Notice2022-05669
Competition in Food Retail and Distribution Markets and Access for Agricultural Producers and Small and Midsized Food Processors
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 17, 2022
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
On July 9, 2021, President Biden issued an Executive Order on "Promoting Competition in the American Economy," which creates a White House Competition Council and directs Federal agency actions to enhance fairness and competition across America's economy. The Executive Order directs the Secretary of Agriculture (the Secretary), among other things, to submit a report on the effect of retail concentration and retailers' practices on the conditions of competition in the food industries. This notice requests comments and information from the public to assist the U.S. Department of Agriculture (USDA) in preparing the report required by the Executive Order and advancing policy steps to promote competition in the food and agricultural markets.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 52 (Thursday, March 17, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 52 (Thursday, March 17, 2022)]
[Notices]
[Pages 15194-15198]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-05669]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
[Doc. No. AMS-AMS-22-0026]
Competition in Food Retail and Distribution Markets and Access
for Agricultural Producers and Small and Midsized Food Processors
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Notice; request for public comments.
-----------------------------------------------------------------------
SUMMARY: On July 9, 2021, President Biden issued an Executive Order on
``Promoting Competition in the American Economy,'' which creates a
White House Competition Council and directs Federal agency actions to
enhance fairness and competition across America's economy. The
Executive Order directs the Secretary of Agriculture (the Secretary),
among other things, to submit a report on the effect of retail
concentration and retailers' practices on the conditions of competition
in the food industries. This notice requests comments and information
from the public to assist the U.S. Department of Agriculture (USDA) in
preparing the report required by the Executive Order and advancing
policy steps to promote competition in the food and agricultural
markets.
DATES: Comments must be received by May 16, 2022.
ADDRESSES: All written comments in response to this notice should be
posted online at <a href="http://www.regulations.gov">www.regulations.gov</a>. Comments received will be posted
without change, including any personal information provided. All
comments should reference the docket number AMS-AMS-22-0026, the date
of submission, and the page number of this issue of the Federal
Register. Comments may also be sent to Jaina Nian, Agricultural
Marketing Service, USDA, Room 2055-S, STOP 0201, 1400 Independence
Avenue SW, Washington, DC 20250-0201. Comments will be made available
for public inspection at the above address during regular business
hours or via the internet at <a href="http://www.regulations.gov">www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Jaina Nian, Agricultural Marketing
Service, at (202) 378-2541; or by email at <a href="/cdn-cgi/l/email-protection#375d565e595619595e5659774244535619505841"><span class="__cf_email__" data-cfemail="90faf1f9fef1befef9f1fed0e5e3f4f1bef7ffe6">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
On July 9, 2021, President Biden issued Executive Order 14036,
``Promoting Competition in the American Economy'' (86 FR 36987)
[[Page 15195]]
(E.O. 14036). E.O. 14036 focuses on the need for robust and open
competition in the American economy to secure broad and sustained
economic prosperity, promote the welfare of workers, farmers, small
businesses, startups, and consumers, and prevent the threat that
excessive market concentration poses to basic economic liberties and
democratic accountability. With respect to agriculture E.O. 14036
notes:
Consolidation in the agricultural industry is making it too hard
for small family farms to survive. Farmers are squeezed between
concentrated market power in the agricultural input industries--
seed, fertilizer, feed, and equipment suppliers--and concentrated
market power in the channels for selling agricultural products. As a
result, farmers' share of the value of their agricultural products
has decreased, and poultry farmers, hog farmers, cattle ranchers,
and other agricultural workers struggle to retain autonomy and to
make sustainable returns.
In relevant part, E.O. 14036 directs the Secretary, among other
things--
to improve farmers' and smaller food processors' access to retail
markets, not later than 300 days after the date of this order, in
consultation with the Chair of the FTC, [to] submit a report to the
Chair of the White House Competition Council, on the effect of
retail concentration and retailers' practices on the conditions of
competition in the food industries, including any practices that may
violate the Federal Trade Commission Act, the Robinson-Patman Act
(Pub. L. 74-692, 49 Stat. 1526, 15 U.S.C. 13 et seq.), or other
relevant laws, and on grants, loans, and other support that may
enhance access to retail markets by local and regional food
enterprises.
