INDUSTRIAL AGRICULTURE:
MAIN STREET VS. WALL STREET
The industrial revolution has hit farming. The application
of the industrial model has had profound impacts on
agriculture, especially in the livestock industry. Food
corporations and processors now control the bulk of the food
dollar -- illustrated by the fact that farmers receive only
21" per dollar spent on food, down from 37" per dollar in
1980. As the profits of the food corporations grow, five
hundred family farmers go out of business every week.
Under the industrial farming system, family farmers are faced
with the prospect of entering into contractual agreements
with corporations or becoming extinct. Independent family
farmers have traditionally raised animals as part of
diversified farming operations in numbers that don't
overwhelm the environment. Factory farms, in the name of
efficient food production, do not waste valuable time or
money worrying about the environmental or social impacts of
crowding too much livestock on too small a plot of land.
The independent family farmer is losing ground. The rise of
factory operations has led to a clear choice for consumers:
Who do we want producing our food? Family farmers, stewards
of the land, or corporate production managers, whose bottom
line is profit?
Today, independent ranchers are unable to find a fair market
for their cattle. The threat of invasion by corporate
confinement hog operations is uniting farmers and citizens in
rural communities across the country. Poultry growers have
no choice but to sign unfair contracts that send them deeper
into debt while lining the pockets of giant poultry
companies. This issue of FARM AID NEWS & VIEWS will explore
corporate concentration from the perspective of cattle, hogs
and poultry.
HOGS: PSF PROVES THAT BIGGER IS NOT BETTER
Premium Standard Farms, Inc. (PSF), one of the top four
factory hog production giants, appeared on the factory
farming scene in 1988. Touting a new model of hog production
and backed by millions of dollars from outside investment
firms, PSF planned to control every aspect of hog production
-- in effect, to raise, slaughter, and process hogs
themselves. Eight years later, this model of cost-effective
efficiency, which featured farming without farmers, filed for
Chapter 11 debt restructuring. PSF president Dennis Harms
states that "extreme market volatility in the last two years"
was the cause of the bankruptcy.
Rhonda Perry of the Missouri Rural Crisis Center stated that
"It just goes to show that they weren't more efficient, they
just had access to Wall Street money. Family farmers have
always had to deal with market volatility. Who's kidding
who?"
PSF, based in Princeton, Missouri, came under attack in 1995
by family farm and environmental groups when it filed an $8
million lawsuit against Lincoln Township, a rural Northern
Missouri community with a population of under 250. The
lawsuit was filed after citizens called for the enforcement
of county zoning laws which would restrict development by
PSF. The National Campaign for Family Farms and the
Environment was formed last April when thousands of people,
outraged by the lawsuit, rallied with FARM AID president
Willie Nelson to unite against PSF. In response to the
rally, PSF dropped the monetary portion of their lawsuit
against Lincoln Township, but continued to pursue legal
strategies for combating the zoning laws.
PSF representatives state that operations at all of PSF's hog
confinement facilities will continue during the restructuring
process. However, other reports indicate that rival hog
companies have been looking into buying out the PSF
facilities.
PSF's bankruptcy is a major victory for the Campaign for
Family Farms and the Environment. Premium Standard Farms was
the first corporate target of the Campaign, according to
Rhonda Perry. "Through the Campaign's public awareness
campaign, we have divided the industry. PSF was the model,
the flagship of the industry, but they couldn't take the
public scrutiny -- we were able to expose them." Campaign
members have been working to enact "good neighbor" policies
that would require public notification of the intent of a
factory farm to come into the community; require lagoons to
be bonded; and assure air and water quality, among others.
Chirag Mehta of the Illinois Stewardship Alliance says that
the Campaign's success can be attributed to its solid
coalition of farmers, environmentalists and rural residents
working to sustain rural communities and the environment.
"The Campaign has been able to keep operations from coming in
'whole hog.' Companies know when they'll be stepping into a
fight it might make them think twice," Mehta said. The
Illinois Stewardship Alliance coordinated a rally on July 30
in White Hall, Illinois, for community groups organized to
address the impact of large-scale hog confinement operations
in Illinois.
HOGS: FACTORY FARMS
SMELL WORSE THAN WALMART
When factory farms move into town, the effect on the local
economy mirrors the effects of Walmart: Small producers are
driven out of business when they can't keep up with the low
prices that mass-production offers. Unfortunately, in the
case of factory hog facilities, the effect on the community
is much more devastating. One hog produces two to four times
the waste as one human, and this waste is typically stored in
open-air pits the size of several Olympic-sized swimming
pools. These lagoons are apt to leak or overflow, making
neighbors sick and flooding ground and surface water with raw
hog sewage. This toxic waste contaminates drinking water and
kills fish and wildlife. One colossal spill occurred last
summer when a North Carolina producer's lagoons overflowed
after heavy rains, spilling 25 million gallons of hog sewage
over surrounding fields and contaminating a 17-mile stretch
of a nearby river.
