Corporate Farming
| Industrial agriculture has been defined, even by its proponents, as a system where the farm owner, the farm manager and the farm worker are different people. That's a dramatic change from the historic structure of agriculture, where the people who labor in farming also make the decisions and reap the profits of their work. Corporate farming leads to closed markets where prices are fixed not by open, competitive bidding, but by negotiated contracts, and where producers who don't produce in large volumes are discriminated against in price or other terms of trade. A healthy and stable community depends not on the number of livestock being produced, but on the number of livestock producers living and working there. The Center works to create genuine opportunity for family farms and ranches. We educate the public about the consequences of industrialization and corporate farming through our monthly newsletter. The last 12 months of Corporate Farming Notes are presented below. |
August 2008
Regulators Scrutinize Effect of Possible JBS AcquisitionsThe Department of Justice is looking more closely at the anti-competitive impact of JBS S.A.’s acquisition of Smithfield Beef’s Five Rivers Cattle Feeding, according to our investigations and several reports in financial trade publications. JBS announced in March their intention to acquire Smithfield Beef Group and National Beef Packing, purchases that would make JBS both the largest beef packer and cattle feeder in the U.S.
Five Rivers Cattle Feeding, a joint venture between Smithfield Beef and Continental Grain with the capacity to feed over 800,000 head of cattle, would come under the ownership of JBS if the transaction is approved. In conversations with a variety of government agencies looking at the JBS mergers, the ownership of Five Rivers by JBS has been called a “significant area of inquiry.”
Our investigations also lead us to believe that the JBS purchase of National Beef’s Dodge City and Liberal plants in Kansas combined with the JBS Swift plant in Cactus, Texas, as well as the combination of National Beef’s plant in Brawley, California, and Smithfield Beef’s plant in Tolleson, Arizona, are points of concern for the Justice Department.
Thousands of people from across the U.S. have weighed in with the Justice Department in opposition to the JBS - Smithfield Beef - National Beef mergers. We encourage you to keep up the pressure by expressing your opposition to the JBS mergers at http://www.cfra.org/JBS.
On June 30 the Organic Trade Association filed a legal complaint against Ohio’s Department of Agriculture challenging as unconstitutional an emergency rule seeking to prevent milk labeling that tells consumers whether cows producing the milk were treated with rBST, the synthetic growth hormone sold by Monsanto under the brand name Prosilac®.
“The Organic Trade Association firmly believes that consumers have a right to know, and want to know, about the products they purchase, and organic farmers and processors have a right to communicate with their consumers regarding federally regulated organic production practices,” said Caren Wilcox, the Organic Trade Association’s Executive Director.
USDA’s National Organic Standards prohibit the use of hormones to promote growth or increase production in organic milk production.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.
July 2008
Pork producers will get another shot at democracy. In 2001 a majority of pork producers nationwide voted to end the mandatory checkoff that mainly benefits large, vertically integrated pork producers rather than small and mid-sized family producers. Yet a back room deal at USDA kept the checkoff alive despite the vote.A lawsuit failed to reverse the action at USDA. But as part of the court settlement, USDA will conduct a survey of producers this year. If more than 15 percent indicate they would like to vote again on the continuation of the checkoff, USDA will hold another vote within one year.
Unfortunately, the steep decline in family farm pork production that led up to the first vote has continued for the last seven years. Opponents of the checkoff will likely be fighting an even tougher battle as they seek justice for family farm pork producers.
Contact: Brian Depew, briand@cfra.org, 402.687.2103 x1015 to comment.
June 2008
The farm bill was pretty good for corporate farms. No farm program payment limits, of course, but, just as disconcerting, the conference committee also stripped a provision from the Senate farm bill that would have prohibited meatpackers from owning livestock.We have often written about the importance of banning packer ownership to foster competition in livestock markets and remove the driving force behind the rapid expansion of massive, vertically integrated, industrial livestock operations and the environmental nightmares associated with them.
Several members of the conference committee endeavored to put the ban on packer ownership of livestock back into the farm bill conference report. Most notably, Senator Chuck Grassley (R-IA) offered an amendment to include the provision with the vocal support of Senate Agriculture Committee Chairman Tom Harkin (D-IA), and Representative Leonard Boswell (D-IA).
However, that support was not enough to overcome the opposition lead principally by House Agriculture Chairman Collin Peterson (D-MN) as well as Representatives Cardoza (D-CA), Hayes (R-NC), Etheridge (D-NC), and Goodlatte (R-VA).
