Des Moines Register Iowa View
Two years ago this month, nearly a thousand people — mostly farmers – crowded an auditorium in Ankeny for the Iowa kickoff of the U.S. Department of Agriculture and U.S. Department of Justice workshop series addressing competition and antitrust issues in agriculture.
The historic collaboration between the Justice Department and USDA promised action and hope for farmers who have struggled for decades to address the growing power of a hyper-consolidated agribusiness industry. The hearings produced a lot of speeches — the transcripts run almost 1,900 pages — but precious little action.
Today, the big agribusiness, meatpacking and seed companies have maintained their stranglehold on farmers. Some firms are considering more mergers as the economy strengthens, which would further consolidate the marketplace.
As Sen. Chuck Grassley noted at the Ankeny workshop, “Bigger isn’t per se bad, but it can lead to predatory business practices and behavior. And that’s what we’ve got to be concerned about.”
The lack of competition is especially acute in livestock markets, where a few companies control the national marketplace. About four out of five cattle and two out of three hogs are slaughtered by four companies in each sector. With few national buyers, farmers rarely get a competitive price for their livestock. On the local level, there are often only one or two beef or hog packers buying farmers’ livestock. And frequently, the available packers won’t even buy from independent producers.
The big meatpackers have the power to drive down the prices farmers receive for hogs and cattle. In many cases, meatpackers control and feed their own livestock. Packers such as Tyson, Cargill, and Smithfield Foods use packer-owned livestock to exert unfair market power over farmers.
The companies can buy cattle and hogs when prices are low and slaughter their own livestock when bidding prices rise. This puts long-term, downward pressure on cattle and hog prices and effectively allows the meatpackers to manipulate prices.
Persistently low livestock prices push farmers out of business. Between 1997 and 2007, Iowa lost more than 9,300 hog farms (about half) and 7,600 cattle operations (one-fourth), according to USDA figures. The loss of these nearly 17,000 farms reverberates throughout the rural economy as fewer farms support fewer feed stores, equipment dealers, and other local small businesses and their jobs and wages.
Although farmers have seen few tangible results from the 2010 workshops, Iowa’s senators continue to champion fair livestock markets. This month, Grassley and Sen. Kent Conrad, D-N.D., introduced legislation to level the playing field between livestock producers and meatpackers that would ban packer ownership of livestock for more than a week before they are slaughtered. Sen. Tom Harkin, D-Ia., cosponsored this important livestock reform measure.
Grassley’s packer ban legislation (S. 2141) is widely supported by independent livestock producers. During the agriculture antitrust workshops, many farmers and ranchers demanded our policymakers prohibit packers from owning livestock. A packer ban would promote fairer, more open and competitive livestock markets, strengthening the marketing options and prices for producers. Studies have found that packer ownership of livestock can artificially lower prices farmers receive and still increase consumer food prices.
Grassley and Harkin have long records of promoting competition and fairness in agriculture markets and both sit on the Senate Agriculture Committee. As Congress begins to take up the next Farm Bill, competition issues such as a packer ban and other similar reforms should be part of the legislation.
As Grassley said in Ankeny two years ago, “there’s not enough competition, too much concentration” in agriculture markets and there is a role for the “government not being a partner but for sure being a referee.”