A study released this month from the Centers for Disease
Control and Prevention (CDC) investigated the link between
the contamination of private wells by an Indiana hog
confinement facility and an unusual cluster of miscarriages
suffered by women in neighboring homes. The CDC noted the
need for further investigation of allegations that nitrates
from hog manure leach into drinking water and increase the
possibility of miscarriage in women whose wells are
contaminated.
Another recent discovery, publicized by the Land Stewardship
Project (LSP), was initiated by a rural Minnesota resident
when her family experienced reoccurring illness after a
factory hog facility called ValAdCo moved in next door. A
series of air quality tests showed that hydrogen sulfide gas
emissions from one-fourth of the sites tested were well in
excess of the state air quality standard. Julie Jansen's
family, who lives next door to the facility, has been
suffering from headaches, diarrhea, vomiting, respiratory
problems, dizziness and black-outs, all symptoms of
overexposure to hydrogen sulfide, a gas emitted from
livestock manure. "This isn't just a problem between me
and ValAdCo here," said Jansen. "Huge lagoons owned by
various pork producers are threatening the health of people
all over the country."
CATTLE: BEEF PRICES CONTINUE TO DROP; CATTLEMEN SUE IBP
Cattle prices have reached 10-year lows, while in 1996,
corporate meatpacking giant IBP, Inc., enjoyed its all-time
most profitable first quarter. Cattlemen in the West are
searching for answers and battling the monopolization of the
cattle industry: four meatpacking companies control an
estimated 87 percent of cattle slaughter. Ranchers forced to
sell their cattle at bargain-basement prices are accusing
these large companies of suppressing beef prices for the
entire industry low prices which are not reflected at the
supermarket. This suspicion stems from the fact that meat
packers have their own captive supply of cattle fed in
packer-owned feedlots or fed under contract for the packers.
Many ranchers believe that competition and free markets are
non-existent in the cattle and beef markets.
On July 10, cattlemen filed a class-action lawsuit against
IBP, Inc., the nation's largest meat packer, contending that
IBP is operating under violation of the Packers and
Stockyards Act of 1921 by paying higher prices to producers
who sign exclusive agreements with IBP. In addition, IBP is
accused of conspiring to fix prices paid on the open market.
This new lawsuit comes on the heels of a similar
investigation held last August which resulted in the
Department of Agriculture charging IBP with violating the
Packers and Stockyards Act.
The Western Organization of Resource Councils (WORC) is
coordinating an effort asking everyone to write Jim Baker,
administrator of the Grain Inspection, Packers and Stockyards
Administration to adopt the following three-point rule:
1. Prohibit formula or basis pricing in forward-contracted
cattle. This means any contract offered will have to have an
actual price attached to it. Many feeders have been hurt by
formula or basis contracts because the packer can manipulate
the cash and futures markets, which are used for the starting
prices on these contracts.
2. Require that forward slaughter contracts be offered in an
open, public manner. This will insure that the price paid
for contracted slaughter cattle will affect the public price.
3. Require that packer-owned and -fed cattle be sold in an
open, public market. This means cattle owned by the packers
will no longer be trucked from the packers' feedlot to the
packing plant with no price fixed to them or reported.
Jim Baker, Administrator
Grain Inspection, Packers and Stockyards
Room 1094 South Agriculture Building
14th and Independence Ave. South West
Washington, DC 20250
POULTRY: POULTRY GROWERS:
CANARIES IN THE COAL MINE
The poultry growers' plight is one that many fear to be the
future of cattle and hog production. The poultry industry is
98 percent vertically integrated, which means that 98 percent
of all poultry produced is bred, owned, butchered, and
marketed by giant corporations such as Tyson, ConAgra,
Perdue, the top three. Independent family farmers are locked
out of the market.
"Feed mills, hatcheries, initial processors, and further
processors are all under one roof, so to speak, and the grow-
out of the birds is done under contract with family farmers
who supply the land, buildings, equipment, and labor," says
Mary Clouse of the Rural Advancement Foundation International
(RAFI). Growers have no input in the management of their
facilities, and often times the corporations require massive
facility improvements which can cost hundreds of thousands of
dollars. "The farmer owns nothing but the debt," says Rhonda
Perry of the Missouri Rural Crisis Center.
In the past, when disputes arose over the terms of the
contracts, farmers were able to win lawsuits against the
corporations. Now, however, contracts are written to state
that arbitration is the only acceptable means of contract
dispute resolution. "Arbitration is no choice," says Mary
Clouse. "Growers are treated like slaves. The system has
within itself the seeds of its own destruction."