The largest corporate “farms” in the country – Smithfield (the largest pork producer and packer in the U.S.) and JBS (the largest cattle feeder and beef packer in the U.S.) – will continue to wreak havoc among family farmers and ranchers and throughout rural America, for now.
As in 2002, the U.S. Senate showed vision and courage by prohibiting packer ownership of livestock in their farm bill. In fact, support for this provision was actually stronger this year, including greater support within the Senate Agriculture Committee. But, in the end, Chairman Peterson and others who publicly declared their opposition to fair access to competitive livestock markets for family farmers and ranchers won the day on vertical integration.
However, thanks to the tireless efforts of a core group of family farmers, ranchers, and like-minded organizations, combined with the persistence of Senator Harkin, the farm bill conference report did include one meaningful livestock market reform for which the Center for Rural Affairs has long advocated. It requires the Secretary of Agriculture to write rules that define an “unreasonable preference” as prohibited by the Packers and Stockyards Act.
If well written, rules defining “unreasonable preference” could help stop price discrimination against family farmers and ranchers and breathe life and competition back into livestock markets.
Contact: John Crabtree, 402.687.2103 x 1010 or johnc@cfra.org for more information on the Center’s Corporate Farming Notes.
May 2008
On March 4 and 5, JBS-S.A. of Brazil announced the acquisition of National Beef Company of Kansas City, America’s fourth largest beef packer, as well as the Smithfield Beef Group. In little more than a year, JBS has become the largest cattle feeder and beef packer in the United States. The Department of Justice has undertaken a premerger analysis to determine if the acquisitions by JBS are anticompetitive under U.S. antitrust laws.The Center for Rural Affairs has been working with allies to convince Justice that this mega-merger must be scrutinized more closely and that the premerger analysis should be extended. We are also gathering comments from organizations, churches, farmers, ranchers, and other concerned citizens through an online petition and comment page. We have over 500 citizen signers of our letter to Justice and, given time, hope to make that thousands.
You can find out the status of the Justice Department’s analysis and, if there is still time, comment and sign onto our letter at http://www.cfra.org/competition.
As previously reported, local residents near Ravenna, Nebraska, have engaged in a running battle with Swift over dumping of paunch (gastrointestinal contents of slaughtered cattle) in open fields near their homes. Since the JBS takeover, the residents’ limited progress has been reversed, and paunch dumping is as egregious as ever.
In early April the mayor of Grand Island told JBS-Swift officials that the company’s plant could be shut down over unresolved wastewater problems. Nebraska Dept. of Environmental Quality issued notices to the city and JBS-Swift four times in the last nine months for violating discharge permits.
The Iowa General Assembly is poised to provide $22.8 million in true “pork barrel” spending for yet another research study of how to make liquid manure from industrial livestock operations not stink (HF 2688). House Ag Committee Chair Delores Mertz (D-Ottosen) and Speaker Pat Murphy (D-Dubuque) played a legislative shell game to get the bill out of committee and reported to the floor.
Contact: John Crabtree, 402.687.2103 x 1010 or johnc@cfra.org for more information.
April 2008
Brazilian firm plunges into U.S. meatpacking and cattle feeding ventures; California beef recall the largest in historyOn March 4, JBS-S.A. of Sao Paulo, Brazil embarked on a beef packing acquisition binge. That day JBS announced its intention to purchase National Beef Company of Kansas City, America’s fourth largest beef packer. The next day, JBS announced its acquisition of Smithfield Beef Group.
If approved by the Justice Department, these acquisitions would give JBS the capacity to slaughter over 42,000 head of cattle per day in the U.S. or about 32 percent of national slaughter. Cargill, with 29,000 head per day slaughter capacity, and Tyson, with 28,300, are the second and third largest beef packers in the U.S. and combined with JBS would account for over 80 percent of U.S. beef slaughter.
JBS would also acquire Five Rivers Cattle Feeding, a Smithfield joint venture consisting of feedlots in Idaho, Colorado, Kansas, Oklahoma, and Texas with combined capacity to feed over 800,000 cattle at one time.
Two days and $1 billion later, JBS is positioned to become the largest cattle feeder in the world along with its status as the largest beef packer in the U.S. and worldwide. JBS continues to demonstrate to ranchers and farmers with cattle exactly why a ban on packer ownership should become federal law, just as Smithfield has convinced family farm hog producers.
