In Colorado – At the USDA/DOJ Livestock Workshop

Attorney General, Eric Holder on left, Secretary of Agriculture, Tom Vilsak on right (photo by Kris Hite)

It isn’t often that one gets to see history in the making, but if the organization R-CALF is correct, this “cow girl” may have been witness to the, “most important day in the history of the cattle industry.” This year, for the first time in history, the United States Department of Agriculture (USDA) and the Department of Justice (DOJ) held joint public hearings, called “workshops”, in an attempt to understand the state of agriculture in the United States and then create policies that will prevent an impending crisis in agriculture. The Livestock Workshop, which was held at Colorado State University on August 27th, was the fourth in a series of five public hearings across the country.  (Crop Farming held in Iowa, Poultry in Alabama, Dairy in Wisconsin, Livestock in Colorado and the upcoming Margins Workshop in Washington D.C. on December 8th) The hearings were lead by Tom Vilsack, the Secretary of Agriculture, and Eric Holder, the Attorney General of the United States.

How exactly – with food dripping off packed grocery store shelves, mounded high on plates in nearly every restaurant, and half of all food purchased being thrown in the trash – are we in a crisis in agriculture you might ask? This question was brought into focus when I attended the public speak out hosted by the non-profit Food and Water Watch in a Fort Collins, Colorado hotel ballroom the night before the Livestock Workshop. It was one of many speak outs that day, which served an educational function and practice for those who would put their names in the public lottery to have their comments placed on public record during the workshop the following day.

The panel at the speak-out outlined the current problems in our food production system: on the farm, in the meat packing industry and in the retail sector. To paint the issue in broad strokes, the majority of the production and sale of food is currently in the hands of a few massive corporations. This creates conditions where independent farmers are going out of business, and once the majority of independent farmers are out of the picture, the retailer can inflate the price of food and keep the profit. The beef industry is one of the last major food industries that still has a significant number of independent producers raising food for the market place and under current economic pressures many of these independent operations are going out of business. This was the main focus of the speak out.

To read more about the speak out read the article “Down on the Farm” by Joshua Zaffos: (photo by Kris Hite)

Food security was another important theme of the evening, and this was directly linked to industrial agriculture and the limited choices in the market place when the production and sale of food is in the hands of a few. Today less than 3% of the U.S. population farms and that number is shrinking. (As a result, half of all food consumed in the United States is imported. If a global crisis occurred, Americans would be eating a lot of corn and not much else.) Also, when food production occurs on a massive industrial scale, if something goes wrong it affects a significant number of people. The recent egg recall is a classic example of how fragile our food supply can be. This summer two companies in Iowa simultaneously had half a billion eggs recalled because of a salmonella outbreak. Between the two companies these eggs were being sold under 30 different labels. The massive egg recall illustrates how diversity in the market place is often an illusion. If only a few businesses produce food on a massive scale, when something goes wrong it goes wrong in a big way and significant numbers of people are affected.

The speak-out also outlined the history of monopolies in the chicken and pork industries through the process of “vertical integration”. This occurs when the food distributor or “packer” controls the raising, slaughter, and distribution of animals, effectively controlling every aspect of the production system. When those who run vertically integrated operations control the majority of the market it is next to impossible for the small independent farmer to compete in the market place. It might be possible for small farmers to sell their livestock to a major packer, but it is almost impossible for them to sell their livestock and make a profit. As one woman at the speak-out said when packers “buy” from themselves there is no way for farmers to get a fair value because, “You can’t buy from yourself without being preferential.”

