A small coffee cup with the inscription “Small Farmers — Big Change” sat on the table just in front of Farmers Union President Doug Peterson. The coffee in that cup wasn’t the only thing at the meeting that was hot.
Over 100 farmers from all over the state and outstate gathered for one of many regional meetings in Redwood Falls Tuesday to hear speakers and gain support for an even grander meeting which will take place in Fort Collins, Colo. Friday, August 27 to rein in corporate control of the livestock industry.
It appears there is a collective David vs. Goliath movement on to take action for fair market prices against corporate concentration that has been using its muscle to take over the markets and dictate what farmers should get for their livestock.
Who are they fighting?
A few of the big ones include the American Meat Institute (AMI). It’s the leading trade association for corporate meat packers and processors. They, according to information at the meeting, are a proponent of the defunct National Animal ID System. They and nine of their lobbyists opposed a ban on packer ownership of livestock Country of Origin labeling and the now proposed Grain Inspection and Packers and Stockyards Administration (GIPSA) rule.
Cargill: It was just announced Aug. 18 that Cargill’s fourth-quarter net income more than doubled. Cargill, which process and ships grain and produces pork and beef, reported final-quarter net earnings of $691 million, up from $327 million last year. Its fourth quarter revenue jumped 11 percent to $28.1 billion. Full-year revenue was $107.9 billion, down slightly from $115.1 billion last year. They are continuing to grow with 17 new expanded facilities and 15 more major projects underway.
Cargill, the largest privately-owned firm in America, is the second largest beef packer and livestock feed mill. They are third in beef feedlot ownership and turkey production and the fourth largest pork packer.
If American-based competition isn’t enough, there’s JBS, a Brazilian-based meat packing giant and the world’s largest beef processor. In 2009, in the U.S. alone, JBS had $30 billion in revenue. In recent years they have advanced holdings in the U.S. livestock industry with acquisitions of Swift Co. Smithfield Foods Inc. beef operations, Pilgrims Pride and Five Rivers Cattle Feeding, which is the nations largest cattle feeding organization. As of 2009, JBS controls 24 percent of the beef market, 18 percent of the poultry market and 12 percent of the hog market.
There are more.
Loaded for bear
Backed by the National Farmers Organization (NF0), Minnesota Farmers Union, and Land Stewardship, to mention a few, a distinguished group of speakers were present at the meeting to give their support, air their views and listen to a room full of farmers vent some steam.
The speakers included Bill Bullard, Chief Executive officer of R-CALF. Lynn Hayes, Farmers’ Legal Action Group, Attorney at Law, Rhonda Perry, a Missouri livestock and crop farmer and Missouri Rural Crisis Center program director. Also on the slate of speakers was Minnesota Attorney General Lori Swanson, who could not be present due to illness, but who sent Assistant Attorney General James Canaday in her place.
What the
speakers had to say
There are two issues on the federal level important to farmers and ranchers right now. Congress, in the 2008 farm bill, directed GIPSA to write a rule that clarifies what are unlawful practices under the packers and stockyards act. They have proposed a rule open for comment now. USDA and the Department of Justice are holding joint listening sessions around the country.
Bill Bullard didn’t need a microphone to get his message out loud and clear.
“Over the last 30 years there has been little attention focused on the enforcement of U.S. anti-trust laws and the enforcement of our almost 90-year-old packers and stockyards act that was designed to protect independent producers from the unfair, unjustly discriminatory and deceptive practices of the packers,” noted Bullard.
He said there have been radical changes in the poultry industry of the 60s and 70s and since 1980 the packers reduced the number of hog producers from 667,000 to fewer than 65,000, wiping out over 90 percent.
“We need to look at how they did this. How are they able to capture the supply chain of the livestock industry. The first step is to create a rift in the market place that never before existed — it’s called market access risk. It’s a risk that a producer bears because he doesn’t know if he will have timely access to the market place when the animal is at optimal slaughter weight,” said Bullard.
They have solved the risk by gaining control and eliminating other buyers and having farmers sign contracts. This keeps the producers from selling slaughter-ready cattle at top weight so they can pay him less.
