products.”