There are several steps necessary for big agribusiness to systematically take control of farmers and the farms. As Professor Neal Hamilton of Drake University Law School says, "It's easier to own the farmer than to own the farm." This process is transforming family farmers into hog house janitors and plow jockeys for multinational food corporations.
The first step was consolidation of food processing. With the federal government asleep at the wheel, the packers and grain merchandisers have eliminated most effective competitors from the livestock and grain markets. While big meat packers publicly argue that there is tremendous competition for livestock, the attorneys for the American Meat Institute, a packer trade association, admitted in court documents in a recent lawsuit against the State of Missouri that "[t]he fewer the number of [livestock] buyers, the more likely it is that the price will go down."
The Cargill-Continental Grain merger, which antitrust chief Joel Klein recently approved, is the most incredible and anticompetitive merger in the grain industry to date. The combined company will control an unprecedented level of the export grain trade and leave many farmers with Cargill as the only reasonable marketing alternative.
The second step is vertically integrating the food industry so farmers and ranchers produce commodities only for a specific big agribusiness. They control farm production either through contract or outright ownership -- it's the same practical result. The most astounding example is the recent deal by Smithfield Foods (the biggest pork packer/processor in the world) to acquire Murphy Farms (the biggest factory hog farm in the world). As writer Bill Bishop from Kentucky states, "In the New Agriculture, everybody works for The Man. Farmers are no longer farmers. They are plow jockeys and hog house janitors. They all work for The Man."
In order to integrate the industry, Big Agribusiness must eliminate open market competition as a viable marketing option to lure farmers into contracts. They did it in poultry. In livestock, captive supply controlled by packers far exceeds open market volume. The pork producers and cattleman's associations -- which are tremendously influenced by big packers, big feedlot operators and factory farm interests -- proudly support these "strategic alliances". They are wrong. Once farmers are under contract, the open market withers away, and the farmer-contractors can be systematically squeezed through incremental changes in contract terms (shifting risks, costs and responsibilities) and procurement practices. Farmers become mere hog house janitors.
Biotechnology is moving row crop production the same way. Steve Askew, national account manager for Monsanto, told the Agricultural Retailers Association convention last December that "We're really talking about the integration of the ag industry." DuPont/Pioneer openly promotes its "dirt-to-dinner" strategy where it seeks control at all levels of the food chain. Optimum Quality Grains is currently DuPont's factory row crop farming subsidiary. The corn growers and soybean associations are too integrated with the seed industry -- through joint committees, joint promotion programs, etc. -- so they are feverishly promoting biotechnology despite its negative impact on family farmers and despite profound consumer rejection. Farmers will be turned into plow boys as they become locked into production contracts for a specific company.
Then consider the Retail Power Buyers. Big supermarket chains have moved into high gear to consolidate retail food sales to consumers. The five biggest firms have nearly doubled their market share in five years. Retail consolidation is only accelerating. Supermarket analysts say the food price is substantially determined at the retail level and that affects prices back through the chain to the farm gate.
Let's assume that the Retail Power Buyers abuse their market power to drive down the cost of the food they procure. The food processors which supply them are also powerful. But rather than fight back, it is much easier to pass the damage on to the farmer. Thus, farmers receive less of the consumer food dollar than at any time in history.
In the past, farmers and ranchers were able to successfully challenge retail power in court under antitrust laws until the Supreme Court's 1978 decision in a case known as Illinois Brick. That decision basically said that you can not sue a business for antitrust violations unless you have a direct business relationship with that business. Since most farmers are at least once removed from the retailer, they are required to suffer antitrust harm without a legal remedy. However, Congress has the ability to remove the Illinois Brick injustice if they choose to do so.
The solutions to these fundamental food industry problems need to come from the government, the same government which put the rules in place to foster these trends.
First, the state Attorneys General must collaborate in stopping the Cargill-Continental Grain merger. State Attorneys General have the legal authority to prevent potential harm -- whether or not the U.S. Department of Justice OK's the deal -- and they should be pressured to do so.
Second, there is a law called the Packers & Stockyards Act which was designed to prevent packers from treating farmers unfairly in the marketplace. That law needs to be amended to include a prohibition on packer ownership and control of hog and cattle production.
Third, biotechnology must be rejected in the food supply at all levels -- from the farmer to the consumer to the government. Farmers have unfortunately adopted genetically modified (GM) crops on a large scale. But consumers are rejecting this food, leading to probable segregation in the marketplace where non-GM food is priced at a premium.
Fourth, Congress must strengthen antitrust laws up to populist standards. Populists inspired the creation of these laws decades ago, but pro-business, activist judges have weakened them. There is a groundswell of agrarian/populist pressure in the farm community to strengthen antitrust rules. The general public must come on board for this effort to succeed.
Lastly, stop all corporate welfare to Big Agribusiness and redirect those funds to promoting a decentralized food system infrastructure. Corporate welfare includes discount priced university research, tax breaks, low interest loans, export subsidies, or outright grants. I am also including government food purchases from big agribusiness.
Those taxpayer funds should be redirected to stimulate the growth of a decentralized food infrastructure based upon family farm production. A new, competitive infrastructure must grow from the grass roots to challenge Big Agribusiness, to provide prosperity for family farmers and rural communities and to minimize future increases in consumer food prices.
Michael Stumo is a former farmer now practicing law in Connecticut on sustainable food industry issues. He can be reached at P.O. Box 761, Winsted, CT 06098 or email stumo.and.milleron@snet.net.