“We have seen in the past 13 years the number of feedlots shrinking dramatically. We had over 112,000 feedlots in 1996. In the course of 13 years, we wiped out 30,000 independent cattle buyers from this industry,” said Bullard. “We are losing more than 11,000 per year. That is more cattle operations than there are in the entire states of Idaho, Montana, Arizona, Wyoming and North Dakota.”
This follows in line with the hog and dairy industry even in the face of growing consumption and a growing market.
In 1985 10 percent of all the beef in the United States was imported. Eleven years later that jumped to 13 percent, in 2009 - 17 percent.
“Back in 1980 the U.S. cattle producer received 63 cents for every dollar consumers spent on beef. By 2009 the producers share shrunk to 43 cents, while the consumers costs have increased dramatically,” said Bullard.
Part II next week.
Lynn Hayes explained what the new rule to protect livestock producers addresses and why it is important to farmers.
She said it’s essential that people who want rules passed, speak up. Even though these rules apply most directly to packers buying slaughter-ready livestock.
“The new rule establishes that USDA would consider it unlawful for packers to pay higher prices based solely on the volume of livestock produced unless they offer that price to all producers who can individually meet that volume requirement or who collectively meet that requirement, explained Hayes.
What that should do is help prevent packers from paying large volume producers higher prices than smaller volume producers.
Another thing it does is make it unlawful to packers from paying price premium based on livestock quality, time of delivery or production methods, such as use of antibiotics.
“If they are going to pay someone a buck more a hundred weight in a premium they are going to have to demonstrate how economically it makes sense for them to do it,” said Hayes.
It also prohibits packers from taking retaliatory action against livestock producers who are out there speaking their mind about what’s happening in the livestock industry. That’s important because the packers are coming out hard and strong against these rules.
There are many other stipulations expressed in the new rule, but Hayes said there is still more to be done.
James Canaday grew up as an Illinois farm kid and knows some of the problems his parents and farmers face.
He started by throwing out some statistics such as there are 81,000 farms in Minnesota on more than 27 billion acres. We rank number six in the nation in cash receipts and red meat production, number eight in livestock, number three in hogs and pigs. The value of livestock and poultry in the state is more than $3.23 billion.
“To an attorney general these numbers are very important. Every bit of the state economy can be traced back to you. More than 80 percent of the agricultural jobs are off the farm, supported by you,” said Canaday.
He said he knows major meat packers have steadily been gaining control and chipping away at rural livlihood. The entire agricultural sector is falling under the control of multi-national corporations.
Renville and Redwood Counties are number one and two in soybean production.
“One company owns 97% of intellectual property which allows them great control of the market. Whether you buy Monsanto’s beans or Monsanto’s competitors beans you’re dealing with that issue. Prices have gone up in that market dramatically. It really is the entire agricultural sector dealing with the same issue,” he said.
He said any product in this market that can hurt farmers or consumers must be examined and his office is doing that.
“It’s also important for people going to Ft. Collins. We’ve got a number of the right people listening. What you say can influence people going to those meetings.”
The proposed GIPSA rules, he said, cover many things including mandatory arbitration provisions and contracts. Everybody who has a credit card or cell phone gives up their rights to litigate if they have a problem with a company.
“You certainly may have situations where arbitration is a good deal for you. But we are interested in making sure you make that choice knowingly and making sure you are not forced into that decision before you ever have a dispute with these companies and give up your rights to go to court before you are in that dispute,” said Canaday. He invited anyone to call him at anytime at (651) 757-1421.
Rhonda Perry talked about what to do now. She said it is important to look at the pork industry because producers are going to be told a whole lot of lies.
“Missouri lost 90 percent of hog farmers since 1985. They (corporations) came in and said this was the wave of the future, more efficient way to raise livestock, good for consumers, good for the environment and good for family farmers. What we saw was consumer pork prices went up 71 percent, hog farmers share of the consumer dollar went down 50 percent — down to 25 cents,” noted Perry.
She attributed this to sheer corporate power. The thing they forget to tell you is you can be the most efficient hog or cattle producer if you are the only one left standing, because you now control the market.
“We really need to think who are our friends in this fight and who are our enemies. No one can create political will but us. This is our opportunity, our time. Agriculture isn’t just farmers,” she said.
