The 2018 farm bill is already upon us — House Agriculture Chair Conoway is making noises about accelerating the legislation this fall.
The ongoing wave of multibillion dollar mega-mergers all across the farm and food industry (three huge seed mergers, a stampede of supermarket mergers culminating in the proposed Amazon-Whole Foods, more meatpacker mashups) makes it more important than ever that farm, rural and food advocates lay out key principles to address competition, farmer rights and antitrust issues in agriculture.
We know that the consolidated, corporate, vertically integrated big agriculture lobby is pushing its priorities, so its critically important that we demonstrate broad-based support for the principles of fairness and equity in farm markets.
Please join the farm, rural and food advocates in signing onto these principles (pasted below) to advocate for a fairer farm and food system that benefits everyone.
THANKS for your consideration,
Dear Chairmen and Ranking Members-
U.S. farm income is significantly depressed, with disastrous ripple effects through our rural economy. Since the last Farm Bill debate, these trends have only worsened. As Congress starts the debate on the next Farm Bill, you must address negative trends in agricultural market control and anti-competitive business structures if we are to have any hope of restoring the economic health of rural America.
Agribusinesses continue to consolidate at a frenzied pace, robbing our farmers of competitive markets for the sale of their products. Foreign and multinational interests continue to expand their control of key U.S. agricultural markets, using their control to extract revenue from U.S. producers to repatriate back to their countries of origin. The model of vertical integration and contract production pioneered by large poultry companies continues to expand to other sectors, resulting in loss of farmers’ control over their own farms, increased risk for the farmers who produce under this system, and a downward spiral in viability. The consolidated economic power in the hands of few agribusiness and food companies captures most of the economic value in the food system, leaving little for farmers, workers and consumers throughout the food chain. These trends play a significant role in the ill health of our rural economy.
Given the statutory jurisdiction over the relevant laws governing these matters, we believe that the Agriculture and Judiciary Committees of the House and Senate should play a joint role in investigating these concerns and advancing solutions.
Lessons learned from the global financial crisis: bigger is not better
As we saw a few short years ago during the financial crisis that drove us into global recession, allowing our economy to be controlled by a few large corporations puts our nation and its citizens in extreme jeopardy. The same is true in our agricultural markets. Despite this fact, the steady drum beat of industry consolidation and concentration continues unabated, and has been treated as inevitable and unstoppable by Congress and federal regulators. Farmers, workers and consumers have faced worsening economic conditions — with insufficient enforcement of important antitrust, farmer, labor or consumer protections. We strongly disagree with this ambivalent and ultimately destructive approach to our nation’s rural economy and the sovereignty of our food system.
Anti-trust enforcement in agriculture and food sector must be enhanced
Our market economy relies on the long-established role of the federal government to enforce antitrust law, ensuring fair and open competition that promotes a thriving economy, and limiting the control of those markets by a few large entities that destabilizes our economy. To ignore these responsibilities is to imperil our economy and the well being of our farmers, ranchers, farm and food chain workers, consumers and rural communities.
Foreign ownership in U.S agriculture undermines U.S. farm income and drains resources from our rural communities
Foreign investment in the U.S. agriculture sector is one thing, but the extraction of U.S. resources from our rural communities by foreign agribusinesses, and the increasing control of U.S. farmland and other key aspects of the U.S. food system by foreign entities should raise alarm bells. These trends are becoming increasingly evident in our dairy, beef, poultry, organic, farm input and seed sectors, and cannot be ignored.
Manipulation of livestock markets must be stopped
Because of the consolidation of meatpacker firms in recent decades, livestock markets are extremely concentrated. The market power of these remaining firms, both foreign and domestic, enables them to use marketing and pricing strategies that shift economic risks onto the backs of farmers and ranchers.
Meatpackers use packer-owned livestock as a major tool to exert unfair market power over farmers and ranchers, freezing independent farmers out of the market and artificially lowering farmgate prices to farmers and ranchers — while consumer food prices continue to rise. Meatpackers also use formula contracts, with no fixed base price, that are prone to manipulation, giving meatpackers unfair market leverage comparable to direct packer ownership. Another livestock procurement tool, marketing agreements that are often negotiated in secret, result in the same market distorting outcome because the packers enjoy unequal information and power.
Contract farmers are losing control of their farms and livelihoods to large integrated agribusinesses
Our country’s tradition of independent farmers making production and marketing decisions for their own farms is rapidly disappearing. The newer model of vertical integration coerces farmers to surrender that independence to a large integrator company that takes over control of all decisions, and pays the contract farmer for their labor, land, and facilities. History has shown that once farmers relinquish their independence, their pay, contract terms, and overall treatment by the integrator deteriorates.
Not surprisingly, when the U.S. Department of Agriculture has attempted to establish basic protections for contract livestock and poultry farmers, the companies who impose and control these contracts have vigorously fought those efforts. We understand why these firms want to protect their own interests by fighting against any federal oversight or scrutiny of their practices, but such oversight is an appropriate federal responsibility, and Congress must not allow unfair, abusive or deceptive integrator behavior to go unchecked.
Market transparency benefits producers and consumers
Market transparency is a basic tenet of a fully functioning market economy. Policies should be enacted to establish open and transparent pricing practices for agricultural products, ensure clear access by farmers to information about production contracting standards used in various agricultural sectors, and set clear labeling standards to give consumers information about the origin and production methods associated with the food they purchase. Congress should reject attempts by agribusinesses to undermine proper market functioning with their arguments against fair, open and transparent markets and labeling.
USDA loan guarantee programs must be reformed to prevent abuse by large livestock and poultry corporations
The USDA loan guarantee programs are critical for U.S. farmers, but lending guidelines should be implemented to ensure that scarce federal resources are used wisely and allow full and fair access to credit by diverse and small-and-medium-scale producers, including implementation of real policies and procedures to assure equal credit access as required under existing law. In addition, basic protections should be established to ensure that USDA loan guarantee programs do not subsidize unsustainable and abusive contracting practices by large meatpackers and poultry companies.
Worker rights protections and enforcement in agriculture and food sector must be enhanced
Agribusinesses, food manufacturers, distributors, foodservice companies and grocery retailers also extract economic value from the food system by pushing down on wages, benefits and working conditions. All workers throughout the food chain deserve dignity, economic opportunity and safe workplaces to contribute to the economic engine of rural communities.
Thank you for your consideration of these concerns.
Contract Poultry Growers Association of the Virginias
Farm and Ranch Freedom Alliance
Food & Water Watch
Government Accountability Project
National Family Farm Coalition
National Farmers Union
Organization for Competitive Markets
Rural Advancement Foundation International-USA
Research Director/Senior Policy Advocate
Food & Water Watch