This notice requests comments and information from the public to
assist USDA in preparing and executing the report required by E.O.
14036. To facilitate those comments and information on access to retail
markets, we highlight certain questions and concerns that are relevant
to our efforts.
Consolidation in food retail and related parts of the supply chain,
such as distribution, present potential risks of unfair and
anticompetitive practices throughout the food supply chain. Increases
in concentration have been an important trend in food retail over the
last few decades, as the share of single-store firms or local chains
has declined from 55 percent in 1977 to 35 percent as of 2007, while
the concentration ratio of the four largest food retailers hit 34
percent in 2019.\1\ Food distribution is concentrated in certain
markets as well, with two firms dominating upwards of 70 percent of the
national broadline distribution market.\2\ Additionally, insufficient
analytic attention has been paid to the connections between retail,
distribution, and processing firms and the implications for competition
in the food and agricultural supply chains.
---------------------------------------------------------------------------
\1\ Retail Trends, Economic Research Service, USDA, available at
<a href="https://www.ers.usda.gov/topics/food-markets-prices/retailing-wholesaling/retail-trends/">https://www.ers.usda.gov/topics/food-markets-prices/retailing-wholesaling/retail-trends/</a> (last accessed March 2022); Lucia Foster,
John Haltiwanger, Shawn Klimek, C.J. Krizan, and Scott Ohlmacher,
(2016), ``The Evolution of National Retail Chains: How We Got
Here,'' Handbook of the Economics of Retailing and Distribution,
Emek Basker, ed. London, UK: Edward Elgar Publishing.
\2\ See Federal Trade Commission v. Sysco Corporation, U.S.
Dist. Ct. (D.C.), Memorandum of Opiniont (2015), available at
<a href="https://www.ftc.gov/system/files/documents/cases/150623syscomemo.pdf">https://www.ftc.gov/system/files/documents/cases/150623syscomemo.pdf</a>; see also, generally, ``Wholesaling,'' USDA
Economic Research Service, available at <a href="https://www.ers.usda.gov/topics/food-markets-prices/retailing-wholesaling/wholesaling/">https://www.ers.usda.gov/topics/food-markets-prices/retailing-wholesaling/wholesaling/</a> (last
accessed March 2022).
---------------------------------------------------------------------------
The rise in food retail and distribution concentration in recent
decades potentially impacts agricultural producers and small, midsized
and otherwise independent (SME) processors--as well as potentially
ultimately impacting consumers. Concentration in food retail and
distribution may magnify and contribute to consolidation among meat and
poultry processing firms, among other food system market
participants.\3\ Such firms themselves may consolidate to secure
leverage against consolidated food retail firms, which in turn may make
it more difficult for SME processors to access food retail markets.
Concerns relating to exclusionary and predatory conduct in food retail
and distribution thus may be particularly relevant to the viability of
new and expanded meat and poultry processing facilities and other new
food system market entrants, which are receiving over $1 billion of
support under the White House Meat and Poultry Processing Supply Chain
Action Plan.\4\
---------------------------------------------------------------------------
\3\ Four large meat-packing companies dominate over 80 percent
of the beef sales market and, yet, over the last five years,
farmers' share of the price of beef has dropped by more than a
quarter--from approximately 52 percent to 37 percent--while the
price of beef for consumers has risen. Four large meat-packing
companies dominate about 70 percent of the pork market, and four
large poultry integrators make up 54 percent of the poultry market,
although a pending merger would raise that further. Annual Report,
Packers and Stockyards Division, USDA, available at <a href="https://www.ams.usda.gov/reports/psd-annual-reports">https://www.ams.usda.gov/reports/psd-annual-reports</a> (last accessed March
2022).
