Fact-check: Are meat-packing companies making record profits?

Rep. Abigail Spanberger (D-Va.): “The four big meat packers are raking in record profits … ”

PolitiFact's ruling: True

Here's why: Meat prices are soaring and Rep. Abigail Spanberger (D-Va.) wonders whether there’s been collusion among the nation’s largest meat-packing corporations.

"The four big meat packers are raking in record profits," she wrote in a June 16 guest column for Fox News, which was co-authored by Brooke Miller, president of the U.S. Cattlemen’s Association.

We fact checked Spanberger’s claim about profits and found it is correct. Top executives of the four major meat packing companies have sworn to Congress that they are not fixing prices, saying their record profits are instead the result of unusual economic circumstances brought on by the coronavirus pandemic.

Meat prices rose 12.3% over the 12-month period ending on May 31, according to the Bureau of Labor Statistics. That outstrips the 8.6% inflation rate and a 10.1% increase in overall food prices.

Spanberger introduced in April, a bill that would establish an office at the U.S. Department of Agriculture to investigate possible antitrust violations in the meat industry. The measure, backed by Democrats, passed the House on a largely partisan vote earlier this month on June 16. A similar bill passed the Senate Agriculture, Nutrition and Forestry Committee on June 22 with broad bipartisan support.

The four major meat conglomerates are JBS Foods, Tyson Foods, Cargill and Marfrig. They are the middlemen in 55% to 85% of all the beef, pork and poultry sold in the U.S., according to White House analysis released in November 2021. They buy livestock, slaughter it and process the meat, and sell it to retailers. All of them operate internationally.

Profits

JBS had a record net profit of $4.4 billion for the 12-month period ending March 31, 2022 — a 70% increase over the previous 12 months.

Tyson had a record $4.1 billion net profit for the year ending March 31, 2022 — a 91% increase over the previous 12 months.

Cargill is a privately-held company and isn’t required to publicly report its financial information. Bloomberg reported last August that confidential financial documents showed Cargill delivered a record $4.9 billion in net income for its fiscal year ending May 31, 2021 — up 60% over the previous 12 months.

Marfrig reported a net profit of $820.1 million in 2021, a 32% increase over 2020. "This was our largest profit ever," the Brazilian-based company said in its annual report. Net income dropped during the first quarter of 2022 due to the company’s $360 million stock purchase in BRF, a Brazilian poultry and pork processor. Even so, Marfrig’s chief financial officer said it was the company’s "best operational first quarter."

While profits have been soaring for the large meat packers, many ranchers and cattle farmers complain that livestock prices have remained stagnant as their business costs have increased. Many Democrats, including President Joe Biden, have accused the four conglomerates of setting prices.

High-ranking executives of the four corporations, testifying before the House Agriculture Committee on April 22, said the meat industry is cyclical and a confluence of economic events have led to record profits.

They said an oversupply of cattle in recent years pushed down meat prices and left farmers with more livestock than they could sell. At the same time, they said coronavirus outbreaks caused work disruptions at processing plants, leading to increases in the demand and price for meat. The CEOs also said that inflation has increased processing and transportation costs and those added expenses have been passed on to consumers.

Our ruling

Spanberger wrote, "The four big meat packers are raking in record profits."

The big four are JBS Foods, Tyson Foods, Cargill and Marfrig. Each of the four reported record net income in the latest year-over-year financial information we could find. We rate Spanberger’s statement True.

Our Sources

• Abigail Spanberger and Brooke Miller, "Fewer meat packers threatens our national security," June 16, 2022

• Email from Libby Wiet, press secretary for Spanberger, June 17, 2022

• Congress.gov, HR 7606, S 2036, accessed June 28, 2022

• Beef Central, "JBS logs record revenue and profit for 2021 year," March 22, 2022

• CNBC, "Tyson Foods’ higher meat prices nearly doubles profits," Feb. 7, 2022

• Bloomberg, "Crop Giant Cargill Reports Biggest Profit in 156-Year History," Aug. 6, 2021

• The Cattle Site, "Profits for Brazil’s Marfrig more than double in Q3 2021," Oct. 29, 2021

• Bureau of Labor Statistics, Consumer Price Index, May 2022.

• C-SPAN, House Agriculture Committee meeting, April 27, 2022

• White House, "Recent Data Show Dominant Meat Processing Companies Are Taking Advantage of Market Power to Raise Prices and Grow Profit Margins," Nov. 10, 2021

• Macrotrends, net earnings for JBS Foods and Tyson Foods, accessed June 27-28, 2022

• Bloomberg, "Crop Giant Cargill Reports Biggest Profit in 156-Year History," Aug. 6, 2021

• Marfrig, "Sustainability Report 2021"

• The Poultry Site, "Brazil's Marfrig reports 61.1% drop in first-quarter profit," May 4, 2022

• U.S. Department of Agriculture, "Prices Received for Cattle by Month - United States," May 31, 2022

• Agribusiness, "A consolidated market leaves ranchers wondering what’s next," June 21, 2021

• Joe Biden, comments on the economy, May 10, 2022

• Senate Agriculture, Nutrition and Forestry Committee, "Bipartisan Meat Packing Special Investigator Act Passes Senate Agriculture Committee," June 22, 2022

This article originally appeared on Austin American-Statesman: Fact-check: Are meat-packing companies making record profits?