In a recent post on Grist, Tom Philpott ran down the list of problems that this year’s Farm Bill debaters have blamed, loudly and repeatedly, on subsidies: “everything from the obesity epidemic to the explosion in CAFOs in the late 1990s to the dead zone in the Gulf of Mexico… [to] steamrolling farmers in Mexico, Africa, and elsewhere.” Most mainstream media outlets and, points out Philpott, many progressive causes (Oxfam is one prominent example) are only too willing to point to subsidies as the delinquent dad when our food system spawns yet another bad seed.
Philpott is frustrated by what he sees as a lack of complexity and nuance in the debate over subsidies. I’d like to voice my own frustration about a different but related issue here. I’ve noticed that in the debate over subsidies, both in the media and among progressive reform groups, there is often no distinction made between the subsidy policy itself and the farmers who receive payments. Commodity farmers, once considered the salt of the earth (almost literally), are now characterized quite differently: as a wealthy, powerful, politically-savvy lobbying force capable of shaping the global food system to meet its needs, leaving the rest of us to pick up its mess. Call it Big Farma.
Case in point: after years of being blamed by groups like Oxfam for exporting very low-priced commodities in order to capture foreign markets — an act that undercut developing-country prices and edged poor farmers further into poverty — this powerful farm lobby is now credited with having driven corn prices up by pushing through Congress (and EU governments) laws mandating greater use of ethanol. As a consequence, say the media and (again) groups like Oxfam, developing countries will suffer as food prices rise. Meanwhile, we're told, Big Farma is busy ensuring that it will continue to receive large subsidy payments despite record-high corn prices. Quoth the Chicago Tribune: "Washington sends subsidy payments to farmers. Farmers reward the politicians with votes and money."
The take-home message: the farm lobby, that bloc of corn, soybean, wheat, cotton and rice farmers, is powerful. It is wealthy. And it will do whatever it needs to keep our farm policy system in its pocket.
I don’t know about you, but this portrayal of farmers always leaves me feeling a bit confused, as if I'm missing some key piece of the equation. Big Farma liked low commodity prices in the 1990s, but now it likes high prices? If subsidies make commodity farmers so wealthy, how come so many of them have gone out of business since 1998, when the subsidy program got a huge boost? Also, I thought that only 2% of the U.S. population farms. How exactly did they get so powerful? (And can they teach the local food systems folks that trick?)
In this series of posts, I'll be exploring these questions, looking at the power farmers hold in the food system, subsidies and wealth, and the framing of the farm policy reform debate. I'll start with power: Who really controls our food system and shapes our farm and food policies? Where does their power come from?
The focus of this series will be commodity farmers, particularly those who grow corn and soybeans. In the U.S., these crops are classified not as food, but as inputs — raw fuel for the meat, sweetener, fuel and processing sectors. Meat itself is, at least here, also considered a commodity: uniform, standardized, meat from one animal commingling with meat from many others, this ground beef virtually indistinguishable from that ground beef.
I'd therefore like to start the series off by looking at the meat industry as a case study that can help us examine the role of farmers in commodity production. I have a sneaking suspicion that what we'll see here will be analogous to other commodity-based industries (corn syrup, ethanol) as well. So let's look at where farmers fit into the meat production system. And get ready: at the end of this post, you'll find a list of action items I will plead for your help on — important Farm Bill amendments that could have big impacts for livestock producers, and which could come up as early as December 10th.
Upcoming posts will look at the assumptions about farmer power that populate the food vs. fuel debate and will drill into the data used to justify the rich-farmer rhetoric surrounding subsidies. For now, let's do the meat thing.