On monopsony's effects up the supply chain, generally, see Barry
Lynn, Cornered (New York: Wiley, 2010).
\4\ Meat and Poultry Supply Chain, USDA, available at <a href="https://www.usda.gov/meat">https://www.usda.gov/meat</a> (last accessed March 2022).
---------------------------------------------------------------------------
USDA will use public comments received through this notice to
inform our policymaking and advocacy to help increase fairness and
competition in food retail and related segments of the American food
and agricultural markets. We are particularly interested in the role
that rules, regulations, and enforcement under the Packers and
Stockyards Act of 1921 and the Robinson-Patman Act of 1936--both of
which were designed to regulate discriminatory limits on market
access--may play in enhancing market access for agricultural producers
and SME processors to retail markets, and especially in preventing
predatory pricing by incumbent market participants to exclude new
market entrants and competitors.
We are also interested in comments addressing the role that grants,
loans, and other programs and services may play to enhance access to
retail markets by agricultural producers, SME food processors, and
other local and regional food enterprises. The Department is
particularly interested in the role that cooperative or community-owned
grocery retail and food distribution networks have or may play in
addressing market challenges and in better serving producer, worker,
community, and consumer needs, for example in remote locations or
underserved communities.
Commenters may further provide information relevant to promoting
local and regional food systems, creating new market opportunities
(including for value-added agriculture and value-added products),
advancing efforts to transform the food system, meeting the needs of
the agricultural workforce, supporting and promoting consumers'
nutrition security, particularly for low-income populations, and
supporting the needs of underserved and small to mid-sized producers
and processors.
II. Written Comments
USDA encourages commenters, when addressing the elements below, to
clearly indicate the question their comments are responding to by
repeating the text of the question before their response. This would
assist USDA in more easily reviewing and summarizing the comments
received in response to these specific comment areas. In addition, USDA
welcomes commenters to refer, with appropriate explanation, to any
views set forth in recently or previously submitted comments, such as
those to E.O. 14017 ``America's Supply Chains'' (No. AMS-TM-21-0034)
(86 FR 20652) or ``Investments and Opportunities for Meat and Poultry
Processing Infrastructure'' (No. AMS-TM-21-0058) (86 FR 37728).
This request for information includes but is not limited to the
following elements. The questions below are meant to stimulate
comments, and
[[Page 15196]]
commenters should feel free to respond to those they feel most relevant
to them, or as their time and interests permit. Comments may overlap or
be organized as the commenter feels most appropriate. Please offer
descriptive or quantitative information, as available and relevant.
Competition and Impacts
(1) Are market concentration and power, and lack of competition,
problems in food retail and distribution markets? If so, where and in
what ways? What practices in the food retail and distribution markets
are most concerning from a competition standpoint? Are there particular
practices that exclude or disadvantage new market participants or
potential market participants, unfairly transfer risk, or otherwise
abuse market power or make it harder to compete? Please describe
specific experiences and challenges, if possible.
(2) How do concentration and size in the food retail and
distribution markets affect the ability of agricultural producers and
new, SME food processors to access the retail marketplace? Are
agricultural producers and SME food processors that serve local and
regional markets affected differently? Are there regional and other
demographic variations to any of the impacts? Please describe specific
experiences and challenges, if possible.
(3) How does competition and concentration among distributors and
other parts of the wholesale food market relate to food retail
concentration and competition? How do distribution and wholesale food
market competition and concentration affect access to markets for
agricultural producers and SME food processors? Does buying power of
some retailers at the wholesale level make it difficult for some
producers or SME processors to access distribution within these
channels?
(4) How are SME grocery retailers specifically affected by
concentration and potentially anticompetitive practices in food retail
markets? What about distributors that may serve them? Do any of those
challenges affect agricultural producers and SME food processors?
Please describe specific experiences and challenges, if possible.
