Intensive consolidation of food production (and food profits) started with poultry, then took over hog farming. Now the beef market is turning into a pyramid scheme.
Back in ancient times the pharaohs built the first pyramids on earth. They did it on the back of the working man.
Egyptians believed Pharaoh’s soul could be beamed to Heaven through a tunnel, a shaft built by slaves who, themselves, were eventually buried deep inside the leader’s monument to himself. If everything came out right, a few loyal servants might get to beam along on a sort of “work visa” to eternity.
Several thousand years later a different pharaoh named Bernie Madoff built another kind of pyramid … out of money… by convincing lots of people of much the same thing. The working man is still getting the shaft while laboring eternally for the powers that be.
The higher we go, the fewer people there are left to take advantage of. That’s why broad based pyramids get ever narrower toward the top. Pyramids have become symbols of special interests; they’ve been constructed with all kinds of materials and activities, from sandstone blocks to investment — and now, even meatpacking.
So pyramid schemes are nothing new, but no matter what the building material, construction always grinds to a halt at a certain point. Family livestock producers reached their peak several years ago when unchecked consolidation of small meat packers and processors made them servants of a Ponzi scheme for animal protein.
First they took the buyers, then they stole the markets, and now they own the growers. Today, the line in the 1989 movie Field of Dreams uttered by Iowa farmer Kevin Costner in response to baseball player Ray Liotta’s question “Is this heaven?” should be, “Definitely not– It belongs to Tyson (and by the way, if you don’t have a work visa it’s no big deal).”
In this new version of the tale, Ray would then spend the rest of eternity without a dust mask loading broiler chickens into crates for less than minimum wage.
Without fair prices, U.S. livestock farmers are simply giving away labor and making short term sales of the long term equity they hold in their land and equipment. That’s like rolling square rocks up hill.
Food pyramid number one was built in the U.S. from poultry when integrators decided to produce their own eggs and chickens, using those supplies to limit marketing opportunities for farmers. In the 1950s, big privately owned chicken houses were the rule, not the exception, on a lot of diversified farms across parts of the Midwest where family farmsteads dotted the landscape. When farmers lost direct access to fair markets for both eggs and chicken, they lost profit incentive to produce. The reason this works is simple. It’s pretty hard to be a seller without buyers, and when buyers can buy from themselves there really is no fair market at all.
Now consolidated poultry integrators control the business from yolk to feather, and the few farmers who continue to grow chickens are more like Egyptian slaves carrying back breaking loads rather than free and independent producers.
The next segment of diversified farming to fail at the hand of corporate pharaohs was hogs. Take a drive across central and southern Missouri where hogs used to graze oak timber looking for acorns; what you see now are dilapidated, abandoned livestock buildings a quarter-mile from brand new installations proudly signed up a single word — “Cargill.”
Self-employed farmers will feed livestock for as long as the market feeds profits to them. When corporations figured out how to control profits by integrating all the operations of pork production as they did earlier with poultry, food pyramid number 2 soared to the heavens. Now we’re down to beef.
Cattle numbers here have been in decline for years. They call it the cattle cycle, but cycles have ups and downs. This time it’s a death spiral. A handful of big packers are now free to access beef from around the world and to limit what U.S. farmers and ranchers are paid. When on-the-hoof prices get higher than they want, in comes the packer-owned beef from Mexico or Canada. Consumers never see a country of origin label or a price advantage, because retailers and packers work hand in hand to capture and keep the margin.
Consumers never get a break and cowboys never get financial incentive to produce.
In spite of the fact that retail beef prices in the store remain strong, beef cow numbers in the U.S. have started to fall just as hog and poultry numbers on farms decreased when big corporations took over those businesses. USDA now reports combined numbers of cattle and calves in Canada and the U.S. Why? Maybe because more building blocks mean a bigger pyramid, or because combining national figures conceals the fall in U.S. cattle numbers. Or it may just be that cattle inventories owned by the big packers like to hide across the border.
There’s discussion about who’s really to blame. Is it the biggest packers, or retailers led by the biggest of the big, Wal-Mart? The fact of the matter is that retailers and packers work together to create problems for cattlemen. While hogs and poultry can be raised nose to nose and beak to beak in ever shrinking confinement cages, cattle require land either for pasture or forage production. For corporations the problem isn’t how to control the cattle, it’s how to control the massive quantities of land needed for that production as well as the people who own it.
The surest way to get the land is to build a pyramid on it to take away the profit away from it.
Telling meatpacker pharaohs they can’t build pyramids won’t seal them in a tomb like some folks say it will, but for American farmers it would be like a cruise down Langdon Bend on Cleopatra’s barge, only better — because she’d be paddling along with the rest of us.