Contract Farmers Need Help

As Congress rushed to pass legislation to help America's faltering farmers, the needs of farmers who use contracts to sell their product -- which is fast becoming a way of life for many -- were not addressed. A few short years ago "contract farmer" usually meant a poultry grower who, since he did not own his product (unless the bird died), was not considered a real farmer.

In today's agricultural world contracts of all types are common, including forward contracts for cattle in feedyards as well as row crop contracts covering genetically modified soybeans and high oil content corn. Nuts, vegetables and many other commodities are produced on contract.

Farmers are being told that the American taxpayer is tired of bailing them out, whether for a disaster or for overproduction. A September 13 editorial in Feedstuffs warns that "American agriculture must now quickly consolidate all farmers and livestock producers into about 50 production systems." They are also being told that the free marketing process must reign and should not be legislated or regulated. The government is responsible for legislation and regulation that has harmed farmers and it is irresponsible to proclaim that none is needed now. To do so is to abandon family farmers and change the landscape of America.

At the same time every poll shows that Americans want to retain the family-sized farm and keep rural towns alive. How are we to reconcile these opposing views?

We must look at past government policies and learn from our mistakes and we must give farmers the tools to help themselves not just another handout of money that is too little, too late.

The 1962 report of the Committee for Economic Development advocated the removal of one-third of America's farmers. The program prepared for Congress called for getting rid of all but 400,000 to 500,000 farmers to supply food for America.

They haven't quite succeeded yet because there are still 2 million farms but the situation is really much worse. Recent predictions say only 25,000 to 50,000 farms are needed in the United States to produce for the global food system. That policy to get rid of farmers reminds me of what General Sherman said in 1867:

"The more Indians we kill this year, the less will have to be killed the next war, for the more I see of these Indians, the more convinced I am that they all have to be killed or maintained as paupers."

The government doesn't have to kill the farmers. They are doing that to themselves, suicide being a leading cause of death for farmers.

Farmers who use agricultural contracts can save themselves if they are given the following seven items.

1. We must have legislation assuring fair contracts. Twenty-nine farm organizations met at a summit in St. Louis in April and developed common principles of agreement. Number 8 under concentration reads:

"We call for the development and implementation of national legislation prohibiting unjust or unreasonable conduct by a business that is in a dominating position in contracting, supplying or buying agricultural goods and services."

2. Creation and funding of a section within the USDA's Marketing and Regulatory section that deals with all aspects of contract farming is needed.

3. The government must extend the same indemnity guarantees to cover income losses by contract growers as it does to farmers who own their product.

4. Passage of H.R. 2830, The Family Farmer Cooperative Marketing Amendments Act of 1999. This bill provides for good faith bargaining between processors and voluntary cooperative associations of agricultural producers.

5. It is imperative that the Packers & Stockyards Programs have adequate funding to make use of the recent reorganization and hiring of economists to investigate complaints of deceptive and non-competitive marketing practices.

6. Passage of H.R. 2829, which gives the USDA the same administrative authority over poultry as has been given over red meat. Currently any poultry complaint from Packers & Stockyards must be taken to the Department of Justice, which has not brought a poultry case in modern history. It also gives pullet growers and producers of hatching eggs the same P&S protections as are currently given to broiler growers.

7. Other model contract legislation should be developed. Particular attention should be given to the use of the independent contractor status by processing companies. Companies can and do use the independent contractor status of farmers to escape obligations of state and federal taxes, unemployment insurance taxes and withholding taxes. Yet, most of the criteria used by the IRS to determine independent contractor status are not being met in poultry and hog production contracts.

Companies can and do exercise great control over decisions usually made by the farmer. Companies may demand considerable initial and continuing capital investment. Independent contractors are without recourse to the protections provided by the National Labor Relations Act and the Fair Labor Standards Act. Civil Rights laws should be examined to see that the same protection against sexual harassment and discrimination is given to independent contractors as to employees.

In recent years two reports have shed some light on the inequities contract growers face as companies use their dominant positions to impose unfair and unjust and discriminatory terms and conditions. One is "Concentration in Agriculture: A Report of the USDA Advisory Committee on Agriculture Concentration" and the other "National Commission On Small Farms." Many of the above solutions are recommended in these reports. It is time to act on them.

Ina Young of Paris, Arkansas, is Poultry Chairman of Arkansas Women Involved in Farm Economics (WIFE). This article originally appeared in the October National WIFE Newspaper.

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