(5) How are smaller food service businesses, schools, hospitals,
and other institutional food buyers affected by concentration or
potentially anticompetitive practices in food processing and
distribution? What effects do concentration and potentially
anticompetitive conduct have on food prices, quality and safety,
distribution and availability of healthy foods that meet nutrition
standards, or other needs specific to these buyers and food providers?
(6) How are workers, consumers, other small businesses,
communities, and others along the food supply chain affected by
concentration or potentially anticompetitive practices in food retail
and distribution markets? What effects do concentration and potentially
anticompetitive conduct have on food prices, quality and safety;
distribution and accessibility to healthy foods, and food and nutrition
security; and worker empowerment, equity for underserved producers, and
environmental sustainability? Are challenges with food deserts
aggravated by concentration or competition issues in the food and
agricultural supply chains? Do impacts to any of these concerns vary by
region, commodity, or by other demographics?
Business Practices
(7) Please describe the role that exclusive dealing arrangements
play in the food retail and distribution marketplaces. Do they
facilitate, inhibit, or otherwise affect opportunities in the industry
for SME processors? How do they affect the development of new products
and the growth, diversity, or resilience of the industry? Do they
facilitate, inhibit, or otherwise affect product quality and risk
management? Do differences in commodity, product, or region affect the
practices, risks, barriers, or outcomes? Are tribal businesses and
enterprises and underserved communities affected differently? Does the
size, scale, or market power generally of the companies involved in
such an arrangement matter for how these arrangements affect
competition?
(8) Please describe the role that slotting fees, category captains,
and other preferential access or discounts play in retail food markets,
including but not limited to meat and poultry. Are certain segments,
such as organic or value-added products like grass-fed meats, affected
differently? What affect do such behaviors have on access to the retail
marketplace? How are preferential relationships in the marketplace
manifested, and do those relationships limit new market entrants from
accessing the marketplace? Do those relationships improve risk
management or otherwise enhance market access in certain circumstances?
Should any of these practices be limited or changed to support new
market entrants, and if so, how?
(9) If you are a small or mid-sized producer, have you had to
change any business or marketing practices in order to effectively
navigate required slotting fees to gain market access? Have these
changes negatively impacted the overall profits of the products you
sell? Do you believe that slotting fees are adversely or unfairly
deployed against small or mid-sized producers or otherwise affect
market access and what is the basis for your belief?
(10) Please share any concerns relating to predatory pricing by
incumbent food processors, threats of retaliation by incumbent food
processors against retailers for offering new or different products, or
other practices designed to exclude competitors from the marketplace.
When and where have they occurred? Were antitrust enforcement tools
able to address the challenges in a timely and effective manner? If
not, why not?
(11) Please comment on implications, negative or positive, of
mergers in the food retail or distribution sectors. Have certain
mergers changed contracting or sales practices? Have certain mergers
allowed the acquisition of rivals or technologies or companies that
competitor firms rely on? Have mergers negatively or positively
impacted workers? Have mergers delivered efficiencies?
Information and Supply Chain Market Structures
(12) What roles do control and access to retail data play in
competition and access for farmers and SME food processors? Are there
significant imbalances in access to information among producers,
packers, distributor, and retailers, and how do those imbalances affect
choices and outcomes in the market? Describe the role that data sharing
between food retail companies and larger food processors, such as
packers, plays in the market environment, if any. How do any
differences affect competition and market access, and should any of
these be limited, and if so how?
(13) Describe the role that retailer ownership, including
financing, of livestock and packing play in supply chain competition
and access to retail for producers and SME processors? Are competition
concerns, if any, similar in other agricultural commodity markets? Have
these practices reduced or eliminated the need for, or competition
among, certain suppliers to some retail firms? Are certain segments,
such as organic or value-added products like grassfed meats, affected
differently? Should ownership, financing, or other forms of vertical
integration be promoted, limited, or otherwise changed, and, if so,
how?