Since the major poultry corporations have regional
territories, if a grower refuses to sign an unfair contract,
he or she has no other options for signing with another
corporation. Companies often will not contract with new
growers on old growers' farms, making it impossible to sell
or lease the farm. In addition, corporations threaten to
pick up and leave an area if the growers do not agree to the
terms of the contracts; this threat could easily become
reality with the passage of NAFTA. Growers, saddled with
enormous debt and with their mortgage on the line, are forced
to sign unfair contracts.
The National Contract Poultry Growers Association is
currently fighting to pass national legislation that would
recognize grower cooperatives as a bargaining agent for
negotiating the terms of fair contracts. Poultry growers
recently celebrated a legislative victory when the USDA Grain
Inspection, Packers and Stockyards Administration (GIPSA)
modified regulations under the Packers and Stockyards Act
that require strict procedures for weighing poultry on
electronic scales. Previously, growers were often cheated on
poultry weight (and therefore the price they were paid).
The system of contract farming is moving into hog production.
Initially, the contracts seem like a good deal for farmers;
their risk is lowered, as they have a guaranteed market for
their product. However, if history repeats itself, the
contracts will gradually become more and more unfair to
farmers. Says Mary Clouse, "The poultry growers have been
the coalminer's canaries." For more information, contact the
National Contract Poultry Growers Association at (318) 251-
9227.
USDA RELEASES
CONCENTRATION REPORT
The current allegations of collusion in the cattle market and
unfair treatment of poultry growers and independent hog
producers come just weeks after the release of a report by a
USDA committee that was developed to investigate these very
allegations. The Committee was formed by Secretary of
Agriculture Dan Glickman and "charged with investigating
concentration in virtually any segment of the agricultural
economy where it may be evident." One major finding of the
Committee was that the Secretary of Agriculture's authority
to enforce the provisions of the Packers and Stockyards Act
are "sweeping." In the past, the USDA has made claims that
legislation would be needed in order to enact measures that
would reduce the monopolization of corporate packers. The
Committee stated that "Major policy efforts should be
directed to creating an atmosphere of open disclosure of
basic operating facts, including many aspects of price
discovery, earnings levels of packers and feeders,
environmental management concerns, and contract terms between
integrators and producers."
The findings of the Committee have been met by a mixed
response from the various livestock groups; many feel that
the findings fall short in policy recommendations by failing
to recommend specific actions that USDA can take to establish
a fair livestock market. "The committee majority fell well
short of demanding that anything specific be done to fix the
wreck in the cattle market," said Tom Breitbach, chair of the
Agriculture Issue Team of WORC.
According to Agriculture Secretary Dan Glickman, in a
statement released in response to the Committee report, "We
[President Clinton and Glickman] are committed to promoting a
system of American agriculture in which unfair trade
practices are not tolerated, and in which family farmers and
ranchers can continue to make a good living on the
land." Family farm advocates are pushing the
USDA to implement specific administrative reforms recommended
in the wake of the Committee report.
EVENTS
FARM AID president Willie Nelson has announced plans for the
FARM AID '96 concert, which is to be held in Columbia, South
Carolina on October 12. To date, FARM AID co-founders Willie
Nelson, Neil Young and John Mellencamp will be performing at
the benefit concert along with Columbia natives Hootie and
the Blowfish, the Beach Boys, Jewel, Martina McBride, and
John Conlee. In a press conference announcing the event,
Willie Nelson said, "We hope this concert will remind the
nation that we need to change the way we think about the food
we eat and the people who grow it. It's important that we
have someone there growing the food who cares for the land."
Stay tuned for details; tickets will go on sale in September.
RESOURCES
"Concentration in Agriculture: A Report of the USDA Advisory
Committee on Agricultural Concentration," United States
Department of Agriculture, June 1996. Call the USDA Office
of Communications, (202) 720-2798.
"Understanding the Impacts of Large-Scale Swine Production:
Proceedings from an Interdisciplinary Scientific Workshop,"
Kendall Thu, Ph.D. et al, proceedings released June 1996.
Call (319) 335-4438.
"Swine Systems for Iowa," proceedings of a conference held
February 21, 1996 at Iowa State University. Leopold Center
for Sustainable Agriculture, (515) 294-3711.
"The Industrial Reorganization of U.S. Agriculture," Rick
Welsh, Henry A. Wallace Institute for Alternative
Agriculture, April 1996. Call (301) 441-8777.
National Campaign for Family Farms and the Environment,
contact Rhonda Perry, (573) 449-1336.
Western Organization of Resource Councils, John Smillie,
(406) 252-9672.
________________________________________
Farm Aid News is produced by the Institute for
Agriculture and Trade Policy for Farm Aid. Editors
Harry Smith and Kate Hoff. We encourage the
reproduction of Farm Aid News & Views. Comments and
suggestions welcome. Farm Aid, (617)354-2922. Fax:
(617) 354-6992. Email: Farmaid1@aol.com. For more
information on agricultural publications contact IATP,
(612) 379-5980. Fax: (612) 379-5982. Email:farmaid1@aol.com