Posted by Dave on September 7, 2011
Open, transparent and competitive markets are allegedly the bedrock of the American free market system. The idea that any individual can go to market and sell their goods and not face discrimination, be forced to sign unfair contracts or experience deceptive practices is enshrined in more than 235 years of legal precedent.
The greatest tragedy of the above statement is that we celebrate the myth of the free market everyday and organize our daily lives around it even as continual and mounting evidence points to the contrary.
If you want proof, you have look no further than the food that appears on your plate each day. If you start your day with a slice of bacon, an egg or a glass of milk, more likely than not the first bite of your day is taken at the expense of a farmer. Let's avoid the animal's sacrifice for now, but return to the slaughter that's been happening to family farmers in America's supposedly free marketplace.
For the past three decades livestock and meat packing companies have engaged in merger after merger, until the sector is so highly consolidated that it no longer operates as a competitive market. Instead, large industrial packers have used excessive consolidation to unjustly discriminate against small and medium sized livestock producers with unfair contracts and deceptive practices when farmers sell their livestock at market.
Today only 4 companies control nearly 84 percent of beef packing while another 4 control more than 66 percent of hogs. Such concentration has diminished farmer profit and increasingly placed farmers at the mercy of meat cartel contracts, which have proven to be abusive if not corrupt.
This rampant consolidation and the resulting anti-competitive practices have needlessly driven nearly a million farmers off the land over the past 30 years. Since 1980, the U.S. has lost more 600,000 hog farmers and more the 160,000 independent cattle producers in the past 15 years alone. During this time hog farmers have seen their take home pay cut in half as cattle producers have seen it drop nearly 40 percent.
While bacon and burgers are still arriving on America's plates everyday, the loss of farmers and farmer profits and the placing of production into the hand of fewer producers and packers has gutted rural America of one of its best avenues for job creation while simultaneously stalling its chance for long-term economic viability.
Since Walter Goldschmidt published his landmark book As You Sow in 1947, it has been a widely known that family owned farming operations return more money to local economies than their vertically integrated counterparts. The going rate of return for investment in Iowa for every dollar earned by a family farmer is that it is circulated in the community seven times, for a vertically integrated corporate farm it's less than two. In the 1978 edition, Goldschmidt estimated that for every six farmers that go out of business at least one local business closes as well. A quick calculation shows that over the past 30 years, the loss of 1 million farmers has cost rural America -- the backbone of our nation -- more than 166,000 independently owned businesses.
For anyone concerned about jobs or the economy this type of continued loss represents catastrophe.
Fortunately for farmers and those of us who eat, the USDA has written a new set of fair market livestock rules that could potentially level the playing field for farmers once and for all.
Known as the GIPSA rules, for the USDA agency, the Grain Inspection Packers and Stockyard Administration, that oversees their enforcement, the new rules would create a fair marketplace for farmers to sell their livestock without fear of retaliation from packers and integrators, require packers to maintain written records over price deviations and prevent undue preferences.
Today the Senate Appropriations Committee has a chance to make sure that the new rules, which were written at the request of Congress during the 2008 Farm Bill, finally give farmers a fair market.
The only thing standing between the giant packers and the end of livestock production by independent family farmers is the new GIPSA rules which have been widely reviled by the meat industry -- a sure sign of how good they actually are.
After 90 years since the adoption of the Packers and Stockyard Act of 1921, today the Senate can finally ensure that farmers are guaranteed fair contracts under the law and cannot be subject to discrimination or retaliation in the marketplace.
Advocating such principles as fair contracts and individual ownership of land and livestock used to be the foundation of the American Dream and our democracy. If our Founding Fathers were alive today, they would be fighting the Big Meat cartels just as they fought the unjust monopolies of the Stamp Act and the British Crown.
The new GIPSA rules are about creating jobs for future farmers and ranchers, ensuring the survival of independent family farms and securing the economic lifeline of rural America for the next generation. Miraculously, the new rules are not partisan, but they are fair and they will return the opportunity for a new generation of farmers to raise livestock and grow food like our Founding Fathers and Adam Smith imagined, in a functional marketplace that provides equal access to markets for all.
Today a few Senators will decide whether such a notion is central to the American ideal or just a quaint notion after all. If they chose wisely, Americans will enjoy the fruits of independent farm operations for generations to come. If not, they sign the death warrant for family farmers and rural America. These are the stakes, as they always have been, ever since the first colonists took up arms against concentrated wealth and power. In the struggle for freedom and independence, the battle never changes, even if the face of the enemy does.