The monopolies in the food system are paying meat producers less while at the same time charging consumers more. Farmers used to get 50-60% of a consumer’s dollar. It is now below 40%. A chicken farmer may receive substantially less than 40%. To put things in perspective, a 12 piece bucket of Kentucky Fried Chicken costs $26. To break down where the consumer’s dollar goes, the packers made $4, KFC received $21, and the farmer made $.30. This is a result of the chicken industry being almost 100% vertically integrated since the 1960s. Chicken farmers don’t work for themselves. They are “contracted” to run massive factories that are staffed by migrant labor. The producer takes out a loan with the packers to raise enough capital to build one of these facilities. Under these contracts farmers must sell their animals to the packer, who dictates the price of the animals regardless of the price of feed or other economic tolls on the operator. Chicken farmers don’t have much choice other than to accept these terms. There are only 4 packers that slaughter the nearly all of the 9 billion chickens that are consumed in the United States every year. People that run chicken “farms” are less like farmers and more like indentured servants, scraping by while everyone else makes the profit. (To read more about the chicken industry read this article in Gourmet Magazine)

The pork industry has followed in the chicken industry’s footsteps. Since 1985 95% of hog farmers have gone out of business. The remaining 5% of hog “farmers” run massive concentrated animal feeding operations (CAFOs) a style of farming where animals never see the sun, and where the concentrated waste produced (often times larger than entire cities) can easily pollute streams and water tables. CAFOs are staffed largely by migrant laborers and on hog production facilities they often have to wear respirators just to work in the buildings. (For more information on modern hog farming read Dominion by Matthew Scully a speech writer for former president George W. Bush) The argument that these factory farms are “efficient and create the cheapest possible product for the marketplace is simply untrue. Since 1985 the price of pork has increased by 71%, but the price payed to the producer has dropped by 51%. The packers are the one porker in the middle bringing home the real bacon with the top 4 packers controlling 86% of the market.

Not all “packers” are created equal. Indpendent meat packers have been hit hard by monopolies. The UFCW (the union representing food workers) was hard to miss, not just because of their gold t-shirt, but also in show of number.

This brings us back to the cattle industry and why the USDA Livestock Workshop is hoped to be the most important day in the history of the cattle industry. The cattle industry is the second biggest agriculture industry in America and is undergoing the same process of vertical integration that the chicken and pork industries have undergone. This is putting a lot of independent people in the cattle industry out of business from ranchers (also called cow-calf operators) and family run feedlots (called feeders), to small independently owned slaughter houses. The actual number of people working in the cattle industry is the smallest it has been since the 1970’s. Only four major corporations own the majority of the slaughter houses. When only a few companies run slaughter houses, the animals either need to be raised close to a slaughter house, or shipped a long distance, which costs money and also stresses the animals making them drop weight on the journey, and further cutting into a rancher’s profits. Now that packers are raising their own animals they are driving prices down and causing many ranchers to call it quits. Stories about ranchers who had to call it quits caused more than one tear shed at the speak-out.

If you ask three ranchers their opinion, you get four different answers – so the joke goes.

When people are leaving the second largest industry in agriculture, the impact is far reaching, especially in rural communities. The average age of a rancher is 57, and this average is older in some states. Most ranchers either have a second job, or they have a family member that earns an alternate income. Many young people decide to go into the military instead of take up the family business, not necessarily because they want to, but sometimes because they have no choice. Instead of being able to pass their ranches down to their children, ranchers often have to sell their land to retire or not retire at all. Out of a packed ballroom of over 500 people, less than 20 people under the age of 40 were ranching.  I’ve heard that if you ask three ranchers for their opinion you get 4 answers, but on this issue everyone agrees that the cattle industry is going to change significantly if people can’t afford to ranch anymore.

Eric Holder with Assistant Attorney Gereral, Christine Varney. Their decisions about how to enforce anti-trust laws will determine the future of the US agriculture industry.(Photo by Kris Hite)

The next day at the actual workshop a long line of people filled Colorado State University’s student center long before the doors opened. Several groups of people arrived on busses hired specifically to take them to this event. Many people from Nebraska slept on the bus through the night to arrive at the workshop early in the morning. The non-profit R-CALF was trying to get 25,000 people to attend the event. The USDA took them seriously and even asked the Agriculture Economics Department, who hosted the event, to hire a helicopter to patrol the plaza – a request the Ag Econ Department declined. A little less than 2,000 people attended the event, but they came from all over the country, from Texas, Florida, Kentucky, and even New York. Ranchers, feeders, packers, union representatives, people from non-profits, and anyone else who wanted to attend and stand in line at 7 in the morning, made it through the door and had the chance to add their comments to the public record.

