The Omaha Convention: Packers and Politics
Editor’s Note: The Organization for Competitive Markets is meeting this Tuesday and Wednesday in Omaha, Nebraska. Today and tomorrow, the Daily Yonder’s Bill Bishop and Richard Oswald will be live-blogging from Omaha.
3:30 p.m.: One thing is missing from this meeting. Politics.
OCM is filled with farmers and ranchers -- all of whom are as wonky as any Washington, D.C., think tank cowboy. We've looked at charts, graphs and nearly unreadable Excel files of prices. Most of the facts and figures were part of the record already.
What we haven't done is talk about the politics of ag markets. We haven't discussed how rural Americans move from talking and research to changing laws, regulations and, most importantly, minds.
Maybe that will come later, but in a way OCM is old fashioned. It believes that facts matter and that being right about an issue is enough to eventually prevail. (Of course, it could well be that the politics of the movement are being discussed in hotel rooms. Most likely that's the case.)
2:00 p.m.: Monsanto loses its patent on Round-Up I seeds in 2014. That doesn't mean it will automatically lose its control over Round-Up ready seeds.
Monsanto currently owns all or part of 90 percent of the seeds sold to grow soy beans and corn. It doesn't sell all that seed. Other companies license the Round-Up ready genetic trait that Monsanto developed. Neil Harl, an Iowa State economist, said lessons from the pharmaceutical industry suggest that Monsanto will not give up its near monopoly of the transgenic seed market easily.
First, the company could begin to mix Round-Up I traits with others that have longer patent horizons. The law says that if a seed contains any patented traits, the entire seed is protected. Already, Monsanto is "stacking" genetic traits: adding traits that will be protected long beyond the 2014 Round-Up I patent expiration date.
Second, Harl said that pharmaceutical companies have extended the lives of patented products by paying other companies to NOT produce a generic version of a drug that loses its patent protection. Simply, a company can extend its patent by paying others not to produce a competing drug.
Harl said there needed to be legislation that would prevent Monsanto from extending the life of its Round-Up I seeds through these methods.
And he suggested that this was an opportunity for land grant universities then to produce a clean, lawsuit-proof version of the Round-Up ready seed. (Farmers worry that they might wind up in court where they will be required to prove that their seed doesn't violate any of Monsanto's patents.)
Years ago, universities produced the first hybrid seed varieties, often at no cost to farmers. Here's a chance for universities to do useful work again.
Noon: At lunch, we sat with R-CALF president Bob Bullard. Bullard had set his trademark hat aside and was talking with two young Nebraska farmers. He told them that this was a dramatic time in American agriculture -- and, for that matter, in all rural America.
Bullard said his group (and others) are trying to get 25,000 people to attend a USDA and DOJ hearing in Fort Collins, Colorado, in late August. To the government, this is one of a series of hearings the Obama administration is holding on antitrust issues.
To Bullard, however, this is it. Make or break. This is the time when either independent producers are protected or the last independent growers and producers will be consolidated out of existence.
So R-CALF hopes that an overwhelming showing from rural communities at the Fort Collins meeting will push DOJ and USDA to follow through. R-CALF has chartered about ten buses and there are vans coming to Colorado from as far away as Mississippi.
"We need there to be 25,000 people," Bullard said, as if his life depended on it. The two young farmers nodded.
10 a.m.: Bill Heffernan, an ag sociologist from Missouri, said there is fear across much of the world of a "land grab," as large firms have purchased farm land, water and fertilizer. Heffernan also sees an international "grab" of meat production.
Over the last three years, he said, the Brazilian meat producer JBS has made 39 acquisitions around the world. JBS bought Swift from Conagra and it purchased America's largest feedlot -- a massive operation that can handle 850,000 head at a time. JBS will soon be raising 47% of the cattle it needs as a producer. "That's called a captive supply," Heffernan said.
"They aren't just doing this in the United States," Heffernan continued. "They are doing this around the world."
The theme of the morning is that the ag business is growing more concentrated, even as the Obama administration continues its antitrust investigation. Small beef producers -- such as Laura's
Lean Beef in Kentucky -- have been bought by larger firms. Independent producers become subsidiaries of larger companies.
OCM argues that as more of the ag business relies on "captive supply," fair markets disappear.
These trends are pervasive, said Auburn University economist C. Robert Taylor. Taylor said that a year ago he began studying the structure of the world's fertilizer industry. "At first I thought it was a can of worms," Taylor said. "But it was really a barrel of snakes."
The world fertilizer market is a "geostrategic ticking time bomb," Taylor said. There are dwindling supplies of phosphorus -- the U.S. has a 25 year supply of this necessary agriculture input; Europe has no phosphorus of its own.
And much of the world's supply of phosphorus is controlled by governments. Morroco has 60% of
the world's supply, making it the Saudi Arabia of phosphorus.
"We are setting ourselves up to rely more and more for ag input from politically unstable countries," Taylor said.
9:00 a.m.: Usually, an invocation is a thoughtful, quiet prelude. Not at this meeting of the Organization for Competitive Markets, taking place today in Omaha, Nebraska.
Brother David Andrews, taking the story of Moses as his text, prayed that forces unseen would "free us from the captivity of corporate control...from the markets of meat manufacturers forcing prices below the cost of production."
Maybe it's the heat -- Nebraska is so hot they are cutting football practice short -- but the crowd is sparse. Just a year ago, the OCM meeting in St. Louis was crowded, especially with officials from the Obama administration. OCM officials thought they might host a similar group of people from the Department of Justice and Agriculture.
They didn't. Over the last six months, the Obama administration's push against market concentration in the agriculture business has met strong resistance, both by ag businesses and from within Congress.
So this year's OCM meeting is down to the hard core. Everyone is left wondering if the push to realign the agriculture business is old news and last year's political cause.
When the Organization for Competitive Markets met last year in St. Louis, the group of farmers and ranchers hoped that the U.S. Department of Justice would open an anti-trust investigation of the agriculture industry.
OCM is meeting in Omaha this week the question is how far that investigation will go.
OCM, along with other producer groups, contend that big companies — packers, seed and chemical producers, grocers — are manipulating food prices. As a result, producers (that is, farmers) are losing income and are being squeezed out of the market.
The Obama administration has been supportive of the OCM position on markets — or rather the lack of markets in agriculture. The Department of Justice has held hearings around the country on antitrust violations.
And in June, the U.S. Department of Agriculture issued regulations interpreting the 1921 Packers and Stockyards Act. The new USDA rules would give farmers growing chickens under contract more rights and would help maintain open markets for beef. (See a summary of the proposals here.)
At a House hearing on the regulations in July, however, these regulations were roundly trashed by Democratic and Republican congressmen alike.
That attack has given this OCM meeting an edge. Top USDA and Justice officials, who came to the meeting last year, are staying away. And the agenda of the meeting has been shifted to address the Congressional attacks on the proposed P&S regulations.
We’ll post reports from the meeting for the next two days. The most current post will appear at the top.
So, here we go.