Lawmakers Don't Want Lower Food Prices

Thoughts on Beef and Special Interests

With the likely exception of gas prices, food prices are the most politically important reflection of inflation. This has much to do with frequency. You see your home insurance quote, for instance, once a year. You grumble. You protest. But it’s just once a year, so the protests don’t linger. And you’ve got bigger things to think about, like opening day and the start of the Orioles’ World Series campaign.

But you are reminded constantly of food inflation. And if your grocery bills rise too far, too fast, and too often, you may be tempted to vote against an incumbent president.

White House staff understands this. They get it. The word “shrinkflation” tends to show up in presidential speeches because they know people are unhappy.

And that’s precisely why the White House passed a rule in December to allow beef imports from Paraguay. Your mouth waters while your wallet or purse delights at the thought. There’s nothing quite like Paraguayan beef, other than of course beef from someplace else (I think it all comes from cows).

Perhaps the White House was keen to act because beef prices have surged since the start of the pandemic. The average price for a pound of ground beef is up from $3.87 in February 2020 to $5.13 in February 2024. Steak prices have jumped from $7.64 to $10.53 per pound over that span. Both of those increases exceed the economywide rate of inflation over the past four years by more than 50%.

(Some of us have thought about eating beef substitutes, but then we come to our senses and start up the grill.)

More beef imports mean more supply. More supply means lower prices. Lower prices equal happier Americans. All great.

Except, not so great, because a bipartisan group of senators just voted to repeal the rule (the vote, 70-25, was not even close). These policymakers claim their concern has to do with foot and mouth disease, which last appeared in the U.S. in 1929. Still, it sounds awful (if you’re a cow, pig, sheep, or other animal with divided hooves; this is not the same as hand, foot, and mouth disease).

Maybe some senators actually are concerned about that, though the USDA conducted a risk analysis and concluded that mouth-watering Paraguayan beef can be safely imported.

The bigger issue for legislators is, of course, the powerful lobbying arm of the U.S. cattle industry. Senator Jon Tester, who introduced the measure, didn’t hide his real intent when asked about geopolitical concerns with repealing the rule: “I understand the importance of strengthening alliances with partners all over the world, including Paraguay. But I’m telling you that we shouldn’t do it on the backs of hardworking American ranchers.”

Big picture, allowing beef imports from Paraguay wouldn’t have a particularly large impact on prices. We would have imported fewer than 6,500 tons (because protectionist quotas won’t let us import more), less than 1% of annual beef imports.

But even bigger picture, this is just one example of special interests taking precedence over inflation. Sure, it’s great to stand up for American ranchers. And American meat processors. And American sugar growers. And, well, you get it.

The point is, all these special interest concessions add up to higher food prices, and while that produces wealthier lobbyists, it also produces angrier Americans and lots of discussion about shrinkflation. If only there were drugs that reduced our appetite. Oh well.