Busloads of ranchers were dropped off at the plaza in front of the student center.

Tom Vilsak and Eric Holder led the first panel. The Secretary of Agriculture outlined the problems in the livestock industry with a special focus on cattle and he expressed his sincere concern about the problems we are all going to face in the future. Eric Holder and his staff addressed the anti-trust issues and asked everyone to give comments about how monopolies have affected their businesses and specifically requested comments about how to enforce anti -trust laws. Several prominent politicians from Colorado and Montana, also spoke on the panel.  The panels that followed were filled with producers and led by lesser officials in the USDA and DOJ.

Some of the information from this meeting may influence this little guy’s future.

The diverse number of problems and ideas for solutions expressed at the workshop underlined how large the problems in the livestock industry really are. The only consensus appeared to be that everyone was worried that young people are not or cannot pursue jobs in the livestock industry (along with a universal and resounding loathing for the Endangered Species Act). Wyoming rancher, Dr. Taylor Haynes spoke to the heart of the problem independent livestock producers are having with monopolies when he said that the first step to breaking up monopolies would be to keep the packers from owning their own animals. The USDA may be able to take steps in this direction when it reviews the GIPSA Rule, which has been on the books since 1921, to address unfair practices in raising of chicken, pork, and livestock. This rule in currently under review. It is accused of never having effectively been enforced since its inception, but that might change under the Obama administration. The GIPSA rule can address problems with contract raising of livestock and how this creates monopolies. You can read the rest of the Rule on R-CALF’s website.

Whether the Rule will be updated or re-enforced remains to be seen and it was a matter of much debate at the Livestock Workshop. Even if the rule were to help independent livestock producers, ranchers don’t like being regulated by the government no matter what the regulations are. This may work to their detriment. If ranchers were to speak in a unified voice they might have more political power. Otherwise the proud history of American ranching may be just that. History.

I have to admit that I did feel happy, even proud, to see freedom of speech being welcomed in a democratic market place of ideas, but any warm fuzzies were short lived after listening to the usual political rhetoric. In Eric Holder’s closing speech he asked for Americans to return to the 18th century values that made our country great, but he didn’t bother to define what these values were – we can infer he was not talking about those 18th century values that supported slavery as a legal institution (many individuals who own chicken or pork operations may feel like slaves already.) And even though the Assistant Attorney General was happy to address anti-trust laws head on, several state politicians would skirt the issue or make statements like, “Bigger isn’t necessary bad, but…” not wanting to rile too many feathers in a mid-term election year.

Whether I watched history in the making remains to be seen. The final workshop on price margins in agriculture will be held in Washington D.C. on December 8th 2010.  Everyone that I spoke to at the workshop was skeptical  about what the outcome would actually be. Some laws that regulate big ag can also harm the smaller independent producers. Everyone was happy enough to be there, but also highly skeptical about what changes will arise from these workshops.  Ranchers are not used to getting their hopes up and in their stoic fashion usually take things as they come.

It was also a great pleasure to be in the company of the people who raise our food. The ranchers that I met and who addressed the crowd at the speak-out were eloquent, deeply intelligent, and full of wry humor. These farmers understand soil science, animal husbandry, and the intricacies of local and global economics and have an intimate understanding of the land and their animals through the changing of the seasons.  If the livestock industry is experiencing heart-failure in the heartland of America, one thing is certain, ranchers will take their dignity with them to the grave. I, like many others that attended the Livestock Workshop, will remain skeptically optimistic and hope that some beneficial changes are on the horizon for the future of farming in the United States.

For more information on these issues I recommend the following books: To understand more about the slaughter industry – Meat: A Love Story by Susan Bourette , Fast Food Nation by Eric Schlosser. To better understand how beef is produced read the first section of the Ominvores Dilemma by Michael Pollen. To understand why it is important to support independent livestock producers read Righteous Porkchop by Nicolette Hahn Niman

Special thanks to John Maulsby who was the best possible person to sit next to at the Livestock Workshop and to Kris Hite of for supplying photos.

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