According to foreign media reports, inflation in the United States is high, and as of April this year, the prices of beef and chicken have risen by more than 14% and 16% respectively in the past year. On May 19, local time, US senators proposed a bipartisan resolution asking the Federal Trade Commission (FTC) to investigate whether large meat producers such as Tyson Foods could manipulate prices. Critics blame some of the rise in beef prices on the fact that US beef production is controlled by only four big companies.

In addition to beef, chicken prices are also rising rapidly in many countries around the world, and the US Department of Justice has previously investigated price manipulation in the chicken processing industry.

Affected by the situation in Russia and Ukraine, the global food crisis began to emerge, and a number of countries issued export bans. As of the latest data on May 20, 20 countries have restricted exports of major food and crops, including Argentina, Algeria, Iran, India, Kazakhstan, Turkey, Serbia, Tunisia and Kuwait.

Food giants manipulate beef prices? Us senator asks FTC to investigate

According to foreign media reports, U.S. Senators Elizabeth Elizabeth Warren and Mike Rounds proposed a bipartisan resolution asking the Federal Trade Commission (FTC) to investigate whether large meat producers are likely to manipulate prices.

This is the latest move by US politicians to hold meat companies responsible for high food prices. It is reported that since the outbreak of the COVID-19 epidemic, the level of inflation in the United States has remained high, and the Biden government has reviewed the meat processing industry. Critics blame part of the blame on U. S. beef production controlled by only four big companies.

The latest data from the U.S. Bureau of Labor Statistics (Bureau of Labor Statistics) show that from April 2021 to April 2022, the price of beef and veal rose 14.3%, higher than the 13.7% increase in pork.It is worth mentioning that the increase in chicken prices is also remarkable, with chicken prices up 16.4% over the past year.

In 2018, four companies slaughtered about 85 per cent of US grain fattening cattle, which were made into steaks, roast meats and other pieces of meat for consumers to eat, according to the latest data from the US Department of Agriculture (USDA). The big four processors are Cargill, Tyson Foods Inc, Brazil-based JBS SA and National Beef Packaging (National Beef Packing Co). The companies had previously denied that they had jointly pushed up prices, according to Reuters.

Senators cited a 1914 bill that authorized the president or Congress to direct FTC investigations into alleged antitrust violations. However, the bill has not been used since the 1920s.

Angela Huffman (Angela Huffman), co-founder and vice president of Farm Action, an industry group that supports the resolution, said Congress should use all possible means to stop the abuse of monopolies. "We are pleased to see a bipartisan team going back in history and picking up this tool," he said. The downside is that there is still a long way to go to make a change. "

20 countries issue food export bans

In fact, under the influence of multiple factors such as the persistence of the conflict between Russia and Ukraine and climate change, food protectionism has sprung up in many countries around the world. According to a real-time tracker developed by the International Food Policy Research Institute, the list of countries banning food exports has been growing in the months since the start of the conflict between Russia and Ukraine.

As of the latest data on May 20, 20 countries have restricted exports of major food and crops, including Argentina, Algeria, Iran, India, Kazakhstan, Turkey, Serbia, Tunisia and Kuwait.

The restricted types of food range from staple foods such as corn, flour, rye and barley to soybeans, animal oils, vegetable oils, salt and sugar, to potatoes, eggplant, tomatoes, onions and other vegetables. Meat is also on the restricted list, such as Kuwait restricting the export of chicken and Turkey restricting the export of beef and mutton.

One of the biggest concerns in the market is that India recently banned wheat from going abroad. India is the second largest wheat producer in the world.

Local time on May 13, the Indian government issued an order to reduce production due to high temperatures, in order to ensure its domestic food security, announced an immediate ban on wheat exports. India's General Administration of Foreign Trade issued a notice on the same day, saying that the ban on wheat exports would be implemented immediately. However, countries that have made requests to the Indian government and have been authorized to do so will continue to be able to obtain wheat exports from India.

India has recently suffered from a severe heat wave and a sharp rise in domestic food prices, especially grains, and officials hope to calm food prices by banning wheat exports, according to local media reports. In addition, India expects a significant reduction in domestic wheat production. It is reported that India is currently the second largest wheat producer in the world. Global buyers are counting on Indian supplies after the conflict between Russia and Ukraine led to a collapse in wheat exports in the Black Sea region, Reuters reported.

It is worth mentioning that Indonesia's recent palm oil export ban "caused public anger". Following protests in several provinces and cities in the country, Indonesian President Joko said on Thursday (May 19) that as the country's domestic edible oil supply improves, Indonesia will lift the ban on palm oil exports from May 23 (next Monday).

The United States has investigated the rise in chicken prices.

Earlier, the US Department of Justice has conducted an investigation into price manipulation in the chicken processing industry.

It is reported that the US Department of Justice launched a years-long federal investigation into the chicken market on suspicion of manipulating market prices by large chicken producers such as Tyson Foods, and eventually filed criminal charges against employees of these companies.

According to public reports, between October and December 2021, the US District Court in Denver conducted a seven-week trial of ten current and former executives from Tyson Foods, Pilgrim's Pride and Purdue Farm accused of price-fixing and bidding in the vast US poultry market. On December 16 last year, the US District Court in Denver declared a mistrial against executives of companies such as Tyson Foods because the jury could not reach a verdict in time.

It is worth mentioning that although the existence of price manipulation remains to be investigated, many meat giants in the United States have indeed benefited a lot from rising food prices.