(14) Please discuss how transportation--including rail and
[[Page 15197]]
ocean shipping--and delivery systems may affect competition in food
retail and distribution. Are certain ownership structures, business
relationships, or business practices of particular concern? How do
transportation costs, fees, or levels of service affect the
competitiveness of downstream businesses? Has concentration in
transportation industries led to negative service outcomes or other
potentially unfair practices? Have contractual arrangements that
penalize suppliers, including transportation companies, for not
delivering in sufficient quantities or on other particular terms become
more prevalent? Have they become problematic as market power has grown,
or in certain circumstances?
(15) Describe the role that label claims and labeling standards
play in access to retail markets for agricultural producers. Are public
or private resources sufficiently available for smaller agricultural
producers seeking to develop or use labels? Do labels standards,
verification, and enforcement appropriately support access to markets
for agricultural producers and SME processors? Are there any instances
when a larger supplier used, including potentially misused, a label to
gain market access or advantage over smaller producers or SME
processors? Please share concerns and recommendations, if any.
(16) What role, if any, does financing or financial markets play
any of the issues addressed above?
(17) Are there any other aspects of the regulatory environment that
affect retail market competition and access to retail for producers and
SME processors? Are there specific elements of these requirements that
could be more effectively tailored? What types of resources would be
helpful to assist SMEs with compliance?
Policy Responses
(18) How can antitrust and market regulation and enforcement,
including relating to mergers, unfair practices, and price
discrimination, do more to address competition concerns in food retail
and distribution markets? Should Federal and state antitrust enforcers
place greater emphasis on adverse consequences of buyer power? Should
greater attention be paid to information asymmetries and preferential
access to data? How could USDA utilize its regulatory and enforcement
authorities more effectively?
(19) How can predatory pricing by entrenched market participants be
better identified and acted upon by relevant enforcement authorities?
Can laws that prohibit discriminatory or preferential pricing, such as
the Packers and Stockyards Act and the Robinson-Patman Act, play a
greater role in preventing predatory pricing schemes, or otherwise
promote greater food market access for agricultural producers and SME
processors? Please explain.
(20) How could other USDA programs, services, and authorities be
further deployed to enhance access to retail markets for agricultural
producers and SME food processors? For example--
<bullet> How might grants, loans, and other support from USDA
enhance access to retail markets by local and regional food
enterprises?
<bullet> How might USDA marketing programs enhance access to retail
markets for agricultural producers and SME food processors, including
programs which facilitate access to a variety of markets, support
value-added production and product diversification; increase
diversification in distribution channels and market development, such
as food hubs, non-profit and cooperative distribution models; and
provide technical assistance to producers that helps access USDA
programs and improve market readiness? \5\
---------------------------------------------------------------------------
\5\ See, e.g., ``USDA Announces Supplemental American Rescue
Plan Funding Available through the Local Agriculture Market Program,
Including Funding to Expand Farm-to-Institution Opportunities,''
USDA, March 1, 2022, available at <a href="https://www.usda.gov/media/press-releases/2022/03/01/usda-announces-supplemental-american-rescue-plan-funding-available">https://www.usda.gov/media/press-releases/2022/03/01/usda-announces-supplemental-american-rescue-plan-funding-available</a>.
---------------------------------------------------------------------------
<bullet> How might food and nutrition grant and loan programs
better support competition in retail and better access for producers
and SME processors? \6\
---------------------------------------------------------------------------
\6\ See, e.g., Healthy Food Financing Initiative, available at
<a href="https://www.investinginfood.com/what-we-do/">https://www.investinginfood.com/what-we-do/</a> (last accessed March
2022).
---------------------------------------------------------------------------
<bullet> How might government procurement processes further support
agricultural producers and SME processors effectively access
institutional customers, such as schools and hospitals? \7\
---------------------------------------------------------------------------
\7\ See USDA Agricultural Marketing Service, ``Commodity
Procurement,'' available at <a href="https://www.ams.usda.gov/commodity-procurement">https://www.ams.usda.gov/commodity-procurement</a> (last accessed March 2022).