Welcome to the livestock industrial complex
Each major livestock subsector — pork, poultry, beef — is structured a little differently, but the power dynamics are very similar. Since the 1940s and ‘50s, the poultry industry has been dominated by a small number of large corporations. Early on, these companies realized that it was useful to carry out the business of raising, slaughtering, and processing birds in a close geographic area; birds don’t travel well. It’s even easier if you own or control every link in the meat production chain. The result has been what’s called, in corporate-ese, “vertical integration”: Tyson (for example) contracts with chicken producers and also owns its own production facilities (overall controlling some 20-25% of total chicken production in the U.S.), slaughters the birds in its own slaughter operations, processes the meat (nugget, anyone?), and gets it out to stores through contracted distributors. Every link in the chain is integrated, with Tyson at the helm. Tyson is now the No. 1 food processing company in the United States, above Kraft, Nestle, General Mills, and others. (FYI, all of the market share information in this post comes from Mary Hendrickson and Bill Heffernan's meticulously researched reports to the National Farmers Union, available here.)
Although Tyson is the biggest player in poultry, it’s not unique. Today, virtually all of the chicken U.S. consumers eat, and almost all of the turkey, is produced in large confinement operations owned by big meat companies or controlled by them through contracts. Where does the farmer come in here? Well, farmers grow the feed that gets shipped to Tyson’s production facilities. Notably, many of the vertically integrated companies have fertilizer or pesticide businesses and own their own feed mills, too, so farmers are trapped between a big firm selling them inputs and the same big firm buying their crops for feed. More on that below.
Farmers also raise birds under contract for companies like Tyson. But don’t go thinking that just because they raise the birds, they have much power over how it’s done. The production contracts that legally bind farmers to the meat company are notoriously disempowering. Farmers are contracted to provide the facilities (often taking out large loans to build them), fuel, waste disposal services, and labor. The company legally owns the animals from birth to death. It controls the specific type and use of inputs like feed and medicine and strictly dictates production methods, down to the size of the cage and forced-molting schedule. So much for those years of accumulated farming knowledge.
Production contracts are also legally exploitative. Farmers who sign them are often prohibited from talking about contract terms with anyone, including a lawyer, and mandatory arbitration clauses — which require farmers to relinquish their right to take the company to court if it violates the contract — are common.
This all sounds eerily akin to what corn and soybean farmers in the U.S. experience now that seed varieties (not to mention fertilizers and pesticides) are patented and controlled by a very small number of corporations. Sixty percent of U.S. corn seed is controlled by two companies, Monsanto and DuPont. Using patented seeds brings with it legal obligations to the company, and the lack of other options means that corn and soybean farmers have few if any opportunities to innovate. Simply choosing to grow non-GMO feed corn requires a mini-revolution. And even then, if your field is contaminated with GMOs by a neighbor's field or a passing truck, precedent suggests you'll have little legal recourse.
This little piggy went to the vertical market
The pork world is headed in the same direction as poultry, though it’s not there quite yet. It’s worth mentioning that as late as 1995, the majority of pork produced in the U.S. came from small and mid-sized farms that sold their animals to packing houses at public auctions. Selling animals via auction meant that all producers knew the going rate for hogs and could make their business decisions accordingly. Today, the scene is very different. Three-quarters of hogs are raised in large confinement facilities that hold 2,000 or more animals. And many of these animals are produced under contract for companies like Smithfield or Cargill — who do not always make the prices they offer in these contracts public — or by the companies themselves.
When a company owns both the production facilities and the slaughter operations, the animals are referred to as a “captive supply.” Captive supply is a terrifying prospect for independent producers. Why? Well, on days when prices are high, Cargill or Smithfield can fill their slaughter plants with their own animals, blocking independent producers’ access to the plant and creating a glut of live hogs on the market. Oversupply drives the price down, and the next day, the company buys off the open market at a cheaper price. Pure, unadulterated market manipulation. That’s what power gets you.
