Letter from Langdon: Competition 101

Have we forgotten what it means to 'play fair' on the field, in the pasture, at market?  Many farm groups and now the USDA, too, want to freshen up the rulebook.

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Whether it’s a hand of cards, a race to the finish line, or just making the straightest rows, most of us here around Langdon generally find some way to compete. It’s good for the soul, they say, except when sportsmanship takes a backseat to winning. Occasionally, folks get a little carried away: when our five-year-old relative scored a winning goal during one of his soccer games, home team cheers on the sidelines quickly turned to “Uh-oh’s” as grandson number five went nose to nose with the 30-inch, misty eyed goalie from the opposing team and declared gleefully, “HA! I beat you!!”

At Mom and Dad’s firm insistence, #5 took a time out on the sidelines.

When we’re young we learn about rules and fair play by competing. Competition doesn’t have to mean all out war against the other side. A football coach I once knew liked to see his players knock the other team down on the ground, and then give them a hand up when the whistle blew. One of the things he told his players was “Remember who you are and where you come from.”

In the USA we’ve come from all over, partly because Kings and Queens don’t generally play fair. That’s why our ancestors left the Old Country, to get away from that. And that’s how we got new rules for a nation of people who didn’t think money and power should trump the human rights to life, liberty and the pursuit of happiness.

It’s been a long stretch from then to now. The Bill of Rights hasn’t always been followed to the letter, because sometimes money speaks louder than ethics, or even the Constitution. But the best part about living here is that even when things go wrong, there’s always a chance to set them right.

Right now our government is attempting to set right some things that have been going wrong for a long time. They’re telling the banks that it’s not OK to spend other people’s money on half baked schemes while making depositors think their cash is under lock and key. They’re telling the oil companies “anything goes” is no longer the law of the land and sea. They’re starting to think about returning to another time when monopolies meant too much power in the hands of too few, and most importantly to farmers, they’re telling the big meat packers and poultry and hog integrators that unjust business practices, denying farmers the right to fair and equal treatment under the law, just won’t cut it.

Everyone’s heard about the bank failures and oil spills. Chances are consumers, most of them anyway, haven’t heard about the Packers and Stockyards Act or how it’s been weakened over the decades. They don’t know that farmers have been losing access to free and open markets for livestock and poultry because a few big businesses, acting more like monarchies, have slowly taken that free market away. Most of what consumers tend to hear is the corporate argument that food prices will rise and supplies will be scarce if big agribusiness and food retailers are forced to obey the law. What consumers haven’t been told is that the biggest corporations have been using lax government enforcement so long that both they and the courts think it’s become a right, right along with hiring undocumented workers.

At the soccer game I was reminded that boys will be boys. It’s up to Moms and Dads to keep them in line. It’s not too big a stretch to say that corporations will be corporations. And it’s up to Federal agencies like GIPSA (Grain Inspection, Packers and Stockyard Administration, part of USDA’s Marketing and Regulatory Program) to keep those good old boys on the high road.

It appears the feds might finally be ready to assert their authority.

“Be Independent! Own and Operate an Indoor Poultry Farm” – an advertisement from the days when people actually believed that was possible, 1937.

Those who’ve never farmed might not realize how difficult it is these days to raise and market livestock as an independent producer. When I raised swine 25 years ago, I had half a dozen outlets where I could sell my hogs within a few miles from home. Today all those outlets are gone. Of the hog producers I know left in the business, and there aren’t many, all sell directly to one or two large packers or grow packer-owned hogs in their own buildings under contract. The same is true of poultry. Forty years ago parts of the country were full of farmers who produced eggs or broilers for a broad market. Today very few produce independently. Farmer numbers here at home have declined steadily though the population of our nation has never been larger. Meanwhile, the farmer’s share of the retail food dollar has continued to shrink, food contamination from drugs, chemicals, and bacteria has never been more of a problem, and foreign-produced food ingredients are on the rise.

When farmers don’t have access to fair and open markets they are forced to become contract growers just to gain a return on their farm investment and earn a living. One feature of contracts that is almost universal is mandatory arbitration, forcing farmers who are treated unfairly to adhere to a set of rules made up by packers and integrators. Not only do farmers give up their right to a fair hearing of their grievances, but courts have come to view this practice as legal simply because it’s gone unchecked for so long. That’s why packers now own a bigger share of the livestock they process than ever before. It is impossible for farmers to compete in a marketplace owned lock, stock, and barrel by the competition. That forces them to sign contracts that may not be in their own best interest.

I guess you could say it’s the Packers’ way or the highway, or as a five year old might put it,  “Ha! I beat you!”

Today in our free nation, four or five large corporations processing most of the pork and beef grown here own such a large number of animals through contracting or actual feeding operations that they now control the very producer organizations that once represented the best interests of farmer-members. The infiltration of such organizations has all but silenced free speech by farmers even as it has continued to tax their production through mandatory market promotions agreed to by farmers in better times. Now many of their own dollars have been turned against them. That’s why gaining a new voice in government, thanks to GIPSA, is so important.

Wiki
King George III of England, portrait by Sir William Beechey

One rule GIPSA plans on enacting would protect livestock producers from being required to make costly upgrades to existing livestock facilities at risk of losing their contract. In many instances growers are told they must continually borrow in order to pay for unnecessary upgrades. Many times contracting profits fail to pay the cost of improvements. Another action would protect farmers from price manipulation by packers who distort markets through unfair pricing systems, and would require that all producers be paid comparable prices for similar products. Right now packers and integrators pay some people more and others less.

King George had his favorites too.

We’re half way through a 60-day comment period on the new rules. (Comments can be made as well as read on the web here.) The packers and their allies are asking USDA and GIPSA to extend the comment period to at least 180 days. That is seen mostly as a stalling tactic to allow more time to weaken rules, or even stifle change altogether. More than 200 independent groups including the Organization for Competitive Markets  feel that 60 days is long enough.

GIPSA administrator Dudley Butler sees the problem and has the cure. Looks like big pork, big beef, and big chicken might get a timeout for unsportsmanlike conduct. 

It’s about time the grownups took charge.

 

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