From the Farm: Heinkel’s Packing

Agriculture

DECATUR, Ill. (WCIA) — The Biden administration, concerned that four meatpackers control 80% of US meat processing, announced earlier this week that it will provide training programs for employees and financial aid to help small meatpackers compete.

Owner Wes Heinkel of Heinkel’s Packing in Decatur has mixed emotions about the government’s offer to help businesses like his to compete with large meat packers. So how would he design such help for small slaughter plants?

“Two notes on the labor issue: provide incentives for employers to hire labor and train them. Because the truth is, the company knows better how to train that employee better than the government does,” Heinkel said. “The government has done some of that through the pandemic through employee retention credits, perhaps payroll tax credits for new hires for a couple years. The company doesn’t pay payroll taxes on that person and the person doesn’t pay on that system. It might be a good idea. You’ve got to figure out a way to get wages up.”

“So on the labor thing, I think that might be a good way to go. The guaranteed loans I could really see positive, so long as you are using companies that have proven themselves over time,” Heinkel continued. “I think if you start building new plants with new stainless steel equipment, and guess what. You walk in, you’ve got a brand new plant and you’ve got no labor on the floor, no historical knowledge of how to operate a plant, and I think they should go into companies that have proven themselves and survived the initial consolidation.”

Heinkel says the governmental initiatives may not end up reducing meat prices.

“You never let a crisis go to waste and unfortunately, the big packers are real and they have consolidated those markets. They are incredibly efficient. And I would say that some of these movements may not decrease food prices; they may likely increase food prices,” Heinkel said. “Part of the issue of keeping up with those guys is they can turn the product over. You are seeing food inflation now because they don’t have the labor to turn over the carcass. That’s where the food inflation comes from. Until you solve the labor problem, which is affected directly by COVID-19, you are going to face food inflation challenges for the foreseeable future.

We’ll visit more with Wes Heinkel on our weekend show, Midwest Ag This Week, on Saturday.

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