Beef production is slightly different, and only (in my opinion) because of a pure biological fact that modern industrial agriculture has yet to figure out how to address: calves can’t eat corn. Beef cattle are generally not fed corn until the last 5 or so months of their lives. As a consequence, calves must still be raised in places where good old grass is available. These cow/calf operations tend to be smaller and more geographically dispersed than poultry or hog operations, but the differences end there. Once the calves are old enough, they are sold to feedlots controlled by — yep, you guessed it — big meat companies, and then shipped to packing plants owned by the same firms. The No. 1 beef packer? Tyson. It’s not just chicken anymore.
A corn farmer living in Cargill territory will likely purchase his or her fertilizer from Mosaic, one of the world's largest fertilizer companies; Cargill has a 67% ownership stake in Mosaic. He or she will then sell the corn right back to Cargill, who will mill it (it's the No. 2 animal feed company in the nation) and funnel it into the hog and beef operations that it owns or controls through contracts. The animals will be slaughtered in Cargill packing plants. The company is now the nation's No. 3 beef producer, No. 2 beef packer, and No. 4 pork packer, with significant numbers of hog production facilities as well.
The lesson I take from this overview is that farmers, in their roles as feed-growers and animal-raisers, are an important but virtually powerless piece of the system. The integrated, industrialized meat complex sees farmers as workers — providers of labor — rather than as sources of wisdom or innovation. Sadly, farmers have fewer and fewer ways to avoid being trapped in this role. Rural banks are considerably more likely to lend money to a farm operation if the farmer has a contract, which the bank sees as a steady, guaranteed paycheck. In many rural areas, the demise of the public auction and disappearance of smaller regional grain elevators means that if farmers refuse to contract with a big feed or meat company, they might as well open a petting zoo — those animals aren’t going to slaughter anytime soon.
As long as this is the case, we should be cautions of rhetoric that implies that farmers’ interests are the driving force behind our livestock production system—that CAFOs work for rural economies, that production contracts offer “livelihood security,” or that the main beneficiaries of policies that positively affect bottom lines in livestock production are farmers.
What you can do
I’ll be pondering other implications of these power dynamics in the next installment of this multi-part post. For now, I’d like to leave you with a call for action (quick action, please!).
The Senate, after a long delay, may finally get back to the Farm Bill debate during the week of December 10th. The good news is that there’s a chance the bill will help make livestock markets fairer for smaller, independent producers. Senator Harkin already did a lot when he added provisions on livestock to the bill that passed out of the Senate ag committee over the summer (see more info on his provisions here). But there’s more to be done.
Three amendments will be offered in the Senate that would help protect independent livestock producers and give them greater access to markets currently in lockdown by Tyson, Smithfield, and friends. Please, please call your senators TODAY and ask them to support these amendments. They are:
• The Enzi-Dorgan Captive Supply Reform Act amendment, which would help ensure that meat companies can’t use their power to manipulate the market and drive down the prices independent livestock producers receive;
• The Harkin-Enzi No Competitive Injury amendment, which would make it easier for independent producers to prove in court that meat companies, when they manipulate prices, are causing them harm;
• And the Tester-Harkin-Grassley No Legitimate Business Justification Amendment (say that five times fast, and then call your senator and say it again). This one would clarify that it’s not acceptable for meat companies to use their power to drive down livestock prices even if they claim to have a “legitimate business justification” for doing so (which is how they’ve gotten out of paying damages, or a fair price for livestock, in the past).
• Also, please ask them to reject any amendment that would weaken the Livestock Title that was passed by the Senate Agriculture Committee.
More information on these amendments (.doc) is available from the good folks at the Sustainable Agriculture Coalition, to whom I offer my apologies if I’ve butchered (ha!) their well-crafted explanations of what these amendments do.
We have nothing to lose from a food system that works for farmers, consumers, and the land. We have everything to lose if we let Cargill, Tyson and Smithfield frame the debate. Let’s give them some competition by supporting small and mid-sized livestock farmers in the Farm Bill.
In the next post, I’ll tell you why the framing of the food vs. fuel debate makes me want to hit someone with a cow pie.
Image credits: Farming scene from Madurodam scale village in Holland ©