Tyson Foods, for example, is the largest producer of processed chicken and beef in the United States. It is also a large producer of processed pork and protein products, with brands including Jimmy Dean, Hillshire Farm, Ball Park, Sara Lee, Aidells, State Fair and Raised & Rooted. In fiscal year 2021, 81 per cent of Tyson's products were sold through various US channels, including retailers (47 per cent), food services (32 per cent) and other packaged food and industrial companies (10 per cent). In addition, 11 per cent of the company's revenue comes from exports to Canada, Mexico, Brazil, Europe, China and Japan.

Tyson Foods reported adjusted earnings per share of $2.29 in the second quarter of 2022, compared with $1.30 a year earlier, and net income of $833 million, compared with $477 million a year earlier.

Various products of Tyson Foods have risen to varying degrees. In the second quarter, the average price of beef rose 23.8% year-on-year, while the average price of chicken and pork rose 14.4% and 10.8% respectively. Tyson also expects total sales in fiscal 2022 to range from $52 billion to $54 billion as inflationary pressures continue into the second half of the year.

Tyson shares were trading at $84.12 as of May 19, with a total market capitalization of $30.4 billion.

Global chicken prices rise in many countries

It is worth mentioning that in addition to the United States, including the United Kingdom, South Korea, South Africa, Thailand and other places have recently exposed the news of rising chicken prices.

The prices of three important agricultural products-pork, chicken and eggs-have continued to rise since 2015 and are now at an eight-year high, according to a report released by the Agricultural economy Office of the Ministry of Agriculture of Thailand on March 8. Compared with 2015, the prices of pork, eggs and chicken rose by 46%, 12% and 6%, respectively. The main reason is that the prices of feed raw materials such as corn, wheat and soybean meal are rising, up 14%, 43% and 15% respectively from the same period last year.

Zhongtai Securities reported on May 16 that since November last year, there have been outbreaks of highly pathogenic bird flu in several farms in France. Two poultry farms in Hokkaido, Japan, also experienced an outbreak of highly pathogenic bird flu. Since January 2022, highly pathogenic avian influenza has also been found in waterfowl, broilers and other birds in the United States, according to the Centers for Disease Control and Prevention in the United States. as of May 12 local time, the influenza virus had spread to 34 states in the United States, infecting more than 37 million birds. At present, it is during the period of migratory birds in America, and some experts believe that bird flu in the United States will continue to spread. According to the U.S. Department of Agriculture, the outbreak is the worst since 2015.

Zhongtai Securities believes that international bird flu aggravates domestic supply risks, especially upstream provenance supply. At present, under the bird flu epidemic in the United States, the prices of poultry products have risen to varying degrees. As one of the largest chicken producers in the world, chicken prices in the United States are of guiding significance to global prices. we can see that there is a consistent trend between American and Chinese chicken prices in history, and there is a certain deviation at present. the deviation between the two prices is bound to be repaired.

In addition to meat prices, recently, the issue of global food security has also aroused concern from all walks of life.

Western Securities Yi Bin reported on May 18 that due to economic shocks, extreme weather, and geopolitical impacts, the world is experiencing a new round of food crisis. At present, the number of hungry people in the world is at a new high, the war between Russia and Ukraine, and in May, India, a major wheat producer, announced a ban on wheat exports, and the "food crisis" of the gray rhino is approaching.

According to its analysis, global food prices have remained high since 2019, and the risk of global food crisis is rising. On the surface, there are epidemic situation, geographical conflict, slow global spring sowing, high cost of chemical fertilizer, new round of trade restrictions and other factors, but at a deeper level, under the background of epidemic situation and trade conflict, the global value chain and supply chain are seriously affected by non-economic factors, and the uncertainty of global food supply increases, which aggravates the price rise.

Seven suppliers join hands to speculate on the high price of chicken and make a profit of 1 trillion won

It is worth mentioning that South Korea also conducted a survey on the rise in raw chicken prices and finally found that seven suppliers made a profit of 1 trillion won (about 5.4 billion yuan) in joint speculation of high chicken prices.

In South Korea, chicken is one of the main consumption meat, whether ginseng chicken soup or fried chicken, is a representative delicacy in South Korea, the price of chicken has naturally attracted much attention.

According to a previous report by CCTV Finance, in October 2021, the Fair Trade Commission, the market regulator of the South Korean government, announced that seven chicken suppliers, which account for 93.2% of the national market, have jointly manipulated the prices of some varieties of raw chicken commonly used in ginseng chicken soup for several times over the past six years, making a profit of 1 trillion won (about 5.4 billion yuan) during this period.

According to the survey, from 2011 to 2017, due to the falling prices due to the oversupply of chicken in the market at that time, in order to avoid losses, the seven companies involved began to collude with each other to raise the wholesale price of chicken on the market several times.

Even the Korean Broiler Association has been exposed for manipulating chicken prices.

In April 2022, the Fair Trade Commission, South Korea's market regulator, disclosed that the Korea Broiler Association had artificially controlled the production of broilers for more than nine years to achieve the goal of driving up sales prices. As a result, he was fined more than 1.2 billion won, or about 6.22 million yuan.

It is reported that in order to prevent the reduction of chicken prices, the association serves as a communication link among its members to help them intervene in production from the upstream breeder import stage. In the middle, fresh chicken is frozen to reduce output, and production is limited by discarding eggs and culling more than 28 million healthy chickens. There have been as many as 40 manipulations like this.