On February 18 the Hallmark/Westland Meat Packing Company of Chino, California, recalled 143 million pounds of beef, the largest recall in U.S. history. The Food Safety and Inspection Service determined that the beef in question was unfit because some of the cattle slaughtered did not receive “complete and proper inspection.”
The Hallmark/Westland recall occurred because the company forced “downer” cows that could not walk or stand for inspection, as required by federal regulation, to stand by using forklifts, electric cattle prods to the face, and other extremely abusive methods. The abusive practices were captured on video shot by a Humane Society investigator inside the plant.
Hallmark/Westland CEO Steven Mendell was subpoenaed to appear before a Congressional investigative hearing on March 12. USDA, however, has done little more than rescind Hallmark/Westland’s USDA “Supplier of the Year” award for the 2004/2005 school year. Over 37 million pounds of the beef recalled by Hallmark/Westland last month had made its way into school lunch programs throughout the country, according to USDA officials.
Contact: John Crabtree, 402.687.2103 x 1010 or johnc@cfra.org for more information on the Center’s Corporate Farming Notes.
February 2008
Indiana county slated for mega hog expansion; South Dakota industrial dairies financed through bizarre immigration arrangementIn December, the 12-member Planning Commission of Randolph County, Indiana, voted unanimously to endorse an ordinance that would create a so-called “agricultural district” across 75 percent of Randolph County specifically for the construction of industrial livestock operations.
Over 50 opponents filled the meeting room to comment on the proposed ordinance, and at least another 50 were forced to stand in the hallway because the room was too crowded for them to enter.
The Commission voted against allowing public comment at this meeting. Commission member Todd Schroeder declared that he had heard enough from the public and joined the vote against public comment.
The proposed ordinance would turn 220,000 acres of the nearly 290,000 acres in the county into an industrial park for confined animal feeding operations by creating an intensive agricultural district.
In 2006 Randolph County’s hog population grew by over 126,000 hogs. Last year nearly 38,000 more hogs were added. Maxwell Foods of Goldsboro, North Carolina, has been expanding into the region because of excess pork production in North Carolina.
As was first reported in the Argus Leader of Sioux Falls, South Dakota has witnessed a recent spate of construction of industrial dairies that are financed through a truly bizarre type of capital formation. In the case of Drumgoon Dairy near Lake Norden, South Dakota, which was featured in the Argus Leader report, Rodney Elliot of Northern Ireland was able to construct a 1,700 cow dairy by accessing $2 million from four South Korean investors.
In exchange for their $500,000 investment, each of the South Korean investors gains the right to permanent residency in the United States for themselves and their families. South Dakota has led the pack in taking advantage of the revised U.S. Citizenship and Immigration Services EB-5 program, which provides 10,000 visas annually for foreign investors, with 5,000 reserved for those who invest at least $500,000 in rural areas to create at least five jobs.
Our research has found nine such mega-dairy projects in planning, construction, or operational stages in South Dakota. Most appear to be of similar project size, scope, and cost to Drumgoon Dairy (1,700 cows and $6.8 million estimated project cost), but three South Dakota projects with price tags in excess of $35 million are “in progress,” and several even larger projects are said to be “under development.”
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 with questions and comments.
January 2008
Well, it’s 9:00 pm on December 13, and this newsletter article is 48 hours overdue, at least. And we are still in the office watching the waning hours of the Senate farm bill debate. Now is as good a time as any (or as late as our newsletter editor can reasonably allow) to offer an update on how livestock market reforms are faring.As previously reported, a prohibition of packer ownership of livestock for more than 14 days prior to slaughter was included in the Senate Ag Committee’s farm bill without official dissent. Although there were noises, mostly from Senator Pat Roberts (R-KS), about an amendment on the floor of the Senate to strip the provision from the bill, no such amendment was even offered.
The growing popularity of the ban on packer ownership of livestock that forced opponents to shy away from resisting the amendment in committee also kept them from fighting it on the Senate floor. Their belief that they will ultimately get whatever they want in the House-Senate Conference Committee, however, is a warning that livestock competition reforms still face stern challenges.
We had a tougher time with another important provision in the Senate Agriculture Committee’s Livestock Title. That provision would require USDA to write rules preventing unjustifiable price discrimination against family farm and ranch livestock producers. The committee bill made clear that preferential pricing that is not justified by real differences in quality or actual, quantifiable differences in procurement costs will not be allowed.
