The modern system of vertically integrated markets has turned America’s poultry and pork growers into serfs, working at the pleasure of their feudal overlords – corporations. A century-old antitrust law is supposed to protect the little guy, but the powerful meatpacking lobby appears to be lord of the manor.This trailer for a documentary project, "Under Contract: Farmers in the Fine Print," says chicken farmers are kept in a cycle of debt. "What you end up with at the end of a contract life are farmers who literally live on the edge of bankruptcy," says Christopher Leonard, author of the book The Meat Racket.
In the early 20th century the Federal Trade Commission said five big meat packers held a monopoly over our livestock markets. That's why the Packers and Stockyards Act was passed, as a follow up to the Sherman Antitrust Act.
Monopolies then were predominately held as trusts. So antitrust was the same as pro-competition.
It was bad enough in meat markets that the FTC went so far as to recommend government ownership of livestock auctions to keep the packers from cheating.
Packers and Stockyards protections for farmers were strengthened off and on throughout most of the 20th century as government responded to periodic challenges by an increasingly concentrated and powerful meat-packing industry.
Here's how it works: Unless you buy exclusively from farmers markets, most of the poultry and pork consumed in America today is a product of vertically integrated production. Corporations that once bought animals from farmers now own those animals from conception through slaughter.
The only part farmers play in all that today is as independent contractors who agree to supply facilities and labor.
Back in the days of the Sherman Antitrust and the Packers and Stockyard acts, farmers grew animals and crops on their farms. They fed grain from the farm to their livestock and sold market ready animals at auctions. The purpose of auctions was and is competitive bidding, where genuine supply and demand determine the value of animals on a real-time basis. Prices might be up or down, depending on numbers for sale and consumer demand. But other things, like weather or holidays could affect prices too. While all that didn't always necessarily benefit farmers, auctions represented a transparent market where everyone could see the prices being paid.
It also allowed farmers to anticipate shortage or surplus so they could aim for better markets – for instance seasonal turkey demand at Thanksgiving and Christmas.
Today, government enforcement of the Packers and Stockyards Act as well as other antitrust law has slowed or stopped altogether. Like too-big-to-fail banks, too-big-to-regulate packers mean lack of competition, and in some cases foreign manipulation of markets. All have been allowed to grow to the point that monopoly (characterized by an absence of competition, which results in high prices) combined with monopsony (the market condition that exists when there is only one buyer) have infringed on the rights of consumers and farmers alike.
Early in President Obama’s first term, we had the chance to communicate these problems to a president and administration who seemed to care. A new administrator to the USDA Grain Inspection, Packers and Stockyards Administration was appointed, a lawyer with a lifetime of experience in livestock markets and forcing meat packers to adhere to the law. His name was Dudley Butler.
Meetings were held, problems discussed, and then — nothing happened.
Maybe it was just a case of too little, too late. But when Butler attempted to enforce the law, he learned firsthand of the pro-packer bias at USDA.
That's why Butler resigned without ever being allowed to do his job.
Hogs in America have become almost completely integrated into a seamless packer-owned supply of animals that are in most cases grown under contract by farmers. Farmers who grow most of the hogs produced in America today have very little say in how they operate. And corporations that issue contracts to farmers are mostly free to set their own terms.
They control farmers.
Poultry is even worse, because farmers who contract to grow chickens and turkeys are subject to a tournament system that rewards some farmers at the expense of others. The company gets to pick who gets paid the best. Farmers have little say in the quality of chicks or feed they're given. Eventually that directly affects overall production performance and pay. If the company supplies sick or infirm animals or poor quality feed, that farmer misses a payday.
That's why a lot of poultry growers live below the poverty line.
The average poultry grower earns about 34 cents for each chicken produced over a period of about 49 days, while poultry integrators get nearly ten times as much – more than $3 for the short day trip to slaughter and packaging.
Comedian John Oliver recently called attention to efforts in Congress that would prevent farmers from seeking help or even talking about their bad treatment at the hands of integrators. Congress won't take the blatant high-profile risk of rewriting farm law, but will simply withhold funding of parts of the 2008 and 2014 farm bills that offered new protections through the Grain Inspection, Packers and Stockyards Administration.
Congressional willingness to stifle laws offering protection for farmers who grow chickens does not bode well for contract hog growers or for independent cattle growers who are experiencing more and more concentration of power in the hands of packers.
Opposition to Country of Origin Labeling (COOL) for poultry, pork, and beef seems to go hand in hand with dysfunctional GIPSA rules. Even though countries of Mexico and Canada already enjoy trade surpluses with the United States, they are threatening retaliatory tariffs against U.S. goods if we label meat products in stores according to where they came from.
There's a lot of cheap beef waiting across the border. Since all beef sold in America sports a USDA inspection stamp, consumers may assume it’s all American beef.
Labeling gives consumers a choice.
No label gives the packers money.
The same monopolistic meat corporations doing business in America have even more control of livestock and meat products from Canada and Mexico. It's no surprise that the market price information Canada used to defend their complaint was proprietary, held by the packers, details of which they did not make public.
We're supposed to take their word for it.
In the meantime USDA piled on saying that labeling offers no consumer benefits, as the House voted to kill Country of Origin Labeling for poultry, pork, and beef without a shred of proof from Canada or Mexico that labeling treats them unfairly.
In another twist, National Farmers Union President Roger Johnson pointed out that repeal of COOL would allow both raw and cooked chicken from China into the U.S. without being labeled where it came from. In the past, Chinese exports of melamine-contaminated rice gluten, milk powder, baby formula that killed six infants, and toxic pet food treats from China killed thousands of pets in the U.S..
American agriculture was built by immigrant farmers who lived under feudal systems in parts of Europe where they were oppressed much the same as chicken growers are here today. In those days, farmers lived on fiefs at the pleasure of overlords.
That's why given the archaic way American livestock growers are being treated by overlord corporations and government alike, one synonym for monopoly makes perfect sense.
It's called fiefdom.
Richard Oswald, a fifth generation farmer, lives in Langdon, Missouri, and is president of the Missouri Farmers Union.