The Agriculture Department is working on a study of retail food pricing that is likely to raise questions about industry practices, Agriculture Secretary Tom Vilsack said Thursday.
The study comes as Republicans continue to hammer Vice President Kamala Harris over the food inflation that has taken place since she and President Joe Biden took office in 2021. Harris on Friday is expected to discuss an economic plan that includes cracking down on what she says is price gouging by food companies.
Vilsack, speaking to reporters at an American Coalition for Ethanol conference in Omaha, declined to address the Harris plan, citing Hatch Act restrictions on political activities of federal employees. But he said the USDA study would “be coming out very soon.”
“I think it’ll raise some some valid questions and issues about practices within the industry that ultimately impact and affect the price that people pay that bear some examination,” Vilsack said.
Vilsack sad he believes the USDA’s current partnership with the Department of Justice has been beneficial for ensuring competition across the food and agriculture sectors.
“We’ve been pleased with the work that the Department of Justice has made in terms of cracking down on potential antitrust violations,” Vilsack said.
The Federal Trade Commission issued a report earlier this year that said large grocery chains used their size to get a leg up on their smaller competitors as the pandemic disrupted supply chains.
The companies “used policies that imposed strict delivery requirements on their upstream suppliers and threatened fines for noncompliance. Walmart even tightened the delivery requirements its suppliers had to meet to avoid fines as the pandemic went on,” the report said.
Coming out of the pandemic, Vilsack also has been trying to expand meatpacking options for livestock producers by funding new processing capacity. USDA announced last month that a fresh round of grants, totaling $110 million, for projects in 30 states.
The Meat and Poultry Processing Expansion Program provides funding for building or expanding of processing facilities, installing new equipment, ensuring they are meeting packaging and labeling requirements, and helping companies meet staffing goals.
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Food prices rose sharply starting in 2020, before Biden took office, but inflation has slowed considerably over the past year. The Consumer Price Index for food eaten at home rose 3.5% in both 2020 and 2021 and then jumped 11.4% in 2022 and 5% in 2023., but the index for grocery prices has risen just 1.1% since July 2023.
USDA’s Economic Research Service is forecasting that grocery prices will be up 1% in 2024 over 2023 and only 0.7% in 2025. The 20-year average inflation rate for food eaten at home is 2.7%.
Grocery prices fell slightly, 0.2%, in 2017, the first year of the Trump administration, and rose just 0.4% in 2018 and 0.9% in 2019 ahead of the pandemic.
Scott Lincicome, vice president of general economics for the Cato Institute, a libertarian think tank, responded on X to reports of Harris’ economic plan by citing a New York University survey showing the grocery industry had a 1.18% net profit margin last year.
Last year’s profit margins for farming and food processing were 7.12% and 6% respectively, according to the NYU data.
Julie Anna Potts, president and CEO of the Meat Institute, which represents meat processors, said the federal ban on price gouging that Harris wants “does not address the real causes of inflation.”
“The Harris campaign rhetoric unfairly targets the meat and poultry industry and does not match the facts. Food prices continue to come down from the highs of the pandemic. Prices for meat are based on supply and demand. Avian Influenza, a shortage of beef cattle and high input prices like energy and labor are all factors that determine prices at the meat case,” Potts said in a statement.