---------------------------------------------------------------------------
<bullet> Are there ways to facilitate easier access to food safety
compliance resources, and other ways to level the playing field for SME
processors? \8\
---------------------------------------------------------------------------
\8\ For more information, see ``Food Safety,'' Agricultural
Marketing Service, available at <a href="https://www.ams.usda.gov/services/local-regional/food-sector/food-safety">https://www.ams.usda.gov/services/local-regional/food-sector/food-safety</a> (last accessed March 2022).
---------------------------------------------------------------------------
<bullet> What additional information or transparency could USDA's
Market News Service provide on retail, wholesale, or distribution
markets, through the Livestock Mandatory Reporting Act of 1999 or
otherwise? \9\ Are there information or educational tools, services, or
access to data that could be helpful?
---------------------------------------------------------------------------
\9\ See USDA Market News, ``Retail Reports,'' available at
<a href="https://www.ams.usda.gov/market-news/retail">https://www.ams.usda.gov/market-news/retail</a> (last accessed Feb.
2022).
---------------------------------------------------------------------------
<bullet> What additional market analysis or advocacy could USDA do
with respect to local and regional food systems, transportation, or
otherwise that could support fair and competitive food retail and
distribution markets? \10\
---------------------------------------------------------------------------
\10\ See USDA Agricultural Marketing Service, ``Market Research
and Analysis,'' available at <a href="https://www.ams.usda.gov/services/market-research">https://www.ams.usda.gov/services/market-research</a> (last accessed March 2022).
---------------------------------------------------------------------------
<bullet> How else can competition be enhanced in food retail,
distribution, and related areas? Please discuss any other relevant
matters USDA should consider.
III. Requirements for Written Comments
The <a href="http://www.regulations.gov">www.regulations.gov</a> website allows users to provide comments by
filling in a ``Type Comment'' field or by attaching a document using an
``Upload File'' field. USDA prefers that comments be provided in an
attached document. USDA prefers submissions in Microsoft Word (.doc
files) or Adobe Acrobat (.pdf files). If the submission is in an
application format other than Microsoft Word or Adobe Acrobat, please
indicate the name of the application in the ``Type Comment'' field.
Please do not attach separate cover letters to electronic submissions;
rather, include any information that might appear in a cover letter
within the comments. Similarly, to the extent possible, please include
any exhibits, annexes, or other attachments in the same file, so that
the submission consists of one file instead of multiple files. Comments
(both public comments and non-confidential versions of comments
containing business confidential information) will be placed in the
docket and open to public inspection. Comments may be viewed on
<a href="http://www.regulations.gov">www.regulations.gov</a> by entering docket number AMS-AMS-22-0026 in the
search field on the home page. All filers should name their files using
the name of the person or entity submitting the comments. Anonymous
comments are also accepted. Communications from agencies of the United
States Government will not be made available for public inspection.
Anyone submitting business confidential information should clearly
identify the business confidential portion at the time of submission,
file a statement justifying nondisclosure and referring to the specific
legal authority claimed, and provide a non-confidential
[[Page 15198]]
version of the submission. The nonconfidential version of the
submission will be placed in the public file on <a href="http://www.regulations.gov">www.regulations.gov</a>.
For comments submitted electronically containing business confidential
information, the file name of the business confidential version should
begin with the characters ``BC.'' Any page containing business
confidential information must be clearly marked ``BUSINESS
CONFIDENTIAL'' on the top of that page. The non-confidential version
must be clearly marked ``PUBLIC.'' The file name of the nonconfidential
version should begin with the character ``P.'' The ``BC'' and ``P''
should be followed by the name of the person or entity submitting the
comments or rebuttal comments. If a public hearing is held in support
of this supply chain assessment, a separate Federal Register notice
will be published providing the date and information about the hearing.
Melissa R. Bailey,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-05669 Filed 3-16-22; 8:45 am]
BILLING CODE P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on March 17, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.