North Platte Bulletin
by Micheal Stumo
Imagine if there was only one supermarket chain in New England, let’s call it Big Grocery. Big Grocery could set the prices, while lowering the quality of food sold. The company could blacklist you for complaining and even make you sign long-term contracts like gym memberships as a condition of shopping.
Imagine if when you complained to the government about this lack of choice, bureaucrats told you that you had plenty of choice. You can buy Doritos and burritos at the corner gasoline station, and heat them in the microwave, they would say. You can plant your own garden, and freeze and can goods for the winter. Plenty of choice.
Farmers face these monopolies every day. Dairy farmers are hard pressed to sell their milk to anyone other than Dean Foods, the nation’s biggest dairy-product-processing company. Farmers’ milk can no longer be purchased by Garelick Farms, or Cumberland Farms, or West Lynn Creamery or Natures Best Dairy, because Dean Foods bought them all. Rhode Island’s dairy-farming industry has been ravaged, though demand for milk is high in the state.
Most poultry farmers only have one choice of poultry processor to sell to, and must sign contracts drawn by company lawyers as a condition of selling their birds. The contracts take away many farmer rights, like the credit- card contracts you sign. When you violate the fine print on your credit card, you pay a hefty fee; when farmers stray afoul of the fine print, they can lose their farms. These farmers have large, six-figure mortgages for their farms, and the companies can cut them off at any time.
Livestock farmers are often forced out of business by contracts that can manipulate the price of chickens, milk, hogs or cattle. The contracts are signed between family farmers and multinational corporations like Tyson and Cargill. Many cattle farmers are prevented from even selling their livestock more than one day each month. Farmers have challenged this price manipulation in court, and juries have sided with the farmers and found the companies responsible. Unfortunately, appellate courts have overturned the jury decisions on legal technicalities and excused the companies for the damage they inflicted.
The U.S. Department of Agriculture is supposed to prevent unfair conduct and price manipulation that hurts livestock farmers, but the law is unenforced. A 2005 report by USDA’s Inspector General found that the USDA actually lied to cover up its inaction in thousands of investigations into illegal livestock-market practices.
Congress is now considering a farm bill. Farm subsidies have dominated the public debate. But the Senate Agriculture Committee included other provisions to return fair contracts, competitive markets and a brighter future to independent livestock and poultry farmers. New England senators have a chance to help the region’s farmers by supporting the sensible reforms in the bill as well as needed improvements.
The bill provides farmers a choice of arbitration or going to court if a meat packer or poultry company breaches a contract. Meat packers will no longer be able to force farmers into expensive arbitration through one-sided, take-it-or-leave-it contracts. Additionally, the bill prohibits meatpackers from owning millions of head of livestock to manipulate prices. Currently, many meatpackers slaughter company-owned livestock when prices are high and only purchase cattle and hogs when prices are low. An Alabama jury, academic studies and a major USDA study established that meatpacking giants, such as Tyson, Cargill and Smithfield Foods, depress the prices that farmers receive by owning and controlling livestock.
Although the farm bill has made important first steps to level the playing field for livestock producers, improvements can be made. An amendment will be proposed on the Senate floor to require packers to openly bid on all livestock contracts, instead of striking secret, unreported deals with large livestock farms. Currently, meatpacking companies strike secret sweetheart deals with some large feedlots, but small producers always get the worst price for their livestock. This amendment will improve competition and prices by requiring packers to come out of the market’s shadows and bid for all livestock contracts. Other amendments will address some of the confused jurisprudence that has disadvantaged farmers and ranchers over the past decade.
America was once the breadbasket of the world. Now we are a net food importer. Despite our rich soil, innovative traditions, and increasing food consumption, farmers are forced out of business by broken markets. New England senators, such as Rhode Island Senators Jack Reed and Sheldon Whitehouse, should support these market reforms. Taxpayers will pay nothing. But farmers will receive a fair price and a chance to thrive.
Micheal Stumo, is a former resident of Nebraska who once farmed in Massachusetts. An attorney, he is a member of the Organization for Competitive Markets, a national nonprofit farm organization based in Lincoln.