Senator Roberts of Kansas offered an amendment that would have removed crucial language and allowed the purely volume-based sweetheart deals that packers give to large industrial livestock operations. After weeks of negotiations, Senator Roberts withdrew his amendment, although the final language is not all that we had hoped.
The farm bill has created opportunities to breathe new life back into livestock markets. This is important, not just for family farmers and ranchers, but also to curtail the economic and environmental nightmare that has resulted from the consolidation, industrialization, and vertical integration of livestock production across rural America. Retaining these and other livestock competition reforms in the House-Senate Conference Committee and at USDA will be a long, tough battle.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 with questions and comments about Corporate Farming Notes.
December 2007
In October, the Senate Agriculture Committee included, for the first time in history, a title focused on livestock market competition reforms when they moved their proposed farm bill proposal to the floor.The Senate Committee’s livestock title included several reforms for which the Center for Rural Affairs has long advocated. The most talked about competition reform the Committee approved was the ban on meatpacker ownership of livestock for more than 14 days prior to slaughter. The Center has been at the forefront of the effort to obtain a ban on packer ownership of livestock for nearly a decade. The ban was included in what is called the en bloc amendment without debate in the committee.
A less talked about but equally long awaited reform included in the Senate livestock title would require USDA to write rules defining an “unreasonable preference” under the Packers and Stockyards Act. Since the publication of A Time to Act by the National Commission on Small Farms, of which the Center’s Chuck Hassebrook was a member, we have fought for Congress and USDA to define this term in order to better enforce competition laws and prevent the volume-based, sweetheart deals that packers give to large, industrial livestock operations but deny family farmers and ranchers.
The Senate’s livestock title, principally constructed by Senate chairman Tom Harkin (D-IA), also creates an Office of Special Counsel within USDA for better enforcement of competition laws, improves legal protections for poultry growers, prohibits mandatory arbitration clauses in livestock and poultry production contracts, and strengthens other key provisions of the Packers and Stockyards Act.
Although the inclusion of these reforms in the Senate bill is cause for celebration, it is also clear that the farm bill debate is far from over. There will be an amendment to strip the ban on packer ownership of livestock from the bill. Other amendments to weaken competition reforms are also likely. And protecting these victories in the House-Senate Conference Committee will be an even sterner challenge.
If you have not called your senators and representatives on these issues, now is definitely the time.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 with questions and comments about Corporate Farming Notes.
November 2007
All of us owe a debt of gratitude to our friends at Successful Farming. Every year their Pork Powerhouses® issue reports on the 20 largest U.S. pork producers.Smithfield, having fully digested Premium Standard Farms, reigns supreme in vertically integrated pork production with 1,227,000 sows. Long ago people referred to Chicago as the “hog butcher to the world.” With over one million sows in the U.S., 96,000 in Mexico, 76,000 in Poland, and 51,000 in Romania, that title belongs to Smithfield.
Most of the 20 largest producers have increased their sow herd this year. Smithfield added 27,000 sows, a marginal increase. Cargill added 20,000 sows in newly constructed facilities. AMVC of Audubon, Iowa added 20,000 sows in new facilities in North Dakota. Maxwell Foods of Goldsboro, North Carolina added 9,000 sows, mostly in Indiana.
Senators Grassley (R-IA), Dorgan (D-ND), Enzi (R-WY) and Harkin (D-IA) have reintroduced legislation to prohibit packers from owning livestock with hope of including it in the 2007 farm bill. Clearly, as you read Successful Farming’s list and wonder where Smithfield’s next merger lies, it is now or never for Congress to ban packer ownership of livestock.
Last month we reported on $25 million in federal grants provided by the Environmental Protection Agency (EPA) to America’s Clean Water Foundation (ACWF) for assisting large hog facilities with environmental compliance. An audit by EPA’s Inspector General found severe irregularities and recommended that ACWF be forced to repay almost $25.2 million out of $25.4 million granted.
Over the last month EPA has informed us that they complied with their Inspector General’s recommendation and notified ACWF that the money must be repaid. They did so knowing that the foundation dissolved in 2006 and has no assets. They have not examined the close ties between the National Pork Producers Council, Validus Services (an NPPC for-profit subsidiary) and ACWF, nor considered any responsibility those entities might have for repayment.
Over $25 million in taxpayer dollars were squandered and mismanaged, or worse. However, EPA appears to have no intention to pursue the matter and has referred the case to the Treasury Department for consideration of further action. Our calls to Treasury and too many questions have gone unanswered, so far. But we’ll keep calling and we’ll keep asking.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 with questions and comments about Corporate Farming Notes.
