Competitive and Fair Agricultural Markets

Currently, a handful of corporations dominate the American food system. The rapid trend toward vertical integration, especially in hog production, further exacerbates the economic concentration in packing, processing and production. As the livestock sector has become extremely concentrated and integrated, packers and processors increasingly control production at all stages. Packer ownership of livestock (vertical integration) is driving the economic nightmare and environmental catastrophe of concentrated, industrial livestock production.

In many rural places where livestock are raised there are only a few, or even just one, packer or processor for a given livestock species. This is especially true in the livestock and poultry sectors. At the same time there has been a dramatic increase in the use of production and marketing contracts that further diminish the bargaining power of farmers and ranchers. Currently, fully 89% of hogs are either owned outright by packers or tightly controlled through various contracting devices. Many farmers and ranchers face price discrimination and severely limited market access as a result.

The bottom line? In a world where packers own or control all the livestock, there is no place for family farmers and ranchers, rural communities suffer another economic loss and all of us suffer the destruction of our natural environment.

2007 Farm Bill

To prevent price manipulation and save family farm livestock production, the 2007 Farm Bill passed by the U.S. Senate contained a ban on meatpacker ownership of livestock. It also contained provisions to end the sweetheart deals giant industrial livestock operations receive today. But members of Congress representing the interests of big corporate meatpacking companies stripped most of the provisions in conference committee.

We had one important win in the 2007 Farm Bill. For the first time ever the farm bill includes a Livestock Title. In that title, USDA is directed to establish rules governing “undue preferences” by meatpackers, such as volume premiums to mega livestock producers. The 1921 Packers and Stockyards Act prohibits “undue preferences” but has not been enforced.

We have long opposed volume premiums that are not based on verifiable cost savings to the meatpacker. Sweetheart deals for mega producers place family farmers at a competitive disadvantage.

The farm bill leaves the wording of the regulations to USDA, so they could be strong or do nothing. But the farm bill does force USDA to act, and that gives us a fighting chance to make the case and build grassroots pressure for effective rules. Senator Tom Harkin (D-IA) won passage of this provision.

More Information

Testimony: Delivered by Center staff John Crabtree
House Sign on Letter: Letter Signed by 64 Organizations (pdf)
House Sign on Letter: Letter Signed by American Farm Bureau Federation, National Farmers Union, and Center for Rural Affairs (pdf)
Senate Sign on Letter: Letter Signed by American Farm Bureau Federation, National Farmers Union, and Center for Rural Affairs (pdf)
Senate Floor Amendment: Oppose Senator Roberts Price Discrimination Amendment (#3549) (pdf)
Boswell Breaks with Peterson: Rep. Boswell Affirms Support for Livestock Competition Title in Farm Bill