Doug Peterson, 12-year former Minnesota legislator and now Farmers Union President, told a story of a lobbyist when he was chairing the ag committee. He introduced the congressional lobbyist very simply telling the committee members that before taking his testimony into consideration this person works for those people who buy from the farmers at the lowest price they can and then turns around and sells them to the farmers at the highest price they can.
“I think we have an administration that has said we are going to do something about it. Now it’s a matter of putting the political will together for our Congress people in the senate and the house because we have people that live in rural Minnesota that raise livestock, not packers. If our political leaders side with the packers, when the hell are we going to have change for people who actually want to stay on this land and farm and bring forth a great nation,” said Peterson.
What the farmers had to say
Tim Henning, from Maynard said in the early 90s he started feeding and marketing cattle buying them off the same ranch as his neighbor.
“He took the top end, I took the slighter end. IBP came out and gave us a bid, I called John, what did they bid you? It was $2 more than I received. When I called the packer on it he said ‘What you got a damn hotline between the two of you?’ I pressed him, I got the extra $2. That was the last time IBP ever bought an animal on my place, not by my choice. They have different prices now. My cattle don’t meet their grade, it’s not what they are looking for, the price is ridiculously low. They have more excuses than Carter’s got kidney pills,” said Henning.
Henning then started working with a rancher in Montana, and with a packer in Pennsylvania. Pretty soon Smithfield bought out that packer. He went to a marketing firm who had agreed to come to the meeting in Redwood Falls. That man didn’t show up due to direct or indirect pressure by packers who told him not to tell his story or they would not buy his cattle.
Tim Velde a fourth-generation farmer from Hanley Falls said he once had a choice of four different local buyers to sell to. Now a portion of his production goes into an overseas market and to a small packer.
“We sometimes have to wait two or three weeks to get hogs in when they are ready, so we fall out of the window on carcass weight and quality. Sow price bids sometimes come in $1 under the Sioux Falls top for the day. I’ve hauled livestock into Sioux Falls for quite a few years. When you see the selection of sows there, when you get a $1 under that, you aren’t getting much because usually what ends up there are the animals nobody else wants,” noted Velde.
John Smith from Lac Qui Parle County north of Montevideo told of how Australia ships 10,000 head of cattle a week labeled as U.S. Beef to the states.
“It’s putting their small ranchers out of business because they are under the animal ID rule and everytime they touch that animal and move it they are assessed a fee.
“In a recent trip to Canada, the only beef I saw in their freezers was labeled as Australian meat, not Canadian. When I look at beef in this country I never see any country of origin labels” he said.
Australian beef, he was told, since 2004 is one of the largest importers of beef to the U.S. Under the country of origin law it is required that meat be labeled from all countries in which the processor incurred ingredients. So the label would likely read ‘Product of United States, Australia, New Zealand and possibly Canada.
“The big issue though is how is it that the producers in Australia, if their exports are up, are not making money? The answer is the meat packers have the ability to pass any losses associated with lower wholesale meat prices back to the producer. They’re defying competition. It’s not just the U.S. cattle producer,” said Bullard.
Paul Sobocinski, a Wabasso crop and livestock farmer on the Land Stewardship staff encouraged all in attendance at the two-hour meeting to place their name on a postcard that will be mailed to U.S. House Agriculture Chairman Collin Peterson.
The postcard, in essence said that the sender knows Congress has been hearing a lot from AMI, NCBA, NPPC, and other lobbyists in D.C., but that Peterson needs to know they don’t represent the farmer on this issue. The proposed GIPSA rule is a step in the right direction to ensure more competitive markets and end some of the most abusive practices of big packers.
Gene Paul, a member of the NFO and Farmers Union said the lack of enforcement of anti-trust laws has been compounded.
“When government oversight disappears it creates a vacuum. Those companies with the power take advantage of that to strengthen their position. We’ve seen this in farm production and the food industry around the world as well,” said Paul.
In conclusion Bullard got up again and said August 27 is the day they can change America.
“We can’t outspend or outlobby the powerful meat packers, they are among the most powerful economic forces in Washington. Folks, we can outnumber them. If we have 25,000 people show up at Ft. Collins we will send a message to Washington that will address your questions. I encourage everyone to be there, if necessary, charter a bus like they are doing in five or six other states.”