October 2007
Millions squandered in violation of federal grants designed to help pork producers deal with critical swine waste management issuesAs reported in Alan Guebert’s Farm and Food File, the Inspector General of the Environmental Protection Agency (EPA) recommended earlier this year that the EPA recover nearly $25.2 million of the $25.4 million granted to America’s Clean Water Foundation in three federal grants between 1998 and 2003. The grants were awarded “to perform environmental risk assessments at agricultural facilities,” according to documents on the EPA Office of Inspector General’s website.
America’s Clean Water Foundation did not comply with EPA regulations regarding procurement of contracts under the grants in question. The Foundation spent over $21.1 million on contracts with the National Pork Producers Council (NPPC) and a for-profit subsidiary of NPPC named Validus Services, LLC (formerly know as Environmental Management Solutions). Validus and NPPC were contracted to conduct On-Farm Assessment and Environmental Review programs intended to “help producers identify and plan for addressing any outstanding critical swine waste management issues on their farms,” according to documentation on NPPC’s website.
However, the grants were awarded without competition and without performing the price or cost analysis required by federal regulations. EPA auditors questioned the $21.1 million claimed by Validus “because the Foundation was unable to demonstrate that the contract costs were reasonable, allowable, and allocable.” For example, Validus billed the Foundation for $1.25 million in licensing fees for use of pork checkoff-funded environmental assessment programs. But the National Pork Board, which administers pork checkoff funds, granted NPPC and Validus rights to those programs at no cost.
Recent calls to the EPA Inspector General’s Office in September revealed that the recommendation to recover the money has stalled, perhaps permanently, because they were informed in a July 14, 2006 letter from Foundation attorneys that the Foundation had been dissolved, over two years after auditors first uncovered financial irregularities relating to the federal grants.
Slipshod spending of $25 million in public money intended to assist pork producers in protecting water quality is offensive. What happened under these grants is worse because the smell of graft is as overpowering as the smell from the massive industrial hog operations for which they were intended.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010, for more information on the Center’s Corporate Farming Notes.
September 2007
Nebraska holds I-300 hearings to examine implications for the future; Iowa turns down several large hog confinement proposals>> In 2007 the Nebraska Legislature enacted Legislative Resolution 93, introduced by Senator Phil Erdman, in response to Nebraska’s constitutional regulation of corporate farming being declared unconstitutional in federal court. This was an Interim Study Resolution to “examine implications for the future structure, development, and progress of agricultural production in Nebraska.”
LR 93 authorized an interim study intended to obtain ideas and public comment on ways Nebraska can move beyond the overturning of Initiative 300. Initial public meetings were held on August 27, 28, and 30 in Norfolk, Lincoln, and Scottsbluff. Anyone interested in attending future meetings or sharing comments can find out more at www.cfra.org/I300/meetings or call John Crabtree at 402.687.2100.
>> In August, the Iowa Department of Natural Resources rejected a construction permit for an Adams County hog operation proposed by Swine Graphics, a large, corporate swine producer with multiple Iowa facilities and past environmental violations that concern Supervisor Mark Olive.
“We’re going to have to make a choice whether we want corporate ag or not,” said Olive.
>> In July, Union County Supervisors voted unanimously to reject an application to build a 4,800 head hog facility west of Lorimor, Iowa, because it failed the requirements of the master matrix, a scoring system used to evaluate sites for large confinements.
“We have been chastised for putting the matrix in place in Union County, but … our board felt very strongly when we passed it that we would be taking the opportunity for the public to have a voice,” said Supervisors Chairman Mike King.
“This board has been very much in support of agriculture in Union County,” King added. “Four of us have livestock, out of the five.”
>> In June, Dickinson County Supervisors unanimously rejected Minnesota-based New Fashion Pork’s proposed hog confinement facility west of Spirit Lake, Iowa.
The board informed the Iowa Department of Natural Resources they oppose the construction permit. Manure from the 4,000 head finishing operation – about 1 million gallons annually – would be injected onto 320 acres of farmland near the Little Sioux River.
Bill Murphy worries that the proposed facility would destroy what he and other land owners have worked toward in prairie restoration and conservation efforts. “We must fight this tooth and nail until it is turned down,” Murphy said.
Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information on the Center’s Corporate Farming Notes.
